Dark Side of the Street (Edition #56)
Bank Fail Thoughts, Special Sit Updates, Top Movers and More!
Welcome to the Dark Side of the Street! Here we shed light on the dark corners of the market. If you haven’t already, sign up below for weekly updates. If you’re new to special situations, see some of my learning resources on my substack home page to learn more! Feel free to reach out with any feedback.
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The more you know, the more you realize how much you don’t know. The less you know, the more you think you know”
-David T. Freeman
Thought of the Week
Okay, raise of hands, who thought that rising interest rates were good for banks? Higher rates that banks can charge customers for loans = more money for the bank, right? Apparently not, as two banks failed last week. And now Credit Suisse is currently in liquidity trouble and potentially being bought out by UBS.
In this case it makes complete sense that rising interest rates may benefit banks in the long term. But if those same banks had purchased a lot of long term bonds and the value drops…. well it won’t have enough money to cover a potential run on the bank. It makes sense. But at the same time, who forsaw this possibility prior to the collapse? I honestly didn’t see anyone worried about banks until last week.
This is a funny and humbling little lesson for those studying markets. We really don’t understand as much about the economy and markets as a whole as we think.
Recent Insider Buying
Large Micro Cap Purchases
Top News of the Week
“UBS Offers $1 Billion to Buy Credit Suisse” - Margot Patrick, Ben Dummett, and Dana Cimilluca of WSJ
“Silicon Valley Bank crisis a result of ‘idiot management,’ Kevin O’Leary says” - Dylan Croll of Yahoo Finance
Top Micro Cap Movers this Week
Top 10 Gainers
Top 10 Losers
Special Situation Watchlist
Activision Blizzard (ATVI 0.00%↑) - Risk Arbitrage
The spread between the buyout price ($95/share) and ATVI’s current trading price is now ~20%.
News: “Microsoft offers EU remedies seeking OK on Activision deal” - By Foo Yun Chee of Reuters
AMMO, Inc. ( POWW 0.00%↑ ) - Spinoff
News Updates: No updates
111, Inc. ( YI 0.00%↑ ) - Going Private Transaction
The non-binding offer has been upgraded from $3.61 to $3.66/share (see link for SEC filing)
The spread between the offer price and the current stock price is 35%
World Wrestling Entertainment, Inc ( WWE 0.00%↑ ) - Potential Sale
Current stock price: $83.33/share.
News Updates:
“Vince McMahon’s asking price for WWE is $9 billion, report says” - By MarketWatch
This would value the company near $121/share.
Albertsons Companies, Inc ( ACI 0.00%↑) - Merger Arbitrage
The spread between the buyout price ($27.25/share) and the current trading price is now ~39%.
News Articles:
No new updates
Madison Square Garden Entertainment ( MSGE 0.00%↑ ) - Spinoff
TravelCenters of America ( TA 0.00%↑ ) - Risk Arbitrage
The spread between the buyout price ($86/share) and the current trading price is now ~2%.
Corcept Therapeutics ( CORT 0.00%↑ ) - Odd Lot Tender
The range for the odd lot tender is $19.25 - $22/share. The stock is currently trading at $20.64, representing a max gain of ~7%.
The offer is valid until March 31st, 2023.
*See links for the situation summary from prior editions
In honor of the start of March Madness. Go Purdue! (oh wait, did they lose already…?) Truly madness every year!
See you next week!
- Dark Side of the Street