In today’s briefing:
- TSMC (TSM/2330 TT): Berkshire Buying Could Push ADR Premium Higher
- Buffett’s Investment in TSMC – Impact on Samsung Electronics and SK Hynix
- Sea Ltd: Another Sell-Off?
- Chindata: China Merchants Potentially In The Mix
- Chindata Takeover: China Merchants Enters as Government Interest in Data Centers Increase
- Nitro (NTO AU)’s Binding Offer from Alludo to Force Potentia’s Hand?
- HYBE Shorting Opportunity with a Lockup Release from Dunamu
- Schneider Electric Sweetens AVEVA Bid
- Palantir Inc: Major Drivers
- #40 The Contagion Vectors of the FTX debacle
TSMC (TSM/2330 TT): Berkshire Buying Could Push ADR Premium Higher
- Overnight, Berkshire Hathaway Inc Cl B (BRK/B US) announced that it held 60.06m shares (US$4.43bn) of Taiwan Semiconductor (TSMC) – ADR (TSM US) as of 30 September.
- That caused the ADR to spike after-hours and the local shares have rallied 8% today to close the gap with the ADR.
- The ADR premium is trading near the lows and with Berkshire buying up a substantial chunk, Taiwan Semiconductor (TSMC) – ADR should trade at a bigger premium to Taiwan Semiconductor (2330).
Buffett’s Investment in TSMC – Impact on Samsung Electronics and SK Hynix
- This insight will discuss the impact of Buffett’s investment in Taiwan Semiconductor (TSMC) – ADR (TSM US) on Samsung Electronics (005930 KS) and SK Hynix (000660 KS).
- We believe that Buffett’s sizeable investment in TSMC is likely to have a positive impact on Samsung Electronics and SK Hynix.
- This would be similar to how Buffett’s investment in the Japanese trading companies which has had a positive impact on the major Korean trading companies.
Sea Ltd: Another Sell-Off?
- The last leg of Sea Ltd (SE US)’s original bull thesis is about to break with Shopee’s revenue expected to start declining from 3Q22 onwards.
- However, a lower-than-expected operating loss, driven by cost-cutting could get the bulls excited for a short while following the 3Q22 results due later this week.
- With the business remaining unprofitable after cost-cutting, we think 3Q22 results could be another opportunity to profit on the short-side as the FV of Sea could be around $10bn EV.
Chindata: China Merchants Potentially In The Mix
- Bain Capital-backed Chindata Group (CD US) is on the move after Bloomberg flagged – again – interest from industry players.
- This time, SOE-backed China Merchants Group is understood to be mulling a takeover of Chindata. Shares are up 23% since that article earlier this month.
- Back in April, Bloomberg mentioned GDS Holdings (ADR) (GDS US), PE outfit PAG, and EQT AB (EQT SS)-backed EdgeConneX were rumoured to be interested in merging with Chindata.
Chindata Takeover: China Merchants Enters as Government Interest in Data Centers Increase
- Chindata Group (CD US) is the leading carrier-neutral hyperscale data center solutions provider in Asia Pacific emerging markets.
- At the beginning of the month, Bloomberg reported a takeover offer for Chindata from China Merchants Group, which is a state-owned company.
- Several state-owned companies have shown interest towards acquiring data centers and data center companies, which is likely to be in line with China’s strategy of digitization.
Nitro (NTO AU)’s Binding Offer from Alludo to Force Potentia’s Hand?
- Nitro Software Ltd (NTO AU) has entered into a binding agreement with Alludo at A$2.00 per share via a scheme or an off-market takeover, with a 50.1% minimum acceptance condition.
- This is a good move by the Board to force Potentia to improve its off-market takeover bid of A$1.80 per share. Alludo can leverage synergies to support a higher bid.
- The shares are trading through Alludo’s terms as there is an expectation of Potentia returning with improved terms. The break fee implies that Potentia needs to offer at least A$2.02.
HYBE Shorting Opportunity with a Lockup Release from Dunamu
- Dunamu may not be in a financial situation that will allow it to hold HYBE shares. With FTX’s liquidity crisis, Upbit’s liquidity management risk will inevitably rise to the surface.
- Doubts about whether the size of Upbit’s assets is sufficiently absorbing the shock of a bank run are still strongly raised in the local market.
- These concerns are likely to affect HYBE’s share price as the December 9 release approaches, and yes, we need to design short position setups aimed at this.
Schneider Electric Sweetens AVEVA Bid
- Schneider increased its cash offer by 4% to 3,225p/share, 47% premium, implied equity value of c.£9,863m and EV of £10,569m, 27.8x EV/Fwd EBIT. Schneider said the sweetened bid is final.
- The deal seems dilutive for Schneider: it would mean an implied Fwd P/E of 31.4x vs. 18.7x for Schneider and should increase Schneider’s debt leverage to 1.9x.
- The increased offer had been anticipated as the spread had been positive since the offer announcement. Gross spread has now turned negative and is -1.91% (including dividend) as of 14 November. Long.
Palantir Inc: Major Drivers
- Palantir delivered a mixed set of results in the last quarter.
- Its $478 million in revenue surpassed Wall Street expectations but the company missed out on the earnings expectations of analysts.
- U.S. commercial business expanded for the ninth consecutive quarter, up 53% yearly.
#40 The Contagion Vectors of the FTX debacle
- Time flies in crypto. If you swap “years” for “hours” in this quote from Marvin, the Paranoid Android from The Hitchhiker’s Guide to the Galaxy, you get a glimpse of what crypto has been like in recent weeks.
- “The first ten million years were the worst,” said Marvin, “and the second ten million years, they were the worst too. The third ten million years I didn’t enjoy at all. After that, I went into a bit of a decline.”
- In the last few weeks, FTX has exploded, and somehow it keeps exploding.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
