 | Welcome back to The Daily Setup. Markets were up on Friday riding into the weekend. Here's what's on the docket today: - Manning & Napier is being taken private
- Tesla hits March delivery expectations
- Shorts are stacking up against Tether
So have a cup of coffee, read through the newsletter, and let's have a good start to the week. Nick |
How'd the markets look? Market Outlook |
It Pays To Go Private Biggest Mover |
Shares of Manning & Napier (ticker: MN) headed into the weekend with more cash than you. The upstate New York-based investment manager announced Friday that they have entered into a definitive agreement to be taken private by Callodine Group. The stock, which closed Thursday's trading session at $9.11, gapped up on Friday's open, and spent the remainder of the session trading between $12.72-$12.91. A nice 40.86% gain for you lucky bastards long MN shares prior to the announcement. - Callodine Group, a Boston-based asset management firm, partnered with East Asset Management (owners of the Buffalo Bills, Sabres, and whatever else they have up in Buffalo) in the deal.
- Manning & Napier will be taken private for $12.85/share which equates to a 41% premium over Thursday's close. Terms of the deal include a "go-shop" period which allows M&N 40-days to terminate the merger and accept a better offer. The deal is expected to close in Q3 of 2022.
- Marc Mayer, Chairman & CEO of Manning & Napier, said, "Callodine is a long-term investor with deep roots in upstate and western New York, and a natural fit for us, culturally and strategically." Callodine, specializes in yield investment strategies and currently boasts roughly $2B assets under management.
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Once a stock has announced they will be taken over, the potential for additional gains is minimal. MN closed Friday's trading session at $12.79, a mere $.06 off its takeover price. According to stats from Pitchbook, PE deals in 2021 totaled over $1T, and despite higher rates, inflation, and the crisis in Ukraine, it looks like 2022 may be another banner year for deal making. |
A New Record for Tesla Street Stories |
Tesla (ticker: TSLA) announced their Q1 delivery and production numbers Saturday, and not only did they meet analysts' expectations, but they also set a new record for the world's leading EV company. CEO Elon Musk tweeted (because of course he did) that, "This was an exceptionally difficult quarter due to supply chain interruptions & China zero Covid policy. Outstanding work by Tesla team & key suppliers saved the day." You don't put "exceptionally" in italics unless you really mean it. Since Tesla doesn't report sales numbers, deliveries are the closest approximation we have to the financial health of the company.
- Tesla delivered 310,048 vehicles in Q1, while analysts across the industry were predicting anywhere from 278,000-357,000 deliveries.
- The company's delivery numbers precede their earnings announcement by a few weeks. Q1 earnings are set to be released later this month on April 20th, because of course they are.
- Current average analyst price target for the company is $948 which is about $136 lower than Friday's closing price of $1,084.59. I guess they don't know stocks only go up.
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Tesla competitors NIO, Li, and XPeng released their March delivery numbers Friday, which all showed improvement from their February deliveries. Shares of these three closed Friday's trading session up between 4.18%-5.8%. Will TSLA follow suit? Let's take a look. Shares of Tesla have attempted to break the $1,115 price level three times since January 12th, and each time sellers have come in to push the stock lower. This key upside resistance plus a price gap up from March 28th-31st have me a little weary about jumping in on the long side at its current price. Since the delivery numbers were released over the weekend, Monday's opening could be a strong indicator of market direction heading into Q1 earnings. |
Coming untethered Token Talk |
Short sellers are ready to risk it all on Tether, the largest "stablecoin," i.e. a digital token linked to the US dollar. Traders will use tether as an easier way to buy crypto without getting bank accounts and wire transfers involved. Firms like Fir Tree Partners and Viceroy Research have bet big that the price of tether will fall, as regulators, lawmakers, and amateur internet sleuths have been looking to dig up dirt on the less than transparent cryptocurrency.
- There are currently $82B tether in circulation.
- In the past year, tether hasn't fallen lower than 0.999 cents against the US dollar, which makes you wonder what these short sellers see coming.
- According to an unnamed spokesperson, "Tether has been stress tested time and time again and passed with flying colors. During such events, its peg remained solid, all redemptions were honored and even the price on exchanges remained stable"
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Tether Holdings, the parent company behind the stable coin, have repeatedly promised a full audit of the currency's reserves, but have yet to produce one. Tether has also gone to court to block public records requests, including those seeking the most basic of info, such as the name of its CIO. Maybe one of these days they'll finally give us a peek behind the curtain, so I'll be keeping an eye out. |
Welcome to the show Deals and Rumors |
Bitcoin miner PrimeBlock is ready to take its talents to The Show, and will do so via a SPAC merger. Because how else would you go public in 2022? The merger with 10X Capital Venture Acquisition Corp. II values PrimeBlock at $1.25B, and is expected to finalize in the second half of this year.
- PrimeBlock has already made a name for itself, generating $24.4M in revenue in Q4 of last year, with 12 mining facilities in North America.
- The new CEO of the company will be former Goldman banker Gaurav Budhrani, no telling on if he'll have DJ D-Sol perform at his announcement
- PrimeBlock is ready to go green. It currently sources 60% of its power from non-carbon-emitting sources, and plans to offset the rest. Most miners are using a 58.5% sustainable mix.
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PrimeBlock is getting in just in time. SPAC mergers have slowed from the fever pitch we saw last year as regulatory pressures on blank-check firms have increased. The SEC also recently proposed new rules to close a loophole that leaves investors vulnerable to diluted shares and non-standardized reporting that they don't face during a traditional IPO. A cryptominer going public via SPAC is the dream job regulatory lawyers said they wanted at career day in grade school. |
+ Can't bear to watch - Biotech Stocks, Once Booming, Enter Bear Territory (link)
+ Preparing for the worst - These 10 dividend stocks with yields of at least 5% can help you take on stagflation or a recession (link) + Canary in a crypto mine - Just 2 million Bitcoin left to mine: Bitcoin hits the 19 million milestone (link)
+ You're still here? - BlackBerry Stock Falls Sharply as Revenue Misses Estimates (link) + They're makin' our jobs! - Economy added 431,000 jobs in March despite worries over slowing growth (link) |
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