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Hedge funds score unprecedented gains on Trump’s SPAC deal

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October 21, 2021

By Svea Herbst-Bayliss

(Reuters) – Hedge funds that invested in the blank-check acquisition company that made a $875 million deal to merge with former U.S. President Donald Trump’s new social media venture are set to make five times their investment, regulatory filings show.

It is the biggest gain investors in so-called special purpose acquisition companies (SPACs) have ever recorded on the first day after a deal was announced, according to SPAC Research.

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Nearly a dozen hedge funds invested in the SPAC, Digital World Acquisition Corp, in its initial public offering (IPO) in September, according to the filings. Like other SPACs, Digital World did not disclose which company it was seeking to buy.

Hedge funds have pumped hundreds of billions of dollars into these types of vehicles in the past two years.

The investor excitement had fizzled in the past few months as some companies that merged with SPACs failed to deliver on their bullish projections and retail investors nursed losses. Stock market reaction has been so poor to recent deals that some hedge funds only make pennies on the dollar by buying into the IPOs of SPACs and then selling their shares in the stock market or redeeming them for their IPO price.

But the hedge funds that invested in Digital World’s IPO are set to quintuple their investment after Digital World’s shares jumped more than 400% after the deal with newly launched Trump Media and Technology Group was announced. They were hovering around $50 in late afternoon trading on Thursday, giving Digital World a market value of $1.7 billion.

The hedge funds included D.E. Shaw, which oversees $60 billion in assets, and Yakira Capital Management, which invests some $472 million, according to a regulatory filing.

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Meteora Capital Partners, an affiliate of heavy SPAC investor Glazer Capital LLC, Sander Gerber’s Hudson Bay Capital, Boothbay Fund Management, Boaz Weinstein’s Saba Capital, Shaolin Capital Management, K2 Principal Fund and Radcliffe Capital Corp, another heavy SPAC investor, also put in money, the filings show.

Representatives for the firms either did not respond to requests seeking comment or declined to comment.

The rally in Digital World shares is also a boon to Trump because most stock market investors who buy the shares for much more than their $10 IPO price will not seek to redeem them at that price, ensuring that Trump Media and Technology Group will receive most if not all of the $293 million it is entitled to under the merger.

Some founders of the hedge funds donated to the Democratic Party, including to President Joe Biden, who defeated Trump in the 2020 U.S. election. Others backed Republican candidates including Trump.

Hudson Bay’s Gerber donated to Trump in last year’s election and backed the two Republican candidates for Senate in Georgia. Weinstein donated to Biden and supported the Democratic candidates in Georgia, among other donations.

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David Shaw, who founded DE Shaw, donated millions of dollars to liberal political action committee Priorities USA Action, filings show. Representatives for the firms either did not respond to a request for comment or declined to comment.

Most hedge funds invest regardless of party affiliation.

(Corrects name of Gerber’s fund to Hudson Bay Capital instead of Boothbay Fund Management, paragraph 9)

(Reporting by Svea Herbst-Bayliss in Boston; Additional reporting by Anirban Sen in New York; Editing by Greg Roumeliotis and Will Dunham)

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Walmart veteran Biggs to step down as CFO next year

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November 29, 2021

By Uday Sampath Kumar

(Reuters) -Walmart Inc said on Monday longtime executive Brett Biggs will step down from his role as chief financial officer of the world’s largest retailer next year.

Biggs, the finance chief since 2015, helped oversee a period of rapid change at Walmart as the brick-and-mortar retailer launched and expanded a number of initiatives to help fend off competition from Amazon.com Inc.

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Walmart made its biggest overseas investment in 2018 with a $16 billion deal to buy a majority stake in Indian online marketplace Flipkart, and beefed up its U.S. e-commerce business through the purchase of apparel retailers Modcloth and Bonobos.

Monday’s announcement came as a surprise to some analysts who had viewed Biggs as next in line for Walmart’s top job.

“Bret Biggs was a candidate to ultimately succeed Doug McMillon as CEO, given his long tenure at the company and broad experience across business units and functions outside of finance,” said Jason Benowitz, senior portfolio manager at Roosevelt Investment Group.

“However, we expect McMillon to serve many more years at the helm,” Benowitz added.

Walmart’s shares were down 1% in late morning trade.

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Biggs had held several finance positions, including CFO of the company’s international division and U.S. business, since joining the company in 2000.

Biggs will remain in the role until a successor is named next year, Walmart said, adding he will continue to represent the company as a board member of its fintech startup until January 2023.

The startup, a joint venture with investment firm Ribbit Capital, aims to develop financial products for Walmart’s employees and customers.

Walmart said it was considering internal and external candidates to replace Biggs, as the company deals with surging labor and supply chain costs that have eaten into its profit margins.

(Reporting by Uday Sampath in Bengaluru; Editing by Shinjini Ganguli, Shounak Dasgupta and Sriraj Kalluvila)

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Cyberpunk maker CD Projekt misses quarterly profit forecast

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November 29, 2021

(Reuters) – CD Projekt, the Polish video game maker behind “Cyberpunk 2077”, missed expectations on Monday with its third-quarter net profit, weighed down by higher costs.

The company’s flagship game has helped to boost sales and earnings this year but its third-quarter net profit of 16.3 million zlotys ($3.92 million) was down 78% from the previous quarter, missing analyst expectations for a 51% drop to 36 million zlotys.

(Reporting by Anna Pruchnicka; Editing by David Goodman)

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Cyber Monday spending expected to slow as shoppers see fewer deals

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November 29, 2021

By Uday Sampath Kumar

(Reuters) -U.S. retailers are estimated to generate online sales of up to $11.3 billion on Cyber Monday, a decline in growth from a year earlier as fewer discounts and limited choices due to global supply chain disruptions deter shoppers.

Retailers had also spread out promotional deals across more weeks this year to protect profit margins from surging supply chain costs and to better manage inventories amid widespread product shortages ahead of the Christmas shopping season.

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Those attempts have pinched sales on what are traditionally some of the biggest shopping days of the year, with Adobe Analytics data over the weekend showing spending online during Black Friday fell for the first time ever.

“Online sales on big shopping days like Thanksgiving and Black Friday are decreasing for the first time in history, and it is beginning to smooth out the shape of the overall season,” said Taylor Schreiner, director, Adobe Digital Insights.

U.S. spending on Cyber Monday, which gained popularity in the mid-2000s, is expected to be between $10.2 billion and $11.3 billion, according to estimates from Adobe. 

That translates to roughly flat growth at the midpoint compared to last year’s $10.8 billion, which was a near 15% jump from 2019.

Excitement on social media around Cyber Monday is also ebbing.

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“Cyber Monday continues to be extremely relevant, particularly in the digital world, but the buzz has been more muted than we’ve seen in recent history,” said Rob Garf, general manager of retail at Salesforce.

Discount rates in the United States in the week leading up to Cyber Monday were on average 8% lower than they were last year, according to Salesforce.

The holiday season kicks off just as the new Omicron coronavirus variant has triggered uncertainty over the economic reopening, but experts say it is too early to predict the impact on consumer spending.

(Reporting by Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila)

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