What You Need To Know This Week — February 6th, 2021
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.
SHORT SELLER HINDENBURG RESEARCH LAUNCHES SCATHING ATTACK ON NEWLY PUBLIC CLOVER HEALTH
Activist short seller Hindenburg Research published a report critical of Clover Health, which went public in October through blank check company Social Capital Hedosophia III. Hindenburg accused the SPAC’s promoter, Chamath Palihapitiya, of misleading investors regarding the company’s prospects and called the company a “broken business”. Additionally, the report detailed that Clover Health is under active investigation by the Department of Justice, which is looking into at least 12 issues including kickbacks, unsound marketing practices and undisclosed third-party deals. Clover responded to the accusations with an in-depth rebuttal. Nonetheless, the stock dropped -8.4% this week on the news.
JEFF BEZOS RETIRES AS AMAZON’S CEO, PASSING THE TORCH TO ANDY JASSY
Jeff Bezos, who is often regarded as the best CEO in the world, announced he is stepping down from his executive position at Amazon. Bezos, 57, founded Amazon in 1994 and turned it into a $1.7 trillion behemoth, pioneering both online retail and cloud storage sectors, amongst many other business lines. He will transition to the executive chairman role, passing the company’s reins to his lieutenant Andy Jassy in the third quarter. Jassy, 53, joined Amazon in 1997 and has led Amazon’s Web Services cloud team since its inception, a key growth driver of Amazon’s financial performance. Investors shrugged off the news as the stock rose 3.4% this week.
PAYMENTS FIRM PAYONEER TO GO PUBLIC THROUGH SPAC FTAC OLYMPUS ACQUISITION
Online payment company Payoneer announced a business combination with blank check company FTAC Olympus Acquisition Corporation in a deal that valued the fintech startup at $3.3 billion. As part of the going-public transaction, Payoneer will receive over $250 million from the SPAC and $300 million from a PIPE financing that includes Wellington Management, Dragoneer Investment Group, Fidelity and Franklin Templeton. The deal showcases the appeal of the blank check structure as the preferred method of going public. Over the past week, there were 8 SPAC business combinations announced for a total enterprise value of $52.7 billion. Unlike many firms going public via SPAC, Payoneer is profitable, with over $400 million of revenue expected this year. FTAC’s stock was up 10% this week on the news. The stock is held in the Accelerate Arbitrage Fund (TSX: ARB).
Notable Insights, Articles, Podcasts, and Tweets
Listen to Chamath Palihapitiya, the founder and CEO of Social Capital, discuss a myriad of topics including his perspective on value investing and tackling climate change.
Listen to legendary investor Stanley Druckenmiller discuss his concerns regarding monetary policy, the Federal Reserve, money printing and inflation on Talks at GS. “The Fed in 6 weeks bought more treasuries than they did in 10 years under Bernanke and Yellen when people like me were screaming about how excessive QE was during that period.”
Japanese conglomerate Softbank continues to cash in on the SPAC craze, filing to raise $550 million through two more blank check companies.
The race of North America’s first Bitcoin ETF ‘accelerates’, as Accelerate filed a preliminary prospectus to launch a bitcoin ETF.
Tesla’s Elon Musk thinks bitcoin is “on the verge” of being more widely accepted. A potential catalyst for the cryptocurrency is Tesla investing some of its balance sheet into bitcoin.
The Accelerate Arbitrage Fund (TSX: ARB) is currently ranked the #1 alternative fund in Canada.
Bill Gross stated in his latest investment outlook: “The victims in the GameStop experiment have and will continue to be the Robinhood investors storming the gates of capital markets (for which they have an admirable objective of creative destruction of hedge fund/old Wall Street dominance) without the size, the endgame plan, and the mathematical option pricing expertise to succeed. Even without regulatory action, the plan was doomed from the beginning.”
High frequency trading firm Citadel was likely the biggest winner of the GameStop stock surge, as it pays discount brokerages such as Robinhood for their retail order flow, cashing in on each trade. U.S. Sen. Carl Levin called payment for order flow “a conflicted practice that siphons billions out of U.S. investors’ funds each year.”
The trading frenzy in speculative stocks has been happening for hundreds of years. “The desire to get rich without labor has prevailed among men at all ages and will doubtless continue as long as human nature remains unchanged.” — Horace White in 1909
Westchester Capital Management, who runs the Merger Fund, sold to Virtus Investment Partners for approximately $220 million.
It is not surprising that Letko Brosseau, who owns 12% of TSX-listed Dorel, plans on voting against the Cerberus-led management buyout at the low valuation of 5.4x EBITDA and a paltry 11.2% premium.
The CEOs of Exxon Mobil and Chevron discussed a merger that would create a $350 billion energy behemoth.
