December has always been a great time for big deals, no doubt fueled by a fervent desire to beat the taxman.
We’re only at mid-month and already the seeming head-scratchers are piling up like cord wood on a Wisconsin farm.
In the spirit of the season, let’s shake these gift boxes and see if we can figure out what’s inside:
1) Global casino icon Steve Wynn has purchased a little more than a million shares of the company that bears his name. That’s a three-day, $63 million shopping spree. So what’s he seeing that the sharps at T. Rowe Price are missing? That mutual fund powerhouse dumped Wynn stock last spring in reaction to sour conditions in Macau.
He could be making a bargain play in a stock that’s taken a pounding over the past couple of years; he could simply be doubling down on himself, a not unreasonable bet; he could see something that tells him Macau is about to turn.
Betting against Wynn has never been all that profitable. I suspect good things in this box.
2) Another case of acting against conventional wisdom comes to us from Vermont via Germany.
Keurig is a name that touches us all, either directly at the coffee machine or indirectly in the shift to individual brewing technology. But owner Green Mountain Coffee is a long way from its roots, if not from its Vermont home. Wall Street sharps have shaken and stirred this company.
Its stock is way down as it reaches for diversification.
Now comes JAB Holdings, a German outfit with dreams of building a global empire to rival Nestle. Some have likened the coffee strategy to that of Anheuser-Busch InBev in consolidating the beer market.
Maybe. But $13.9 billion is a lot of money for a company the market values at less than half that amount. And there’s talk of other suitors who may muddy the waters for the many heavyweight investors in Keurig Green Mountain.
Too big to fail is still a powerful concept. But I’m guessing this box contains mostly hot air. Let’s look further.
3) And then there’s Hyperloop Technologies.
The Los Angeles-based firm is working on yet another Elon Musk vision – a transportation system that sends people hurdling through a tube in pods at speeds of 750 mph. And it has chosen to do initial testing on a 50-acre tract in North Las Vegas’ Apex technology park.
Musk — the man behind Tesla electric cars, the giga-factory outside Reno and SpaceX rocket travel — doesn’t have any skin in this game. So, is that a sign that this one is too far out there for even Musk? Or does it mean the smart businessman recognizes he can’t succeed at anything if he spreads himself too thin?
Maybe. But Musk’s SpaceX arm is running a high-value innovation competition for technology remarkably like Hyperloop is proposing. Proof of concept could produce funding. And there we have motive and timeline.
If funding is available, we could have an answer on the pod-travel premise by 2020. If not, the bubble could burst much sooner.
Nevada, as represented by Governor Sandoval, is eager to claim another tech victory.
That’s fair enough, for now.
But loading Apex with a handful of swing-for-the-fences tech outfits seems the kind of longshot gambling that got North Las Vegas in the mess it’s long been in.
I’m rooting for Hyperloop and car maker Faraday Future, should they join the Apex party.
But my bet here is this is not giga-factory II, not an economic powerhouse. I’ll pass on this box.
The downside here is we really won’t know which box contains the best deal for several years. That puts kind of a damper of the instant gratification of opening presents.
But then that’s the nature of business. It’s a gift with a long horizon for everyone involved. And we wouldn’t have it any other way.
Of course, I’m the guy who passed on Google at $84. Ouch.
Happy shopping.
