What You Need To Know This Week — January 4th, 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.
STOCK INDICES HAVE BANNER YEAR AS VALUATIONS HIT ALL-TIME HIGHS
The S&P 500 finished 2019 with its best performance since 2013. Nearly all of the annual gain in the index came from multiple expansion, not an increase in corporate earnings. Despite zero profit growth in 2019, US equity valuations sit at all time highs on a number of measures, including price-to-sales, EV / EBITDA and market cap-to-GDP. As the stock indices sit at all-time highs, CNN’s “Fear & Greed Index” is clocking in at 95, the highest “extreme greed” level in at least three years.
WESCO STARTS BIDDING WAR FOR ANIXTER, TOPPING PE FIRM CD&R
Interloper Wesco International has commenced a vicious bidding war with private equity firm Clayton, Dubilier and Rice LLC (CD&R) for electrical component distributor Anixter International. CD&R initially struck a friendly deal to acquire Anixter for $81.00 per share in October. The back-and-forth bidding has escalated such that Wesco has the upper hand with a $97.00 per share offer for Anixter. Time will tell who will win the auction process.
SATELLITE COMPANY MDA SELLS TO CANADIAN INVESTOR GROUP FOR $1 BILLION
Space technology company MDA, formerly known as MacDonald, Dettwiler and Associates, is being acquired by a group of Canadian investors including John Risley (Co-founder of Clearwater Fine Foods) and Jim Balsillie (Co-founder of Blackberry). The $1 billion acquisition of the company from US-based parent Maxar Technologies will see MDA’s headquarters move back to Canada. Maxar’s stock was up 20% on the news of the deal.
U.S. MILITARY KILLS IRAN’S POWERFUL MILITARY COMMANDER QASEM SOLEIMANI BY AIR STRIKE IN IRAQ
Qasem Soleimani, head of Iran’s elite Quds Force and the mastermind of Iran’s military strategy in the region, was killed by U.S. forces in Iraq. President Trump stated that Soleimani was “directly and indirectly responsible for the deaths of millions of people”. His killing marks an escalation in tensions between Iran and the U.S. Oil and gold prices were up 2.0% and 1.6%, respectively, on the news.
Recommended Articles, Podcasts, Books and Tweets
Listen to venture capitalist Marc Andreessen talk about why we should be optimistic about the future on the a16z podcast.
Warren Buffett turned down the opportunity to serve as a white knight and acquire Tiffany & Co after it received an unsolicited bid from LVMH.
The top three stocks of the decade on the TSX? Boyd Group Income Fund (4,247%), Constellation Software (4,064%) and Air Canada (3,663%).
The top performing global stock of the decade was New Zealand-based dairy company A2 Milk Co., which generated a 16,150% return.
AQR’s Cliff Asness on private equity and private asset investing: “I think it’s entirely possible that investors are accepting a discounted expected net return… for the privilege of not being told the prices.”
John Hussman on current market valuations: “Unless one has been blindly invested in the most overvalued glamour stocks, it has been unrewarding to hold a broadly diversified portfolio of carefully selected stocks, while hedging their market risk with offsetting short positions in the major indices”
Short sellers are targeting companies engaging in “greenwashing”, where corporations falsely claim ESG characteristics.
Buyout firm KKR and pension fund AIMCo are teaming up to buy a 65% stake in the Coastal GasLink natural-gas pipeline from TC Energy Corp. for $6.6 billion.
Hudson’s Bay Co. Chairman Richard Baker has approached key shareholders, including activist Catalyst Capital, about increasing his offer for the company to $11.00 per share.
HSBC plans an ambitious expansion of its asset management business by focusing on ETFs.
After returning client capital four years ago, hedge fund BlueCrest continues chalking up gains, ending up 2019 up 50%.
Boeing fired its CEO Dennis Muilenburg due to company struggles after its 737 MAX jetliner suffered two fatal crashes.
Warren Buffett promoted protege Todd Combs to CEO of auto insurer Geico.
There was $3.8 trillion of global M&A activity in 2019, making it the fourth-best year on record.
Nemaska Lithium, a Canadian lithium producer backed by Softbank, filed for bankruptcy protection.
