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Adam Cooke's avatar

I think it's simple what's going on: many of the co's on a look back basis are absolute train wrecks. Share issuance is through the roof, losses are material and in many cases consistent or at least lumpy - to me, most of them look like a text book example of what should be avoided under normal circumstances, especially with half the worlds governments painting them as Satan himself.

Now, the difference is that circumstances are certainly not normal and many of these co's will earn substantial amounts of money, certainly in the short term and likely in the medium term (perhaps even longer term) - but what does management do - do they s**t the bed like many have done consistently for the last decade or have they suddenly seen the light? - I'm sure some will be the latter but it's hard to argue that many will be the former.

Can they hold it together for long enough that investors net a substantial return?

Again - I bet some can - maybe many can - but it's still a ballsy proposition to throw any material amount of capital at these guys - at least that's the case for a generalist like myself.

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Alistair Lindsay's avatar

Not legal or investing advice. On TWTR, the scenario that worries me is: a few days before trial, Musk offers say $5bn to terminate the merger agreement and settle the litigation. As I understand, the board has a duty to act not only in the best interests of shareholders (for whom litigation would be by far the better choice -- I have the prospects of getting an order for specific performance a bit below you but not materially; and I don't think Musk can realistically do anything other than comply with a Delaware Court order) but also the company itself and they are free to consider the interests of other constituencies as part of that assessment. I can see the board deciding that the company and its employees would be better off remaining independent with the benefit of the hypothetical $5bn to support the strategy and (potentially - as above, not legal advice) getting advice that the balancing of conflicting interests of the company itself and the shareholders is a matter for the board's judgement. If this is wrong, please let me know (I currently don't hold, but would if I got myself comfortable (not relying on anyone's comments here) that this scenario wouldn't arise).

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