News & Press
After a year in which the world has become even more reliant on the tech giants, it looks like FAANGs are set to get an even bigger bite of the cherry – as analysis from The Edge daringly predicts.
The global dominance and brand awareness of Facebook, Amazon, Apple, Netflix and Google need no explanation here, but after more than a year of a global lockdown due to Covid-19, consumers have relied upon tech giants more than ever before.
But, as US Government regulators like the FTC and House of Representatives’ Subcommittee on Antitrust continue to have Big Tech and monopolistic practices in their crosshairs, if FAANGs follow The Edge’s playbook, they have at least +50% upside for investors over the next five years.
The game plan? Spinoffs.
On April 6, 2021, The Edge CEO & Founder Jim Osman joined the MoneyShow Virtual Expo to discuss how value catalyst ideas help investors to make returns in volatile markets, as well as highlighting a major call for break-ups at leading tech firms. Please see below for the full recording of the presentation. The slides are available on request.
Wall Streetʼs latest craze for SPACs has reached a new frontier: China.
These so-called blank check companies — which raise money, go public and merge with a private company, typically within two years — have already raised $97 billion in 2021, according to SPACinsider, more than all of last year. And though the vast majority of that money has been raised by American sponsored SPACs, Chinese firms are starting to get in on the action.
But critics say that listing in the U.S. through this trendy shortcut may show something else entirely. SPACs have come under fire because they allow investors to put money into a company with no stated purpose until it finds a target and they facilitate public listings, without requiring private companies to file extensive paper work. “Pre-merger, there are no disclosures,” says Alex Korda, an analyst at New Jersey-based The Edge Consulting Group who has done research on the returns of SPACs over the past five years. “When they say blank check, it is a double entendre — there is no clarity on what type of company they are going to buy.”
Stocks sold in an extraordinary torrent of recent block trades are poised for further selling pressure in the weeks ahead.
Goldman Sachs Group and Morgan Stanley have spearheaded more than $20 billion of these unregistered stock sales since Friday, according to people familiar with the matter, following a margin call on the family office of former Tiger Management trader Bill Hwang. The ensuing volatility could be just the start of a rough stretch for these stocks, based on one measure of performance for prior share sales the banks have brought on behalf of holders.
But the selling pressure looks more like a buying opportunity to those with longer time horizons, according to a special situations research firm. “We are looking at names where not only are there block trades, but also names that are falling in sympathy,” The Edge Consulting Group Chief Executive Officer Jim Osman said in an interview. “Forced selling is where investors who have more than a five-minute view can make some of the best investments ever.”
In November 2020, insiders CEO Anthony Jabbour and CFO Bryan Hipsher bought shares at the mid-$26 level. Then, on February 11, 2021, both Jabbour (spending $998K) and Hipsher (spending $116K) bought again, this time at the mid-$23 level.
This is a major positive indicator for value creation. According to the world’s top insider buying expert George Muzea, insiders buying so soon after an IPO is seen as a positive indicator for potential performance and is worth paying attention to these situations.
Mega-cap technology companies should consider Spinoffs of major businesses, as this would both reduce the risk of antitrust action against them and result in strong upside for the stocks, according to the research firm The Edge.
Should they Spinoff businesses like Instagram, YouTube, or Amazon Web Services, FAANG stocks — a reference to a group that includes Facebook, Apple, Amazon, and Google-parent Alphabet — could see upside of more than 50% over the next five years in a bull-case scenario, analyst Jim Osman wrote.
Following up from its successful Spinoff of Match Group (MTCH) in July 2020 (IAC up +140% since), we continue to recommend entering IAC as a strong long-term play, with a near-term catalyst of Vimeo’s Spinoff as well as Turo’s potential IPO in 2021.
Two months before the July 2020 split, IAC traded at $71. Leading up to IAC’s Spinoff last year of MTCH, IAC’s stock price had a tremendous fall (to pandemic lows of $40).
On the first day of trading for IAC, the stock listed at $103 (+45% return 2-months before its Spinoff) and now trades at $225 today. As we’re nearing that two-month mark, this recent dip in IAC provides an opportunity to enter ahead of the Spinoff.
While most would arguably agree that 2020 was a dismal year by many measures, it was a banner one on Wall Street for a once little-known financial vehicle: special-purpose acquisition companies, or SPACs. Once considered a shady back-door M&A tactic, SPACs’ popularity skyrocketed last year thanks to high liquidity levels and market demand for new growth companies.
“With a SPAC, investors are essentially betting on management to acquire a company that they’ll then bring public, not on an actual company itself,” says Alex Korda, global deals analyst at The Edge Consulting Group, an analyst team that covers special situations and other investment scenarios. So far, the overall financial performance of SPACs leaves much to be desired. According to a study The Edge Group released of 115 SPACs that acquired or merged with other companies from 2016 to the end of 2020, 71% of them lost money a year after their completion date.
Obvious risks and potential pitfalls aside, do SPACs hold potential for the design world?
Alex Korda, Global Deals analyst, on the latest SPAC deals and why investors should be cautious. With CNBC’s Melissa Lee and the Fast Money traders, Guy Adami, Tim Seymour, Karen Finerman and Steve Grasso.
The Edge’s analysis on SPACs is available on request.
The full video can be seen here or above.
On February 18, 2021, The Edge CEO & Founder Jim Osman highlighted three value catalyst situations to watch in 2021 at the MoneyShow Virtual Expo, as well as detailed how The Edge tracks and advises on similar ideas for investors. Please see below for the full recording of the presentation. The slides are available on request.