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Spirited Trial – InsideArbitrage Friday Wrap

  • November 3, 2023

FRIDAY WRAP

Our list of curated tweets for the current week

Yield Guru: A quick reminder that the next Yield Guru idea will be published on Monday. The first idea published last month was related to bonds, the second one will be preferred shares and the third one in December will likely be a combination of dividend paying stocks and options. The service is free through the end of the year and an annual subscription at the introductory price is very reasonable. Sign up here.

The JetBlue, Spirit Antitrust Trial

 

Hello from the *overflow* room at the US District Court in Boston, MA, where the antitrust trial for the JetBlue-Spirit merger is about to get underway.

Live coverage of the $SAVE $JBLU trial

Very important point in the $JBLU / $SAVE trial. Only 1/3 of Spirit customers paying the bare bones fares

$SAVE “we need to merge to survive and better compete against bigger carriers…”

i think, to the extent $JBLU can introduce a bunch of doubt into the judge's mind that standalone $SAVE is even viable/going concern

Last time a merger arb traded this wide that I can remember was Sprint TMobile.

 

Special Situations

Mergers & Acquisitions

Strong Merger Monday today with four new deals announced including two multi-billion REIT deals.

Healthpeak $PEAK is merging with medical office REIT Physicians Realty Trust $DOC for $5 billion.

$MIRO got bought today for 3.25 plus 1.75 CVR, dont have it anymore but same sector as $ELDN as organ transplant!

Regional theme-park operators Six Flags and Cedar Fair have officially struck a deal to merge

$SIX and $FUN to combine for an enterprise value of approximately $8 billion.

The proposed merger of Six Flags and Cedar Fair does not maximize value for all shareholders and there are better alternatives available.

 

Denbury $DEN stockholders approve merger with ExxonMobil $XOM Closing is expected to occur on November 2, 2023 $XLE update

New Relic $NEWR shareholders approved deal to be acquired by Francisco Partners and TPG

So here we are, the weird ex-election illiquid limbo for arbs.

There is a very fine needle you have to thread to get to $VMW trading at $145-$148 on an expected value basis.

Rithm Capital’s $RITM plan to acquire Sculptor Capital Management $SCU hit another hurdle Wednesday when four former executives sued the hedge fund firm

EC restarted the clock on its investigation into $AMZN $1.65 billion #acquistion of iRobot $IRBT decision deadline is February 14

Albertsons $ACI Kroger $KR as stated in Whalen shareholder lawsuit

$SGEN $PFE- Pfizer CEO expects Seagen deal to close before year end, or early in 2024

Big Oil is doing some of the biggest M&A deals ever.

*Why Oil’s Next Mega-Merger Should Be Shell and BP*

Potential Deals

Velo3D, a 3D printing co. currently valued at a fraction of its November '21 market cap of $2.3 billion, is exploring options including a potential sale.

Silver Lake is in talks to team up with Abu Dhabi wealth fund Mubadala on its potential takeover bid for Endeavor Group

 

Stock Buybacks

This will be one of the key charts to watch in 2024 amid a much higher cost of capital. Global buyback announcements

Shell increases share buybacks as robust prices drive profits $SHEL

$EXPE Expedia approves $5B share repurchase authorization

Anheuser-Busch InBev will launch a $1 billion share repurchase program to reward its shareholders despite reporting weak beer sales in the U.S., its biggest market.

Thomson Reuters Announces $1.0 Bln Share Repurchase Program

Cognizant reports Q3 2023 results

Yum China boosts share repurchase authorization by $1B

Murphy Oil Corporation announces third quarter 2023 financial

$SPGI S&P Global completes prior $500M Accelerated Share Repurchase and plans for an additional $1B ASR in coming weeks

Constellation Brands Announces Additional $2B Share Repurchase Authorization

Investing

Trevor Scott The Warren Buffett of Software

Regional banks falling knife hasn’t hit ground yet.

Regional bank falling knife has hit bottom

The news JUST broke that WeWork is filing for BANKRUPTCY next week

Seeing $WE declare bankruptcy, it was worth bringing back one of the greatest Twitter threads of all time.

Probably a good acquisition for Waystar.

Earnings

Chart of $Meta revenues

As BP misses 3Q earnings

$AMD AMD Q3 FY23

$PFE Pfizer reports mixed Q3 earnings; reaffirms FY23 outlook.

McDonald's with a double beat.

$ANET just reported its 2nd straight 46% EPS gain yoy. Unlike a lot of techs that had big profit declines in 2022, Arista has had 11 straight gains of over 20%.

The U.S. Economy

US government debt was once among the sleepiest corners of finance, but no longer.

'JPMorgan Chase (JPM) CEO Jamie Dimon said it remains possible the Federal Reserve could raise interest rates an additional 75 basis points due to "stickier" inflation, warning businesses should be prepared for such a worst-case scenario.'

Huge rally in US bonds Wed, with 10-yr Treasury yield falling 17 basis points.

A lot of hot takes coming out of yesterday’s FOMC meeting, but this was a pretty direct statement from Jay Powell:

The dollar is on pace for its biggest drop in almost two months as Treasury yields extended a slump and traders pared bets on further Fed interest-rate hikes

JP Morgan: “Even though U.S. home prices have risen considerably over the last few years, this does not mean that the market is in a bubble.

The 5 largest Apartment REITs acquired $878m worth of property in Q3 representing 3,481 units at an average price of $216k per unit.

 

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