June 16th - The Week Ahead

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The week ahead of us 🔍

Here’s a look at earnings coming up this week:

• Tuesday: KB Home, America’s Car-Mart, Bio-Key International, BPI Energy Holdings, Digerati Technologies, Acasti Pharma, Jammin Java Corp, Akso Health Group, Vince Holding, Cognyte Software, Patterson Companies

• Wednesday: Steelcase, Ihuman, Azure Power Global

• Thursday: Kroger Company, Rite Aid Corp, Smith & Wesson Brands, Algoma Steel Group, Tsakos Energy Navigation, Jabil Inc, Jerash Holdings, Methode Electronics, IGC Pharma, Biotricity, Winnebago Industries, Darden Restaurants, Commercial Metals Company, Accenture PLC, GMS Inc.

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The Main Story🤯

Elon Musk won the Tesla shareholder battle to keep his record-breaking pay: Tesla shareholders reapproved Musk’s record-breaking pay pact and signed off on a new Texas incorporation in a show of support for the CEO.

72% of votes cast by shareholders (excluding Musk and his brother Kimbal) were in favor of the $56B compensation package that was awarded in 2018. The payday plan for Elon is currently valued at $48B.

Despite the positive vote it is still likely that the pay package comes under legal scrutiny and ends up back in the Delaware courts.

Previously, Delaware Judge Kathaleen McCormick ruled that Tesla’s board didn’t act in the best interest of the Tesla shareholders in approving the $56B compensation package.

Tesla chair Robyn Denholm had previously gone on record stating, “Fairness and respect require that we honor the collective commitment we made to Elon - a commitment that was, and fundamentally still is, about retaining Elon’s attention and motivating him to focus on achieving astonishing growth for our company.”

Some smaller shareholders have come out against Musk’s pay package. “We remain concerned about the total size of the award, the structure given performance trigger, dilution, and lack of mitigation of key person risk,” Norges Bank Investment Management stated.

Some shareholders may claim that the process leading to Thursday’s vote suffered from the same type of disclosure, corporate governance, and fiduciary duty deficiencies that caused the Delaware judge to invalidate the 2018 vote.

Headlines 🔍

• Disney’s battle with Ron DeSantis is finally over - here’s how they got there: The feud between Disney and Republican Florida Governor Ron DeSantis has reached its conclusion, with a $17B development plan set for Orlando’s Walt Disney World Resort following a years-long battle over the company’s special tax district.

• Treasuries gain as mounting data point to softer inflation, jobs: Yields across the maturity spectrum declined on Thursday, with most reaching the lowest level since early April after the auction drew strong demand.

• Blackstone opts to sweeten deal as REITs upend playbook: Blackstone put a portfolio of student dorms up for sale and has been working to make the deal even more attractive. Initially giving the option for the buyer to take over $800M in debt that had already been negotiated at low rates. After the bids came in, Blackstone stepped up as a provider of below-market financing, bringing the total package to roughly $1B. KKR eventually won the deal, agreeing to buy the properties.

• Wells Fargo’s bet on BILT backfires: check out this thread below

• Kraken owner Holloway builds on Seattle vision with NBA hopes

• Tyson Foods suspends CFO John R. Tyson after arrest. This is the latest incident Tyson has had, as previously he passed out drunk in a strangers house. Nepotism helps though, so let’s see what happens with Mr. Tyson.

• Wells Fargo fires over a dozen of workers for ‘simulation of keyboard activity’: This is interesting and really impactful because I presume a lot of us have also toggled our mouse occasionally to keep that Teams button active. These wealth management professionals were fired over creating the impression of actively working. It can be presumed these professionals were working from home (although it’s not confirmed), and it’s unclear whether they were using any technology to assist them. I would steer clear of downloading software or using tech your IT program may detect…you’re probably better off doing mouse wiggles - but look it’s hard to believe you have privacy on your workplace computer - so you should try to be prudent about that - even if there are down times where there’s less to do.

• BlackRock ‘leading tokenisation of real-world assets on blockchain’

• Cava is worth $33 million per restaurant after blistering debut. Idk about you but that valuation sounds absolutely insane and not sustainable.

• Bear's’ Caleb Williams launches 888 Midas Investment Firm ahead of rookie NFL season. Williams has previously shown an interest in buying an equity stake of whatever team drafts him (not allowed under nfl rules) - but he’s wasting no time on starting to invest before his pro career even kicks off.

• Taylor Swift to end record-breaking Eras Tour in December, singer announces. This could actually have a negative impact on the economy given how much she’s been impacting hotels and air travel in certain cities…

• Business newsletter company Workweek raises $12.5M in a Series A round

• European CLO issuance hits record rate as investors chase yields

• ‘Roaring Kitty’ Keith Gill is now one of GameStop’s top shareholders, screenshot suggests. He’s officially unwound his call options, increasing his GameStop portfolio to 9 million shares and a roughly $262mm valuation

• An interesting thread on the BeReal transaction rationale:

M&A Transactions💭 

Pro-ficiency, developer of tech-enabled training and compliance tools, was acquired for $100.0M by Simulations Plus (NAS: SLP).

2 Luxury Stores Locaed in Paris and France of Mandarin Oriental have entered a definitive agreement to be acquired for $160.48M by Blackstone (NYS: BX).

Dongah Tire & Rubber (KRX: 282690), a Korean company engaged in manufacturing auto products, was acquired for $124.32M by DN Automotive (KRK: 007340).

Alamo Drafthouse Cinema, owner and operator of a chain of dine-in movie theaters, was acquired for $200.0M by Sony Pictures Entertainment. Goldman Sachs advised on the sale.

UrbanSoccer, operator of football turfs and courts, was acquired for $140.63M by Compagnie des Alpes (PAR: CDA).

Only What You Need, manufacturer of plant-based protein beverages, was acquired for $280.0M by Simply Good Foods (NAS: SMPL). Houlihan Lokey advised on the sale.

TotalEnergies EP, a subsidiary of TotalEnergies (PAR: TTE), has reached a definitive agreement to be acquired for $259.0M by Simpor Hibiscus, a subsidiary of Hibiscus Petroleum (KLS: 5199).

Aker Carbon Capture, a carbon capture technology provider, was acquired for $512.72M by Schlumberger (NYS: SLB).

Private Placement Transactions💭 

Santa Ana Bio, operator of a biotechnology company, raised $125.0M of Series B venture funding led by Access Biotechnology, Andreessen Horowitz, and GV.

Highview Power, developer of a large-scale energy storage system, raised $381.64M led by Rio Tinto, Mosaic Capital, and Goldman Sachs Group.

Enveda Biosciences, developer of a drug discovery platform, raised $174.0M of Series B venture funding led by Dimension, and Kinnevik.

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Noteworthy Chart 🧭

30.33% of the S&P 500 is taken up by its 6 top holdings now - up from 26% at the start of the year, largely fueled by Nvidia’s growth.

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