after seeing all this buzz about the electric mustang, i’m disappointed to learn it’s an SUV
My next door neighbor has one and yeah it’s 100% not a coupe. Looks cool from my driveway to me though. It can do 3.5s 0-60 too.
I was actually considering getting one of these, but I heard that the battery life and range are sus.
Not stonks again? Pick a damn side SPY
I’d imagine it could cost people a lot of money if they were to average down and the market dropped to 2015 levels. Like, if the market returned to those levels, how many times is someone going to think nflx is a good buy before it drops to 80 or btc before it drops to 1,500.
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I just bought ATVI (Activision Blizzard) at $81.075, at my standard allocation.
Microsoft entered into an agreement to buy them on 1/18 for $95 a share, which is expected to execute by 6/30/23. The stock was at $65 before the deal. If it falls through, without any fault from ATVI, MSFT will pay them $2B to $3B which amounts to $2.57 to $3.85 per share. So the floor if it falls through should be around $67.57 to $68.85 per share, which is more or less symmetrical downside versus the upside of the acquisition going through.
So it’ll return over 17%, plus there is an annual dividend with an ex-div date in April, so we’ll get one or two dividends. This year is 0.47 per share.
But commonWealth, how can this be a good deal? The hedges and institutional investors would surely be all over it, it’s a huge company! Efficient markets and all!
They are. Buffett/Berkshire has around 1.88% of the company, he got in before it was announced somewhere between $57 and $65 per share. BlackRock bought 7.9% at $79 after the deal was announced. Fidelity and Vanguard took big positions at $80-81 a share. Capital Group took a big position at $81.50 a share. Those five plus the CEO own 26% of the company. And those are just from the 13G’s filed since the announcement, with the exception of Buffett, which is how I found it.
So other big players may have already had a big chunk, or may not have bought enough to trigger a filing. They could own $3B of it without filing.
Unless you think the S&P is likely to do better than ~14% annual returns in the current climate, this is a +EV play.
The reasons it’s probably discounted from what it should actually be worth are:
- It might take 15 months to go through, and 14% a year isn’t good enough for some hedges?
- Hedges may think they can get in later at a similar annualized return.
- Hedges may have caps on the size of the position they can take in one issue.
- It gets pulled down by selloffs on the S&P index funds and QQQ, as it’s in both.
On the other hand, perhaps I’m underestimating the risk of the FTC shutting the acquisition down. I read all the SEC filings and two or three legal analyses of the deal.
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merger arbitrage itt
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In Finland, Wolt’s contract with restaurants prohibits them to offer cheaper prices in b&m than in app. I don’t know how much this is enforced but food prices have skyrocketed during pandemic.
stonks
What’s your point?
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stonks
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that company hasn’t made a good game in a long time MSFT way overpaid
The chances of the deal going through are waaaaay better than 50%, so either you are swimming in alpha or your ‘floor’ is wrong.
That is very possible, I mean I certainly wouldn’t have bought ATVI at $95 as an individual investor. MSFT’s ownership makes it more valuable through synergy, but if I were a MSFT shareholder I definitely wouldn’t be thrilled with this.
I do wish I were scrounging for value stocks a few months back, because in December when Buffett bought it, it would have popped up based on my criteria and been borderline at worst. Oh, well. Who knows whether Buffett bought it for value or because his buddy Bill Gates told him what was about to happen.
Yeah I’m estimating 90% based on what I’ve read, and maybe more like 95%, but I wouldn’t bet on it if it were priced anywhere close to that - I have plenty of room to be waaaay wrong on that estimate and still be +EV.
Well, I should be clear on the “floor.” I’m just saying absent the acquisition in a vacuum. It was trading at $65 before the deal was announced, I suppose it could be argued that there was some insider trading at the real floor is like $60 plus the MSFT penalty fees, so like $63. Either way, there’s enough room here that the precision isn’t that important in determining how profitable it is. Plus a few big funds clearly agree on this being a good price to buy at. If there weren’t any 13G’s filed in the last couple weeks, I’d be more skeptical.
So if the deal evaporated and nothing else changed, I’d expect it to go back to $57 to $65 plus the penalty fees. Of course if the entire market is in the shitter, the downside risk gets bigger because it would get pulled down with it.
Like to clarify what I’m getting at here. If @grue’s point is that the CEO is a piece of shit, I mean, I was able to deduce that by the company culture at Activision and the seual harassment lawsuit. I don’t see where making a merger arb play amounts to condoning that in any way. It’s not like if the merger falls through the company is going to go to zero, and there will be plenty of pressure on Microsoft to clean things up there.
If grue’s point is that he’s a MAGA Republican, and it’s immoral to invest in his company, then I’d say:
A) It’s not like I’m enriching him in any way by buying.
B) I hope you don’t own any stocks/index funds, cause probably somewhere between 70% and 90% of CEOs are Republicans.
If the point is just that he’s a piece of shit and that has nothing to do with the investment, then yeah, dunk away, he sucks. Hopefully Microsoft pushes him out ASAP.
CW,
I absolutely love you and your posting.
Do you really think after an afternoon of research you have an edge over the dozens of hedge funds that exclusively do merger arbitrage? Do you see how preposterous that is?
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No, I don’t think I have edge on them on a trade like this, but BlackRock bought it at $79 and Capital Group bought it at $81.50. I got it at $81.08. I’m betting with big hedge funds, not against them.
BlackRock’s position was for over $3B, Capital Group’s is around $3.4B. Vanguard’s is around $5.25B.
I think any stock that has a P/E ratio of - is going to have a bad year.
Good thing there were no large institutions selling!
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I don’t really have a point just that um blizzard sucks and I would never put $ on a company that sucks if there was any way to avoid them in mutual funds but it doesn’t appear to.