Dark Side of the Street (Edition #63)
Buyback Thoughts, $VVV and $CMLS Odd Lots, Top Movers and More!
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“If you do it at the right price, there’s nothing better than buying in your own business.”
-Warren Buffett
Thought of the Week
Inflation comes down to 5%, US debt ceiling needs adjusting, and investors fear a recession. Thats last week’s market recap in a sentence. We also have two odd lots announced this week. For me, too many buybacks indicates economic fears for companies. If a company believes that buying back stock creates more value for stockholders than plowing it back into the company for current/new projects that could indicate the expectation of a downturn.
A company doesn’t want to put money into projects that won’t yield the expected return or an idea that won’t sell in the market because of overall low economic demand. So to make shareholders happy they will buy back stock showing that they are doing something with their cash balance.
After reading this week’s news and seeing two odd lot tenders… my spidey senses are heightened and bracing for a downturn.
New Odd Lot Tender Offers
Valvoline Inc. (NYSE: VVV)
On May 11th, 2023, Valvoline announced that it has commenced a modified dutch auction tender offer and will purchase up to $1 billion of their own stock back from shareholders between the price of $35 - $40/share. VVV closed at $38.55/share which represents a max gain of 3.6%. The offer will expire on June 8th, 2023. Below is a link to the full PR Newswire.
Cumulus Media Inc. (NASDAQ: CMLS)
On May 12th, 2023, Cumulus Media announced a modified dutch auction tender offer and will purchase up to $10 million of their own stock back from shareholders between the price of $2.85 - $3.25/share. CMLS closed above the max purchase price on Friday at $3.30/share. The announcement created unusually high volume in the stock and I would expect share to trade lower in the coming weeks. The offer will expire on June 9th, 2023. Below is a link to the Global Newswire press release.
Recent Insider Buying
Large Micro Cap Purchases
Top News of the Week
“Small-Cap Stocks Have Been Crushed. 3 With Big Potential.” - By Jacob Sonenshine of Barron’s
“Icahn Enterprise Stock Has Tumbled 36%. The Short-Seller Saga Isn’t Over.” - By Nicholas Jasinski of Barron’s
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 ~23%.
News Articles:
No news update.
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 34%
Albertsons Companies, Inc (ACI 0.00%↑) - Merger Arbitrage
The spread between the buyout price ($27.25/share) and the current trading price is now ~34%.
News Articles:
No new updates
TravelCenters of America (TA 0.00%↑) - Risk Arbitrage
The spread between the buyout price ($86/share) and the current trading price is now 0%.
News Articles:
*See links for the situation summary from prior editions
Another focus song for your research.
See you next week!
- Dark Side of the Street