Dark Side of the Street (Edition #6)
New Odd Lot Tender $TNET, $ZIMV Update, Recent Insider Buying 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 here for weekly updates or share with your friends and family. 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.
Thought of the Week
“Knowing that a clever guy is stacking the deck is not necessarily protection”
- Warren Buffet
The LA Rams won Super Bowl one week ago, but the true winner of the game was the sportsbooks. This was the first Super Bowl in which 100 million Americans could legally bet on the game.
Even my sister, who hates football, got in on the action and put together a classic game of Super Bowl Squares. So obviously my instinct is to get an edge on the game, so I spent way too long trying to ‘rig it’ and statistically get an edge. Unfortunately, all I really proved is that the random function in excel isn’t truly random.
But that’s just an insight to how I think, find a way to win… always. That’s why I look into special situations and micro cap stocks. These are the areas of the market where I can get an edge on the market and find value.
Many equate investing to gambling but it’s in fact very different. When you buy a stock, you actually own a fraction of a business (in my case incredibly small fraction). As an owner, if managers aren’t performing or acting in YOUR best interest, YOU can rally enough votes to oust them, bring in better managers, and provide value for the money that YOU have invested in the business. It only seems like gambling because of the feeling that your tiny voting power can’t make a difference.
When you bet… if you lose (even with a gigantic edge on the book), you just lose.
Upcoming Special Situations
Odd Lot Tender Offer
TriNet Group, Inc. (NYSE: TNET) has commenced a modified ‘Dutch’ auction tender offer announcing that the company will purchase up to 99 shares from any individual in the range of $83 - $97/share. Individuals will be able to tender their shares until March 17, 2022. The stock is currently trading at $86.50/share.
Recent Insider Buying
Top 10 Micro Cap Purchases this Week
Source: OpenInsider.com
Top News of the Week
Deals Are Booming, but Antitrust Scrutiny Has Deal Traders Worried - By David Benoit of WSJ
“After a record run for mergers, investors who trade on deal news are feeling nervous.
Merger targets Activision Blizzard Inc., (ATVI) Spirit Airlines Inc. (SAVE) and Zynga Inc. (ZNGA) are trading well below their agreed-upon acquisition prices, a sign that investors are more worried than usual that the deals could fall apart.”
Are Activist Short Sellers Misunderstood? - By Michelle Celarier of The DealBook Newsletter
“Supporters of short sellers say that the research behind these proposals is misleading and that activists, by uncovering fraud, do more good than harm. They argue that the proposed changes would hamstring, if not destroy, a business that provides a vital service in policing the markets.”
Hasbro Activist Begins Proxy Fight, Urges Wizards Unit Spinoff - By Cara Lombardo of WSJ
“Alta Fox, which says in the letter that it has spoken to Hasbro, noted that the company’s stock price is lower than it was five years ago and has significantly trailed the broader market. Alta Fox believes Hasbro could double its valuation by spinning off the unit that houses the Dungeons & Dragons business.”
Top Micro Cap Movers this Week
Top 10 Gainers
Top 10 Losers
Special Situation Watchlist
Colfax Corp (NYSE: CFX) - Spinoff
No Update
Activision Blizzard (NASDAQ: ATVI) - Risk Arbitrage
The spread between the buyout price and ATVI’s current trading price is now ~17%.
Warner Bros. Discovery (NASDAQ: WBD) - Spinoff Merger
No Update
ZimVie Inc. (NASDAQ: ZIMV) - Spinoff
ZimVie entered the ‘when issued trading’ market this week on Feb. 16th, 2022. It is currently trading at $44.20/share.
*See links for the situation summary from prior editions
For those of you who’ve made it this far, here is a treat. My research song of the week!
See you next week!
- Dark Side of the Street