A Weekly Update on Special Situations
  • Continental Resources $CLR received an unsolicited take-private proposal from its controlling shareholder.

  • NCR $NCR said it was deciding between a sale of the entire company or splitting into two.
"The conversations with potential suitors have been extremely constructive."
– Michael Nelson, NCR Corp – VP of IR & Treasurer – at RBC Capital Markets Financial Technology Conference

  • Mereo BioPharma $MREO reportedly draws takeover interest from AstraZeneca $AZN.

  • Paya Holdings $PAYA reportedly exploring a sale amid takeover interest.

  • Seagen $SGEN reportedly in takeover talks with buyers including Merck $MRK.

  • FedEx $FDX announced a 50% dividend hike and a cooperation agreement with D.E. Shaw regarding board composition.

  • Radius Health $RDUS 15% shareholder Rubric Capital sent a letter backing activist investor’s board slate.

  • Templeton Global $GIM activist Saba Capital commented on Templeton’s attempt to invalidate shareholder vote at AGM.

  • Bausch Health $BHC suspended the planned IPO of its Solta skin-care business.

Thanks for reading! Until next week.
What to watch for the week of 6/20/22
Get ahead of the market this week by checking out my watchlist. Here’s what I’m most interested in for the week beginning June 20th. These are just a few of the potential market catalysts to look out for in the coming days. Feel free to save this post for reference. If you found this graphic helpful, be sure to like, comment, share and sign up to get even more helpful infographics coming soon ➡️ TheAnonymousProfit.com $SPY $AMZN $QQQ $COTY $CCL $JD $SWBI $FDX $WGO
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Josh Kohn-Lindquist's avatar
$17.2m follower assets
FedEx up 15% on 53% Dividend Raise
Also added Jim Vena, former COO of $UNP and $CNI (a couple of dividend-growers that have done alright over time), to its board, along with Amy Lane from Merrill Lynch's investment banking group.

I still really like the dividend potential $FDX has -- even after this significant bump.

The payout ratio should remain below 25-30% for 2022 and 2023, and EPS/FCF generation should continue to rise along with the company's improving margin profile.

They still need to execute on integrating their TNT acquisition and tiptoe through this market, but things look promising.
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A bear case for energy
Oil stocks are going parabolic. Headlines say that oil prices will continue to remain high for a very long time. The things I'm seeing in the transportation sector make me think that the oil rally could end sooner than we realize.

First, US rail traffic remains below 2021 levels. Railroads run on gasoline and natural gas. If there's less demand for gasoline and gas from the railroad industry, then that reduces demand for gasoline.

Second, shipping demand is declining. $ZIM is down nearly 15% today and $MATX is down nearly 12%. Based on the stock chart patterns, the shipping rally could be over.

Third, the decline in e-commerce is reducing the demand for transportation services altogether. $UPS and $FDX rely immensely on e-commerce growth for revenue growth. If other transportation companies see lower demand for their services, then it would mean that even FedEx and UPS should be seeing lower demand for their services too.

This year's busy travel season can be the fuel that provides the last stampede in the oil rally. Airlines, cruises, taxis, and other modes of transportation consume huge amounts of energy. It would be no surprise to be that the busy travel season will be why WTI Crude hits $150/barrel during the summer.

After this year's busy travel season, I wouldn't be surprised if the economy enters a recession shortly after. And with a recession, energy prices will plunge significantly as demand for energy has plunged.
Oil may drop... refined products may not (at least not relationally). Downstream companies should have a very good 2Q and 2nd half of the year.
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Josh Kohn-Lindquist's avatar
$17.2m follower assets
1 Dividend King and 1 Dividend Grower I'm Buying
I went back to the well on two of my favorite dividend stocks that I am trying to build into a part of my core 34 -- $FDX and $LOW.


They are by no means sexy investments -- but they each have prominent and sustainable megatrends working in their favor.

Also, they each offer an incredible dividend potential of 8.8% for FedEx and 6.3% for Lowe's.

Dividend potential is just another way of saying earnings yield, as it is merely dividend yield divided by payout ratio.

I love this dividend potential figure as it helps me find dividend-growth stocks with well-funded payouts that should continue rising over time.

Over the long haul, I think these two stocks should outpace the broader market's total return and give me much-needed stability in my portfolio.
Will FedEx and Lowe's outperform the S&P 500 over the next decade?
43%Both will
12%Just FedEx
31%Only Lowe's
12%Neither, dividends are gross
16 VotesPoll ended on: 06/05/22
The industrial real estate industry is looking to enter a downcycle
According to Wired, $AMZN is looking to cut back on warehouse space as its projections of high online retail sales didn't materialize.

Many of the leases that Amazon made during the pandemic with warehouse providers are now looking to be cut. The recent retail sales report shows that consumers are paying more for items; not buying more items. Even if consumers might still be sitting on a higher pile of savings, inflation is eroding the real value of people's savings.

E-commerce fueled the surge in demand for warehouse space. As the industry endures a slowdown, demand for warehouse space will decline. Many of the pre-leases that e-commerce companies have signed with developers are looking to get cut in the process. Developers will continue to finish the construction of warehouses, only to find that their project will finish at a time when there's a huge glut in the supply of warehouses.

$PLD $STAG and other warehouse stocks will see their pricing power erode. As for the cold storage warehouse providers like $COLD, I do see them handling the supply glut better because demand for cold storage is still high.

Using Dow Theory, the declining demand for warehouse space correspond to a freight recession. Companies are cutting back on transportation services because they are ordering less inventory. $FDX $UPS $JBHT $XPO are other trucking and parcel delivery companies are going to be impacted negatively by the decline in e-commerce. UPS fell after their earnings because of that reason.

For now, I plan on holding $STAG because I enjoy the monthly dividends I receive from it. I'll be monitoring their earnings and reading the earnings transcripts to see how conditions in the warehouse REIT space are holding up.
Like everything tied to retail and consumer demand, bad short term outlook for sure. I’m holding a small amount of $STAG and $PLD. Wouldn’t be surprised to see them drift lower but I like them long term so I don’t see the point in selling to buy back a little lower. I think demand will come back before it gets really painful. I do see some positives here too. Amazon will stop building their own warehouses now and maybe even sell some as leasing will provide more flexibility in dealing with inventory cycles. The second positive is that as other e-comm businesses scale they will fill in the spaces left by Amazon. Obviously this is dependent on demand coming back but if you think e-comm is still a growing market, warehouses will be integral to that long term, and this is just a temporary bump in the road. Now though the retail and e-comm companies will be more hesitant to try to build their own warehouses as it’s added risk to manage during down cycles. The warehouse as a real estate sector is now a fortified sector for real estate companies.
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Stanley's avatar
$11.4m follower assets
All Hail Amazon, King of Logistics!
You just ordered something online from a retailer and receive your shipping notification - "The item you ordered is on it's way and be delivered by Friday, shipped via our partner, Amazon Shipping.".
This idea may not be too far fetched and be coming sooner than you think as it appears that Logistics may just well be the next "AWS" for Amazon, as it prepares to take on $FDX, $UPS and $AMKBY (Maersk) globally head on per rumblings in trade journals.
Amazon is, after all, already moving goods of third parties via Amazon Air, and is testing a standalone courier service, Amazon Shipping, in the UK with a US launch rumored.
Amazon has the infrastructure in place to make a global logistics empire a reality - tracking technology, ground fleet, a growing air fleet, oceanic shipping.
I'm linking a couple of articles below if you are intrigued.
Amazon Air: A Risk To FedEx And UPS?
Amazon and Maersk are setting up a fight for the world’s supply chains
...let me know your thoughts!
Disclosure: Long $AMZN
3 Value Stocks to Buy and Hold
I tried identifying some "value" stocks -- which is solidly outside of my regular investing lane.


tl;dr for each:

  • $FDX could finally start seeing improving margins from its TNT acquisition
  • $CROX and its ROIC of 98% is bananas
  • $NVR is an absolute share cannibal thanks to its asset-light model
Which value stock would you consider?
41%FedEx
41%Crocs
16%NVR
12 VotesPoll ended on: 04/21/22
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