What You Need To Know This Week
A weekly recap to keep you informed on the most important events this week impacting markets, business, tech and the global economy.
TESLA DISCLOSES $1.5 BILLION BITCOIN INVESTMENT
Electric vehicle manufacturer Tesla Inc. disclosed that it invested $1.5 billion of its cash in to bitcoin and also would begin to accept bitcoin as payment for its products. Elon Musk, Tesla’s CEO and the world’s richest man, is the most high profile business leader to put a stamp of approval on the asset class. Given Tesla’s position as a major component of the S&P 500 Index, and the popularity of the S&P with investors, Tesla’s bitcoin investment introduced the cryptocurrency to millions of investors’ portfolios. The leading cryptocurrency surged 24.1% this week, buoyed by the news. Bitcoin has a 10% weight in the Accelerate OneChoice Alternative Portfolio ETF (TSX: ONEC).
BROOKFIELD INFRASTRUCTURE LAUNCHES $13.5 BILLION HOSTILE TAKEOVER OF INTER PIPELINE
After building nearly a 20% toehold in the target by buying its shares in the market, Brookfield Infrastructure Partners LP revealed a “bear hug letter” to Inter Pipeline Ltd. It outlined a plan to launch a $13.5 billion hostile takeover bid for the Calgary-based midstream company. Brookfield, who holds securities amounting to 19.65% of the energy infrastructure company through the ownership of shares and total return swaps, had approached Inter Pipeline’s board about an acquisition last fall and was rebuffed. In its statement, Brookfield offered to increase the $16.50 hostile takeover bid to a range of $17.00 to $18.25 per Inter Pipeline share if granted access to due diligence materials. Thus far, the target board of directors has rebuffed the approach. Inter Pipeline shares rallied 31.7% this week on news of the bid.
FUEL CELL TRUCK STARTUP HYZON MOTORS TO GO PUBLIC THROUGH SPAC DECARBONIZATION PLUS
Blank check company Decarbonization Plus Acquisition announced a business combination with Hyzon Motors, a supplier of zero-emissions hydrogen fuel cell powered commercial vehicles, in a deal that valued the startup at $2.1 billion. The go-public transaction includes a $400 million PIPE financing led by BlackRock, Fidelity, Wellington Management and Riverstone Energy. Shares of the SPAC are up 13.4% since rumours of the deal broke and now trades at a 56% premium to its IPO price, indicative of the market remaining keen on clean-energy vehicle startups. The Accelerate Arbitrage Fund (TSX: ARB) owns shares of Decarbonization Plus Acquisition.
Notable Insights, Articles, Podcasts, and Tweets
Listen to Bloomberg analysts Eric Balchunas and James Seyffart discuss institutional interest in bitcoin and the prospects of a Bitcoin ETF on The Pomp Podcast.
Why have SPACs exploded in popularity, such that they now account for 90% of all IPOs? “A SPAC is the most lucrative financial product, the likes of which we’ve ever seen.”
Here are the top 10 SPAC accounts to follow on Twitter.
America’s oldest bank, Bank of New York MellonCorp, announced that it would hold, transfer and issue bitcoin on behalf of its asset management clients. It is only a matter of time before all institutions deal in bitcoin.
Listen to Accelerate CEO Julian Klymochko discuss how GameStop went from a forgotten brick and mortar gaming retailer to the face of retail investors in their fight against wall street hedge funds on the upcoming Webinar: THE SHORT SQUEEZE: HOW RETAIL INVESTORS USED GAMESTOP TO TAKE ON WALLSTREET.
Missed our Webinar this week, SPAC Investing In The Current Market Environment? No matter, you can view the replay here.
GMO’s Jeremy Grantham: “The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior, I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000.”
U.S. equities are now at their highest valuations of all time on a number of metrics, including Warren Buffett’s favourite valuation indicator, Market cap / GDP, and price to sales.