What You Need To Know This Week — February 1st, 2020
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.
WARREN BUFFETT’S BERKSHIRE HATHAWAY SELLS ITS NEWSPAPER BUSINESS TO LEE ENTERPRISES
Conglomerate Berkshire Hathaway is selling its newspaper business to print media specialist Lee Enterprises for $140 million. The assets being sold include 30 daily papers, 49 weeklies and 32 other print products. The deal does not necessarily represent a reduction in exposure for Berkshire to the newspaper industry, as the company is lending Lee $576 million as part of the sale. Lee’s stock was up 64% on the news.
VOLKSWAGEN MAKES PLAY FOR NAVISTAR IN A BID TO CONSOLIDATE THE TRUCKING INDUSTRY
Volkswagen’s subsidiary Traton tabled a $2.9 billion, $35.00 per share, all-cash offer for American commercial truck and bus manufacturer Navistar. The unsolicited offer represents a 45% premium for Navistar stock. Volkswagen already owns 17% of the company.
CASINO OPERATOR PENN NATIONAL INVESTS $136 MILLION IN SPORTS MEDIA BRAND BARSTOOL SPORTS
Penn National Gaming acquired a 36% stake in popular sports-media publisher Barstool Sports for $136 million in cash and stock. The deal includes an option for Penn National to acquire at least a 50% stake over the next three years for an additional $63 million. The Barstool investment will help Penn National establish a presence in the nascent online sports betting market. Penn National’s stock rose 11% on the news.
AMAZON REJOINS THE $1-TRILLION MARKET CAP CLUB AS ITS STOCK HITS A NEW ALL-TIME HIGH
Online-retailer Amazon once again entered the $1-trillion market cap club after it announced its fourth quarter results. Amazon’s revenue grew 21% to $87.4 billion, beating expectations for the quarter. Its stock was up nearly 8% on the news.
Recommended Articles, Podcasts, Books and Tweets
Listen to an in-depth interview with Sam Zell, one of the greatest real estate investors, on The Tim Ferriss Show.
Food delivery companies DoorDash and Uber held merger talks last year in an attempt to stem losses. The talks were encouraged by investor Softbank, who holds stakes in both companies through its Vision fund.
Canada’s GDP grew 0.1% in November and 1.5% year-over-year.
While U.S. GDP grew 2.1% year-over-year in the fourth quarter.
High frequency traders cost investors nearly $5 billion per year through latency arbitrage.
Institutional investors are hooked on private credit. The loose lending in the space won’t end well.
Legendary hedge fund manager Seth Klarman on the current market environment: “the rocket fuel that has propelled markets in 2019 will run out.” Currently, his fund is at 31% cash.
The Eurozone logged its slowest economic growth rate in 6 years with Q4 growth of only 0.1%. France and Italy’s GDP declined in the quarter.
A bellwether for shipping bulk goods and global economic activity, the Baltic Capesize Index hit an all-time low this week, dropping a stunning -98.9%, going from >3,000 to 1 in one day.
Hedge fund manager Ray Dalio on the coronavirus outbreak: “I, and we at Bridgewater, don’t have a clue as to what extent this virus or ‘pandemic’ will spread, we don’t know where it will spread to, and we don’t know its economic or market impact.”
The mystery bidder who launched a $12.00 offer for Cincinnati Bell is a Macquarie infrastructure fund. This offer pits the Australia-based infrastructure investor against Canada-based Brookfield, who has a friendly deal with Cincinnati Bell on the table.
Historically, stock spin-offs have outperformed. However, recently spin-offs have underperformed the S&P 500 by 2.7% per year.
The Economist is cautious about private market assets given that “everyone now believes that private markets are better than public ones.”
Private equity firms Blackstone and Apollo have been focusing on raising permanent capital vehicles, amassing a total of $250 billion thus far.
Mattress company Casper set its IPO valuation at $768 million, a significant discount to its last private financing value of $1.1 billion.
In a drive for cost synergies, BorgWarner agreed to acquire auto parts manufacturer Dephi Technologies in a $3.3 billion deal.
Ray Dalio has implemented a succession plan at his hedge fund Bridgewater, but he remains firmly in control.
