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“Freedom is the right to tell people what they do not want to hear.”
-George Orwell
Thought of the Week
I am a big hockey fan, and this week I heard a lot of chatter in the media about how Russian hockey players should come out publicly against Putin and the invasion of Ukraine. But places like Russia are very different than the Western world. Freedoms and consequences are different there.
How can I say this? Well, I lived in China for a month. China governs in a style similar to Russia. In China, there is no privacy. There are cameras everywhere watching you. In China, there is no freedom of speech, and history is modified to suit the governments’ needs. Most negative historical events about China (ex. Tiananmen Square Massacre) are scrubbed off the internet, it’s called the Great Firewall of China. People are so afraid of bringing up these incidents that college students have not heard of the massacre. And in China, the police are their military. Yes, men with AK-47s (not handguns).
To summarize -
What we believe a prominent Russian should say against their government is a judgment that I don’t think any of us can fully comprehend. The fact that I don’t have to make that decision makes me appreciate living in the United States of America.
Now let’s dive into this week on the Dark Side… well… of Wall Street that is.
Upcoming Special Situations
Risk Arbitrage
In January 2022, Zynga Inc. (NASDAQ: ZNGA) announced that Take-Two Interactive (NASDAQ: TTWO) would acquire them for ~$12.7B (or $9.86/share). The transaction has passed the 45-day “go-shop” period on Jan. 25th, 2022, which is a significant step in closing the deal. The acquisition is expected to close in the 2nd quarter of 2022.
This is another business combination in the video game industry. Take-Two owns Rockstar Games and 2K (famous for the Grand Theft Auto series and NBA 2K games), while Zynga owns online/mobile games such as FarmVille and Words with Friends.
Barron’s recently published an interesting article on the acquisition and how the combination could impact TTWO.
ZNGA is currently trading at $9.14/share, representing a spread of 7.88%.
Recent Insider Buying
Large Micro Cap Purchases
Source: OpenInsider.com
Top News of the Week
“How the West Unplugged Russia From the World’s Financial Systems” - By Liz Hoffman of WSJ
“Russia now faces a repeat of one of the most painful episodes in its post-Soviet history—the financial crisis of 1998, when its economy collapsed overnight. In the decades that followed, Russia earned its way back into the good graces of financiers in New York, London and Tokyo. It is all being undone at warp speed and will not be easily put back together.”
“Investors brace for U.S. CPI reading of close to 8% next week as risk of durable inflation grows” - By Vivien Lou Chen of MarketWatch
“Russia’s attack on Ukraine in the past week has shifted the calculus, by putting a much longer stretch of high U.S. inflation firmly within the realm of possibilities. The war is creating havoc in oil markets, roiling commodity prices, and trickling down to American consumers at a time when the inflation rate is already at a 40-year high of 7.5%.”
Top Micro Cap Movers this Week
Top 10 Gainers
Top 10 Losers
Special Situation Watchlist
Colfax Corp (NYSE: CFX)/ ESAB Corporation (NYSE: ESAB) - Spinoff
ESAB Corporation has filed its Form 10 with the SEC and the reverse stock split passed in the ‘Special Meeting’ on Feb. 28th, 2022.
Activision Blizzard (NASDAQ: ATVI) - Risk Arbitrage
The spread between the buyout price ($95/share) and ATVI’s current trading price is now ~16.7%.
Warner Bros. Discovery (NASDAQ: WBD) - Spinoff Merger
No Update
ZimVie Inc. (NASDAQ: ZIMV) - Spinoff
ZIMV began trading on Mar. 1st, 2022, at $32.80/share and has since declined to $23.69/share.
TriNet Group, Inc. (NYSE: TNET) - Odd Lot Tender Offer (Dutch Auction)
TNET is currently trading at $88.72, with the tender offer range being $97 - $83/share. The maximum gain is currently 10.48%.
StarTek, Inc. (NYSE: SRT) - Risk Arbitrage/Going Private Transaction
The spread between the buyout price ($4.50/share) and SRT’s current trading price is now ~25.6%. This is a significant move from last week as the spread was 10.66%.
*See links for the situation summary from prior editions
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Okay, now that I’ve gotten my promo out of the way, here is my most played song this week while writing the deep dive.
See you next week!
- Dark Side of the Street