What You Need To Know This Week — January 16th, 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.
ONLINE LENDER AFFIRM STOCK NEARLY DOUBLES IN INITIAL PUBLIC OFFERING
San Francisco-based online lender Affirm Holdings saw its shares soar nearly 100% in its stock market debut. The company raised $1.2 billion at $49.00 per share in its IPO only to see its shares trade up to $97.24 on the first day of trading, valuing the company at $30 billion on a fully-diluted basis. Investors appear to be oblivious to the risks in Affirm’s business model, given its primary customer, Peloton, accounts for 30% of its revenue. Profits remain elusive at Affirm, which had a $15 million net loss on revenue of $174 million in its latest quarter. Nonetheless, the stock finished the week up 136%.
SPAC ARCLIGHT SHARES SKYROCKET ON MERGER WITH EV COMPANY PROTERRA
Electric vehicle companies and SPACs continue to fit like hand to glove as special purpose acquisition company ArcLight Clean Transition Corp announced a business combination with electric bus and battery manufacturer Proterra Inc. The deal values Proterra at $1.6 billion and includes a $400 million PIPE investment from investors Daimler Trucks, Franklin Templeton, Fidelity and BlackRock. ArcLight’s stock was up more than 120% this week on the news. Once the deal is closed, Proterra shares will trade under the symbol PTRA. The Accelerate Arbitrage Fund (TSX: ARB) is long ArcLight shares and warrants.
ARBITRAGEURS WIN BIG AS CISCO UPS BID FOR ACACIA BY 64.3% TO $115
Jilted buyer Cisco convinced would-be merger target Acacia to come back to the bargaining table and sign a new merger agreement at an increased price as the parties dropped their litigation. Acacia shareholders hit the jackpot as Cisco increased its bid from $70.00 to $115.00 per share, a 64.3% increase, valuing the maker of optical interconnect technologies at $4.5 billion. Previously, the deal had been held up by Chinese regulators, and Acacia walked away after it expired, thinking the deal undervalued the company. No more deal delays are expected and the transaction is expected to be completed by the end of the first quarter. Acacia, whose stock was up 43.7% on the news, is the largest position in ARB.
Notable Insights, Articles, Podcasts, and Tweets
Listen to Oaktree’s Howard Marks discuss the dichotomy of “value” and “growth” investing on The Memo podcast.
Business Insider: Julian Klymochko wakes up at 4:30 a.m. to manage an ETF that seeks to profit from the SPAC boom. The investing chief breaks down how the strategy works and shares 2 new SPACs on his radar.
If you missed this week’s webinar, SPAC Investing: How To Earn Low-Risk, Double-Digit Returns, you can view the replay here.
Listen to Accelerate CEO Julian Klymochko discuss the SPACs on his radar on Benzinga’s SPACs Attack.
If you’re interested in corporate hijinx, M&A and fraud, the failed buyout of Input Capital is a story worth reading. There were “more red flags than a bullfighting convention.”
Jim Simons, the greatest hedge fund manager ever and the father of quantitative investing, is stepping down as Chairman of Renaissance Technologies. The move comes after a year in which its client fund strategies dropped between -20% and -30% while its internal fund gained 76%.
Third try’s the charm? After getting rejected by anti-trust regulators twice over the past 25 years, Staples is again making a play to acquire Office Depot.
Investors used to love “story stocks.” Now they love story ETFs. Assets in theme ETFs have grown at an average of 45% annually over the past three years.
IMF Managing Director Kristalina Georgieva urged Governments worldwide to “Please spend. Spend as much as you can and then spend a little bit more.” If investors aren’t considering at least a small allocation to Bitcoin, they should consider it.
SPACs that unveiled business combinations in the last 3 months of 2020, on average climbed 5.4% on the day of those announcements and traded 16% higher one month later, according to the Wall Street Journal.
