Buffett Bought the Dip

Berkshire Hathaway has been deploying cash left and right, McDonald's is leaving Russia, Canadian home prices dropped for the first time in two years, NYC Covid cases are rising, China's economy is grinding to a halt, and JetBlue made a hostile cash offer for Spirit Airlines.

Litquidity Capital
May 17, 2022

Good Morning,

Berkshire Hathaway has been deploying cash left and right, McDonald's is leaving Russia, Canadian home prices dropped for the first time in two years, NYC Covid cases are rising, China's economy is grinding to a halt, and JetBlue made a hostile cash offer for Spirit Airlines.

Let's dive in.

Before The Bell

As of 5/16/2022 market close.

If you want to learn more about crypto trading strategies and the world of DeFi, check out our Foot Guns newsletter.

Markets

  • The S&P and Nasdaq closed in the red, as tech stocks dragged the indexes down in a volatile trading session 
    • Slowing US economic growth, rate hikes, and rising inflation have all contributed to the investor concerns
  • The Dow, S&P, and Nasdaq, are now down 12.3%, 16.3%, and 27.0%, respectively, from their record highs

Earnings

  • Warby Parker shares fell 5%+ after a miss on both quarterly earnings and revenue (BRRNS)
  • Wix also dropped significantly yesterday after the Israeli software company’s Q1 loss was wider-than-expected (YHOO)
  • What we’re watching today: Walmart, Home Depot 
  • Full calendar here

Headline Roundup

  • McDonald’s exits Russia as country’s isolation increases (BBG)
  • Deutsche Bank gets WhatsApp information request from regulator (BBG)
  • Starbucks offers to reimburse employees for abortion travel (BBG)
  • Canadian home prices post first drop in two years on rate hikes (BBG)
  • Elon Musk says Twitter deal at lower price is ‘not out of the question’ (BBG)
  • NYC nears high Covid-alert level, may consider requiring masks (BBG)
  • Abbott in pact with FDA on steps to reopen baby-formula plant (BBG)
  • Backed by Murdoch and Koch, Pennsylvania Senate GOP campaigns spend $55M+ on primary ads (CNBC)
  • China’s economic distress deepens as lockdowns drag on (WSJ)
  • Warren Buffett spends big as stock market sells off (WSJ)

A Message From Masterworks

Overheard at Equinox, Wall Street, 2021

Citi Dude: Did you hear our base got bumped to 120k?

JP Morgan Bro: That sucks, I might clear $200,000 all-in.

Crypto Chad: I just bagged $2,300,000 from this dog coin lmao.

I remember the conversation well. But, sadly, the days of making millions flipping digital coins and meme stocks could be over. Since November, $1 trillion crypto value vanished along with $7 trillion from the stock market. 

According to Morgan Stanley, they’re deploying capital into physical art. Now, the art market is sizzling. For example, an Andy Warhol painting just sold for $195 million.

Here’s why we’re bullish:

  • Store of value: works by legends like Picassos don’t usually dip by 50% in a day
  • Risk-adjusted performance: Citi reports art has nearly 0 correlation to stocks 
  • Significant appreciation: contemporary art prices outpaced the S&P by 164% (1995-2021)

And there’s one place I’ve been using to invest in art exclusively, Masterworks. And despite the deep losses in the equities, fixed income, and crypto, they’ve still performed.

Before them, you’d have to go to a black-tie auction, ignore your MD’s “pls fix” emails for a night, and spend millions. Now all you need is WiFi to diversify your portfolio with shares of Warhols, Monets, and Basquiats. 

Want in on the action? Good. Getting started takes less than 60 seconds. Plus, the Exec Sum fam gets the red carpet treatment with my private link*

See important Reg A disclosures

Deal Flow

M&A / Investments

  • Carlyle agreed to buy US defense contractor ManTech for $3.93B (RT)
  • JetBlue made a hostile $3.3B cash bid for Spirit Airlines in an effort to prevail over a rival offer from Frontier Airlines; Spirit’s shares jumped 13.5% on the news (BBG)
  • Steel production company Nucor agreed to buy overhead door maker CHI Overhead Doors in a $3B deal (RT)
  • Chatham Asset Management offered to buy marketing firm Vericast for $2.8B (BBG)
  • Morgan Stanley Infrastructure Partners is in exclusive talks to buy broadband and cable service provider WideOpenWest, which has a market value of ~$1.8B (BBG)
  • Apollo agreed to buy a minority equity interest in European VC firm Sofinnova Partners, committing up to $1.04B in managed capital (BBG)
  • DCP Capital is considering selling its controlling stake in printed circuit maker MFS Technology at a potential $700-$800M valuation (BBG)
  • US lifting and rigging company Crosby Group agreed to offer $438M for Japanese hoists and cranes maker Kito (RT
  • Dyal Capital is in talks to buy a minority stake in real estate investment firm DivcoWest (BBG)
  • Sri Lanka, which is set to default on foreign debt and is printing money to pay local salaries, plans to sell its national airline, Sri Lankan Airlines, to help stanch losses (BBG)

VC

  • Kriya Therapeutics, a gene therapy company, raised a $270M Series C led by Patient Square Capital (BW)
  • AI-based mass transit operations platform Optibus raised a $100M Series D at a $1.3B+ valuation led by Insight Partners, Bessemer Venture Partners, Verizon Ventures, and others (TC)
  • German instant grocery startup Flink raised a $60-70M round at a $5B valuation from Carrefour; acquired French startup Cajoo for ~$93M (TC)
  • Proptech company Stoa raised $50M in funding from Zeev Ventures (PRN)
  • Construction robotics startup Dusty Robotics raised a $45M Series B led by Scale Venture Partners (TC)
  • Keelvar, a startup automating procurement for supply chains, raised a $24M Series B led by 83North (TC)
  • Metatheory, a web3 interactive media company, raised a $24M Series A led by a16z (BW)
  • Akuity, a provider of application delivery software for Kubernetes, raised a $20M Series A led by Lead Edge Capital and Decibel Partners (TC)
  • Marketing data management platform Claravine raised a $16M Series B led by Five Elms Capital (TC)
  • Sustain.Life, a platform enabling SMEs to take climate action, raised a $16M seed round led by Tapestry VC and Sustain.Life’s co-founder Mike Hanrahan (BW)
  • ProDrops, a card collecting game developer, raised a $5M seed round from Playtika (PRN)
  • Topship, a Nigerian ecommerce logistics startup, raised a $2.5M seed round led by Flexport and YC (TC)
  • Formally, a legal collaboration platform that allows users to easily hire attorneys, raised a $2.3M pre-seed round led by Bessemer Venture Partners (BW)

SPAC

  • Battery maker Dragonfly Energy agreed to merge with Chardan NexTech Acquisition 2 Corp. in a $500M deal (BBG)

Fundraising

  • Infinity Ventures, an early stage VC investing in fintech infrastructure and commerce, raised a $158M fund (BW)

Crypto Corner

  • LFG reserves dwindle to just 313 bitcoins from 80K after UST crash (CD)
  • Kwon proposes forking Terra, nixing UST stablecoin in ‘Revival Plan 2’ (CD)
  • $1.2B in bitcoin was liquidated in last week’s crypto crash (DC)

Exec's Picks

  • Supply chains have been disrupted for months, and inflation is rampant. In order to understand what is causing these issues, we need to know where the materials that our societies rely on come from. Doomberg published a great piece tracing the starting points of our most important products. Check out their piece here.

The Hiring Block

  • If you're looking to break into finance, lateral, or move out, check out our job board on Pallet, where we curate highly relevant roles for you. We've got 40+ jobs spanning IB, S&T, VC, tech, private equity, DeFi, crypto, CorpDev and more. We sift through all the noise on LinkedIn, Indeed, Monster, etc. so you don't have to.
  • Featured Job Listing: For anyone considering a career change, Stirlingshire, a startup looking to fix the full-service broker-dealer model, is looking to hire new brokers and advisors. Stirlingshire is offering a 100% payout, 100% WFH, and equity to all first-year hires. Interested? Check out their posting on our job board 🤝

Meme Cleanser

Catch the latest episode of our Big Swinging Decks podcast, presented by CoinFLEX.US, on SpotifyApple Music, and YouTube 🤝 

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