Three Things (11/14)

Monday, Nov 14th 2022


“In every business, in every industry, management does matter.” - Michael Eisner

1) Big Names Ensnared in FTX Fiasco: FTX's collapse hasn't only rattled the crypto markets, but prominent investment players are caught in the whirlwind. Tiger Global, Third Point, Altimeter Capital, and Millenium Management are among some of the institutional investors caught in FTX's demise. FTX, once valued at $32 billion, fell to zero after a liquidity crunch brought the crypto exchange to its knees earlier last week.

Titan's Takeaway: FTX's collapse shows that even the top capital allocators were caught forsaking proper diligence for fear of missing out on the next great startup. It's easy to get caught up in the moment when the winds are at your back, and the economy is booming, but when the winds shift, even "sure-bets" can be reassessed and, occasionally, schemes exposed.

2) Estee Lauder Nears Deal for Tom Ford: The makeup and cosmetic brand is said to be closing in on an agreement to acquire the luxury fashion house Tom Ford for $2.8 billion. Tom Ford's namesake firm spans luxury products ranging from menswear, eyewear, beauty, and fragrance. He started the firm in 2005 after leading Gucci as a creative director in the 1990s.

Titan's Takeaway: The transaction and global M&A market have slowed as rising interest rates are making companies postpone strategic plans. However, the exclusive deal shows the resilience and strength of the luxury fashion industry, even in the face of inflation and rising rates.

3) Disney Plans Job Cuts: The Mickey Mouse House is looking to reduce costs and is preparing for job cuts, according to a leaked memo from the CEO. The job cuts come after Disney reported mixed earnings for showing growth in its streaming units but losses in the division climbing to $1.5 billion in the quarter, sending its stock plunging. 

Titan's Takeaway: While Disney's shift to streaming continues to be costly, we remain confident that Bob Chapek's goal of profitability for the services is well within reason. Looking for efficiencies in overhead may be painful but imperative as the company tightens its belt.

As of this writing, DIS was a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.
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