Wednesday, Jun 1st 2022

Three Things (6/1)

Commentary

"Believe you can and you’re halfway there.” – Theodore Roosevelt

1) Inflation surges abroad: Inflation in the eurozone reached 8% in May; energy prices were 39.2% higher than a year earlier. This report comes as EU leaders commit to block the majority of Russian oil and gas imports, and to stop insuring ships containing Russian resources. As investors in uranium mining companies, France’s relatively stable energy prices due to their widespread adoption of nuclear power caught our eye.

Titan’s Takeaway: We respect the EU’s commitment to deprive Russia of the capital necessary to continue their invasion on Ukraine, but consumers globally will likely feel the ripple effects at the pump for the foreseeable future.

2) Elliott Management scores big: Activist investor Elliott Management agreed to sell Italy’s AC Milan football club to U.S. investors, Redbird Capital. The iconic club is being sold for €1.2 billion after they won the title in Italy’s top professional league. Elliott seized control of the club in 2018 after former owner, Chinese businessman Yi Yonghong, defaulted on over €300M in high interest loans provided by Elliott. The firm spent much of their time keeping costs under control and trying to win government approval for a new stadium.

Titan’s Takeaway: First off, this was flawless execution by Elliott: acquire team for major discount, add value that leads to a championship, and sell for a nice profit ~4 years later. Despite the public market slump, we expect unique assets like sports franchises to continue to change hands as investors seek creative alternatives.

3) Starz to stream solo: Lionsgate revealed plans to spin off its streaming unit, Starz, by the end of the summer. Failing to provide a boost for the cable network, Starz will function as a stand alone entity in a crowded streaming space. Media companies are interested in the deal as DirecTV and Roku in partnership with Apollo are looking to purchase a stake as high as 20% of the outstanding equity.

Titan’s Takeaway: Starz enters the already crowded streaming wars unarmed and looking for allies. With a sizable content library, we’re left wondering if this spinoff will actually turn into an acquisition target.

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