April 6, 2020–T-Mobile Closes its $30 Billion Merger With Sprint. Why is This Transaction so Important?
SoftBank Pulls $3 Billion WeWork Tender Offer. Why Did They Renege on the Deal?
Xerox Ends its Hostile Pursuit of Rival HP. Did This Acquisition Ever Stand a Chance?
Whiting Petroleum Files for Bankruptcy as the First Insolvency of the Oil-Price Crash. Is it the First Domino to Fall?
Welcome investors to the Absolute Return Podcast. Your source for stock market analysis, global macro musings and hedge fund investment strategies. Your hosts Julian Klymochko and Michael Kesslering aim to bring you the knowledge and analysis you need to become a more intelligent and wealthier investor. This episode is brought to you by accelerate financial technologies. Accelerate because performance matters. Find out more at www.Accelerateshares.Com.
Julian Klymochko: Welcome investors to Episode 61, of The Absolute Return Podcast, I am your host, Julian Klymochko.
Michael Kesslering: And I am Mike Kesslering.
Julian Klymochko:Today is Friday, April 3, 2020. Have a number of interesting things to talk about this week. We are in the midst of the whole Corona virus market panic. I mean, we have had a bit less volatility. The VIX, the fear index, has come down from its peak of eighty-five, an all-time record to about 50, which is still extreme. But we’re not getting those plus or minus 5 percent, 10 percent up and down moves in the market lately in March. It was mostly down, however, these days we are back to kind of 2 to 3 percent, which is still extreme historically, but it seems much less extreme given what we went through in March. Nonetheless, we are not here to talk today about macro issues, which we have really been focused on those broader macro-economic trends. We are more so talking this episode. You know what the corona virus panic; this whole bear market pandemic is having on specific companies, so we are talking about corporate actions off the top.
- T-Mobile, their merger with Sprint, 30 billion dollar deal. It finally closed after two years, a $30 billion deal. We are going to chat about why this transaction was so important and really, what it signifies for the M&A market in the current environment.
- Softbank, we are going to chat about them and WeWork, one of our favourite companies to chat about, Softbank, they actually officially pulled a 3 billion tender offer for WeWork shares. Why did they renege on the deal?
- Hostile deal. Xerox ended its hostile pursuit of rival HP. Did this acquisition ever stand a chance? We are going to talk about the implications of that one there.
- Lastly, Whiting Petroleum. They filed for bankruptcy. The first insolvency of the oil price crash. Is this the first domino to fall? And should we expect this to happen more and more in the oil market, given what has happened with the oil price crash?
T-MOBILE CLOSES ITS $30 BILLION MERGER WITH SPRINT
Julian Klymochko: But nonetheless, some good news. T-Mobile, they close their landmark acquisition of rivals Sprint $30 billion deal, which was initially announced in April 2018. Took them quite a bit longer to actually close this deal and they finally closed it, which is super positive. We have spoken a lot about merger arbitrage over the past month and how spreads are ultra wide. Many market participants pricing in a ton of deals breaking. At one point in mid-March, the merger arbitrage market was pricing in nearly 50 percent of deals falling apart. But we look at the scoreboard over the past, kind of, five weeks, what has actually happened in the M&A space, and T-Mobile represents one of this is deals have closed. We looked at 19 deals in the U.S., seven deals in Canada have closed, so that is twenty six deals in North America. Twenty-six public M&A transactions, two have closed since February 28. So deals keep getting announced. Deals keep getting closed, so certainly, it slowed down on the announcement side, but existing deals continue to close. We have not seen any deals officially break aside from this Xerox-HP hostile deal, which we are going to talk about further in this episode. Nonetheless, on this T-Mobile Sprint deal. It really represents a major consolidation in the U.S. mobile carrier sector. It brought four competitors to three, which previously investors thought would be impossible.
Sprint and T-Mobile have tried to do this deal back since 2013, but they called it off back then because the Obama administration was really against that consolidation from an antitrust perspective. But in the more business friendly Republican administration under President Trump, clearly they are able to get it done as it just closed. Other interesting dynamics, if we rewind just a couple of months back to February, this deal was really left for dead by investors until it was surprisingly approved by the court, a real long shot deal. I remember looking at the odds back then, America was really pricing in only a 30 percent chance I’d be successful. Rightly or wrongly, it did get done and Arbs were really, really at least arbitrages that were long, very rewarded as Sprint stock effectively doubled on this positive court decision.
The pro forma entity once T-Mobile integrates Sprint, they will have about 100 million customers, making them a strong competitor to entrust industry leaders. Number one, AT&T and number two, Verizon. And the other interesting aspect of this transaction I wanted to mention is it was an all-share deal, but T-Mobile did issue 19 billion Bonds to fund this merger, probably for the repurchase of Sprint’s debt, etc.
Now bankers from Barclays, Deutsche Bank, Goldman. On this $19 billion deal, they actually received sixty five billion in orders, so massively oversubscribed. It gives you a sense that credit markets are really opening up. What we saw just recently was the Fed coming into this space to start buying corporate bond ETF. Really establishing a floor on that market, after the bottom fell out in March, the bottom effectively fell out of every market in March. But the Fed looking to really support the investment grade bond market and you can really see evidence of that spreads have really snapped back. Corporate bonds have rallied and the demand has come roaring back with this T-Mobile deal more than threefold oversubscribed. The other thing that I wanted to mention in terms of investor support, T-Mobile stock is one of the few that has actually had positive returns year to date. Obviously, we are in a pretty steep bear market here. The index down roughly, what? Twenty-five percent recovered from its peak drop of thirty five percent. Nonetheless, T-Mobile’s stock hanging in there, and clearly investors are liking this consolidation wouldn’t you say?
Michael Kesslering: Yeah, yeah, absolutely and in terms of the dynamics here. I mean, with this deal closing in terms of the overall merger arb space is now that capital has to flow into other deals. And there was quite a bit of merger arb capital dedicated to this deal is it was a very, very popular transaction, although it did have its points in time where it was quite unpopular and spreads really blew out. But you’re seeing some of this capital flowing into some of their higher quality situations which, you know, could just be temporary but could be a bit more longer lived. You did see that in terms of the merger arb universe that we track. You did see it come in a few percentage points, which was interesting to note as that capital does seem to stay within merger.
The other aspect to this deal was that the fact that it closed without receiving all of the regulatory approvals. It really seems like, you know, both parties wave the risk of closing prior to all these final approvals being received and waiting longer to secure their financing for the transaction, as you had mentioned, the 80 billion dollar in bond offering. So there obviously was some financing risk to this deal that the parties thought that it would make a bit…It looks like the parties thought that it would make a bit more sense to close without those final approvals, especially with T-Mobile. I mean, if you are looking at them, over 80 percent of their stores are closed now. The COVID impact is certainly weighing on their operations, especially when you are trying to close both a transaction and a concurrent financing. But one thing I found interesting is, you know, I’ve never seen a situation where a deal actually closed without all the final regulatory approvals and Julian. How common is it to see an actual deal closed without receiving all these approvals?
Julian Klymochko: I think it is relatively uncommon, especially this type of approval. You typically see them wait until they get all of them and close up to deal with no risk. Although one relatively recent was AT&T/Time Warner, I believe they closed it prior to hearing any sort of appeal. That ran into some antitrust issues, AT&T won and I believe they went ahead and closed the deal prior to learning whether or not the government was going to appeal, ultimately the government did not appeal. So it didn’t really matter anyway, but on this one, T-Mobile/Sprint, they announced as two years ago, it took way longer than expected to close. So clearly, they are just really keen on executing here and want to get it done as quickly as possible. So definitely positive news for Arb’s involved closing earlier than expected with respect to the latest closing guidance. You also mentioned, the other interesting aspect is the notion of recycling capital within the merger arbitrage space, because certain deals, even though they’re independent of other deals, they definitely do affect each other. If you have a lot of capital recycling from Sprint, T-Mobile, that’s got to find a home in other merger, and acquisition transactions because you have merger arb investors that need to put that capital worth. They now have excess capital as this deal closes.
So certainly, you can see spreads tightening when something like this happens. And the other point I want to make in terms of what happens in one certain M&A situation can have broad effects on spreads of other deals. In contrast to this, closing is back in February when they got court approval and Sprint stocks skyrocketed. There is actually a large hedge fund that had a short position, and their merger arbitrage desk, they reverse the spread, thought the deal would break and wanted to profit if it did fall apart. Bad call on their part, suffered big losses, ended up firing the head of the desk, head the merger arbitrage desk, and then in March, rapidly unwinding their whole, or a large chunk of the merger arbitrage book, which the media reported that did perhaps contribute to the massive blowout in spreads that we saw in mid-March. No one really knows at this point. That is all just rumour, but that is something to consider. Is these knock on effects that one deal can have with respect to spreads on other deals but to wrap up this segment, why is this transaction so important? We really just want to highlight that. Look, strategic deals continue to get done. They continue to close, don’t believe that all the panic in the market is going to prevent that, so that’s really something to consider.
SOFTBANK PULLS $3 BILLION WEWORK TENDER OFFFER
Julian Klymochko: In terms of tender offers that failed. Softbank, the Japanese conglomerate, they pulled out of a proposed $3 billion tender offer for WeWork stock. Now, this was not a financing but it, was a deal that was supposed to cash out previous or current shareholders. Mostly to the benefit of former CEO Adam Newman, in which this tender offer was part of his exit package.
Now, Softbank, they blame their change of heart on certain conditions of the offer not being satisfied. This deal was initially hammered out in October as part of Softbank rescue for WeWork. As you recall, from listening to our episodes of the podcast back from October, we talked about a lot about WeWork rescue package and how Softbank had to fund them after their failed IPO and they are left basically running out of money, teetering on the brink of bankruptcy. So co-founder, former CEO Newman…Adam Newman, ousted as part of the deal. He was actually set to sell up nearly 1 billion dollars of shares in this three billion dollar tender offer. And that in of itself was quite controversial. He was getting this massive exit package, cashing in on a billion dollars of stock, while many people at the company, many employees were struggling. Their options were underwater. They are getting fired. WeWork was desperately trying to cut its expenses.
And really why they’re pulling out on this deal, they cited a number of reasons. They indicated WeWork failure to receive antitrust approvals, the, quote, “multiple new and significant pending criminal and civil investigations,” so a lot of bad stuff happening at WeWork. If we wanted to talk about corporate victim of COVID-19 in terms of businesses during the worst. It is tough to find a worse business than WeWork for this environment. They have this asset liability liquidity mismatch where they go out and sign these long term leases and then rented out on a short term basis. But with everyone now working from home, they’re stuck with these massive long term leases and no near-term revenue as all their clients are now working from home. So certainly, they are an incredibly tough spot. No surprise that Softbank is pulling out on this deal.What are your thoughts on why they are reneging on it here?
Michael Kesslering: And just specific to your comments just now about their business model? I mean, that was the entirety of their business model. Was that they would grow to such a scale that they would become systemically important to the entire commercial real estate sector.
Julian Klymochko: Well, they are the number one tenant of Manhattan real estate, aren’t they?
Michael Kesslering: Yes, and so like basic part of the downside or well, I guess the upside case. Was that even in an economic downturn was because they were the largest tenant in New York, as well as some other major markets globally, that they would have enough sway that they would be able to pressure landlords into relieving them of their obligations, but that is something that really hasn’t been done before. And so there really wasn’t much of a roadmap and it’s based on some pretty dubious assumptions. But at the end of the day all that would help them is for them to lessen their obligations. It still would not likely make them profitable so it’s just to lessen some of the downside was part of the bull case there but yeah, like I said on dubious assumptions, really.
But back to this actual tender offer, as you had mentioned, like this was just optically really poor for both WeWork, that continuing company, and Softbank. And after Softbank announced they were no longer going to go through with this tender offer. Their shares did increase as Softbank has taken a ton of reputational damage over the last year. Well I guess really since fall of 2019 regarding their WeWork investment and as well because of that, one’s everybody is looking at their portfolio. There were a number of other portfolios stocks or private companies that were going down. WeWork really as well as Softbank, really taking a lot of reputational damage here.
Among the other firms that would have been, benefiting from this tender offer would be Benchmark Capital. I believe they would have represented some of these shares being tendered but as Softbank had mentioned, really, only 10 percent of the tender shares were going to go towards current employees. And with that, Softbank has actually, I believe they’re repricing some of the employee stock options that are just wildly underwater to which is just an obvious step to ensure that the employees running the company are still properly incentivized. But really nothing much more to say on this other than, I don’t think this story is over yet. As Adam Neumann still retains his shares but I guess, to go back as well. Softbank already had a majority stake in the company, so this was not entirely necessary. They still do have control of the company, so Adam Neumann is now a minority shareholder under the control of Softbank at the end of the day.
Julian Klymochko: Softbank has invested over 14 billion into WeWork and as we indicated right from the start, this was just a really, really bad deal. Not surprised at all that it is falling apart because there is really going to cash out Neumann and Benchmark does not affect the WeWork the company because they were not actually issuing any shares. So the company wasn’t going to see any proceeds from this. Clearly, this is going to go to litigation. These companies are going to battle this in court but it appears that Softbank or WeWork just has not satisfied the conditions. So in terms of an acquired pulling out of a tender offer, it is in your right. If the conditions are not satisfied, the other overarching theme here to consider is that WeWork had this really weird kind of tech-ish profile just last year. They’re this massive growth company, They’re going to IPO at 80 billion dollars. That was a massive failure, investors looked at their books and it was just a disaster. Their valuation came down 90 percent to 8 billion, and now this recession hit and their equity is actually looking worthless. And that’s why it’s really tough to justify a 3 billion dollar tender offer cashing out some rich people at a valuation north of 10 billion dollars. When you look at WeWork publicly traded bonds and they are trading at highly distressed levels, 37 cents on the dollar. That is where WeWork Bonds are trading, and when a company’s bonds are trading at 37 cents on the dollar, that implies that it is going to go bankrupt. The equity is going to be worthless and the bonds are likely going to be highly impaired such that you are not going to make back much of your investment, even on the debt side of the company.
So WeWork highly distressed. They require likely another rescue in this environment. Bonds implying bankruptcy, tender fell apart. It is a bad situation, but ultimately does not make sense for Softbank to continue throwing good money after bad, so we will see where this one goes but certainly an interesting litigation. This is where the lawyers take over and make all their money, so we are going to leave it at that.
XEROX ENDS ITS HOSTILE PURSUIT OF RIVAL HP
Julian Klymochko: Another deal that fell apart. Xerox and we talked about this deal in the past. What Xerox-HP situation was? Xerox went hostile with the backing of Carl Icahn to try to acquire HP. And the really interesting aspect and the reason we gave this such low odds prior to the whole pandemic and recession coming was that HP was roughly 4 fold the size of Xerox. So that right there is, a mass of a hurdle to clear when Xerox was 7 billion and this was like a 30 billion dollar acquisition. We called it the Menno trying to swallow the whale, which is even in the best of markets, is an incredibly difficult thing to do so Xerox; they launched a hostile tender offer. They also launched a concurrent proxy battle to try to replace HP board of directors, because HP, the board of directors, just said, you know, we don’t want any piece of this deal. It is a bad deal, using way too much leverage, it does not make sense. So Xerox sufficiently pulled the plug on this whole longshot hostile takeover of rival HP this week. They stated that the pursuit of this highly leveraged transaction was not prudent given the pandemic and the resulting bear market. Clearly, you know, their financing might have been affected, but really no appetite for investors for this type of transaction. Talking about some price action, HP shares down fifteen percent this week. But when we previously talked about it, we always viewed it as pretty much a long shot. Market pricing and pretty low expectations and really just wanting to communicate to investors that this deal falling apart is not indicative of what you should effect from the broad M&A market in this environment. It is really not reflective of the increased risks due to COVID-19. Clearly, that had an effect, but we always thought that this deal stood a low chance irrespective of the current recession before that even happened, and we had market at all-time high valuations, in January and February. It still looked highly unlikely just given the dynamics, the extreme leverage and be resistance from HP board of directors. What are your thoughts on what is happening on Xerox and HP, which with respect to post-mortem now that it has officially, been called off?
Michael Kesslering: I am glad you brought up the distinguishing between the Xerox/HP transaction and higher quality transactions that are in the market right now in the merger ARB space, as well as I guess we should clarify for some of our listeners with the Softbank/WeWork transaction. WeWork is a private company so that tender offer, you know, that is not something that would be on the radar of any merger ARBs. So not really relevant to merger ARBs, just something interesting in the overall investment world.
But that’s the thing, is that in a market like this, it would be very interesting if high quality deals, deals that were trading at, narrower spreads if those were breaking then that would be a lot more cause for concern. but a very speculative deal that in all of our discussion on the podcast about this deal. We really just talked about low of a probability that it would be for this transaction to close in its current form, even at the end of the day, like if you take out the risk of the external financing that Xerox was looking for and had come to terms with. At the end of the day, HP, at that time, their comments were just that the consideration offered at $24 share just was not properly valuing HP. Now, the fact that HP is now traded down to under $15, that’s not really you know, it’s not really fair to say that they would be happy to have that $24 now but really, at the end of the day, to summarize, this was very, very speculative deal, not indicative of the overall merger ARB space. If you had one of those A-plus deals, I would be a lot more worried about the space.
WHITING PETROLEUM FILES FOR BANKRUPTCY AS THE FIST INSOLVENCY OF THE OIL-PRICE CRASH
Julian Klymochko: Yeah, that makes sense and I wanted to chat finally about the other side of a coin, a deal that is not M&A, but at restructuring. So what we had was U.S. shale oil producer Whiting Petroleum. They filed for Chapter 11 bankruptcy, really just dealing with the plummeting oil price. They had too much debt and with WTI oil prices crashing, they could no longer really meet their obligations. WHITING was actually once the largest oil producer in North Dakota. So big into the Bakken trend. What they are looking to seek in this Chapter 11 bankruptcy, they are not liquidating or anything. It is just a reorganization, a restructuring of the company, so a different type of deal. We typically talk about mergers and acquisitions, merger arbitrage, but there is a different aspect to investing that involves distressed debt investing. And there’s a lot of firms that specialize in buying the bonds of bankrupt companies and this is really where that comes into play and where, in my opinion, this is just a start of a massive distressed debt investing cycle, kind of like what we saw coming out of 2008/2009. You see a lot of companies go bankrupt, reorganize in court and they look to swap debt for equity.
What Whiting looking to do in their Chapter 11 filing is basically convert two 2.2 billion in debt convert that into equity as of December 31, they had 2.8 billion in debt and about half a billion in cash. So they are looking to convert most of the debt on their balance sheet, reduce those obligations converted to equity, give bondholders equity ownership in the pro forma reorganized entity.
You are wondering why this company ended up with so much debt? Well, it was from an M&A deal. They bought Kodiak Oil and Gas, which was a public oil and gas producer in mid-2014, paying six billion dollars. That included two point two billion dollars in debt. Unfortunate timing on that one. That was right before the 2015 oil crash, and oil producers really have not been able to recover from that one. They have basically been continuously kicked in the teeth in 2020. It has just gotten bad as it has gotten so much worse for oil producers, so I don’t think this is going to be the only oil producer, large oil producer filing for bankruptcy. I think Whiting Petroleum, just one of many dominoes to fall here, some price action. Whiting stock hit thirty-seven cents. You might be wondering, “why is their stock not zero? I thought the bankrupt company’s stock goes to zero?” Well, the current proposed bankruptcy. Current shareholders, if you look at stock WLL. They actually could end up with some ownership of 3 percent of the pro forma post reorganization equity, so there could be some value for equity holders here. But I mean it’s just a penny stock for now. We were short the stock in the past, but no longer short. We recovered a number of weeks ago as it drifted lower into a penny stock. It is really tough to short stocks lower than a dollar.
So it really shows short sellers the benefit of having short sellers, because when a company is going bankrupt and long investors want to exit at something higher than zero, that is where short sellers are typically covering their short and giving some sort of price consideration to long investors wanting to exit. Whiting was as large as 15 billion dollar market cap that has shrivelled to as low as 30 million. Really, the stocks been absolutely demolished over the past kind of five years. What are your thoughts on this bankruptcy filing? Think that we are going to see more coming out of that oil space with this massive crash and this bear market that is really affected, affected the oil space kind of it’s been like a five year thing that has just gotten substantially worse and never better.
Michael Kesslering: Yeah, bear markets such as these are really, really shows some of the bad corporate governance as well as highlight some of the good corporate governance and companies. But for the most part, highlight the bad and so in this situation there. This was one of the more egregious things that I have seen is that days before they filed for bankruptcy, their board actually approved a fourteen point six million dollars in cash bonuses for their top executives. I believe about six and a half million of that went directly to the CEO and then the rest was split amongst five other executives, and like that, that is an absolute scumbag move.
Julian Klymochko: Just disgusting. Companies bankrupt and people are losing their jobs and the people responsible for driving it into bankruptcies. Bankruptcy, shareholders losing pretty much everything, bondholders going to get hosed. The people that are responsible are getting richly rewarded. I mean, 14 million dollars in bonuses to what, five or six people responsible for doing that? Should they win the lottery for such an incredibly bad performance? It just make me sick.
Michael Kesslering: Yeah, it is just really like breaking the windows on the way out of the store. I will note now, this is sarcasm is just seeping from me right now but I will note that the executives did forfeit their equity awards. They were in line to receive at the same time as they received this cash bonus. So these equity awards that are worth absolutely nothing.
Julian Klymochko: Yeah,
Michael Kesslering: They did forfeit those, so that is a pretty great move of them. I do have a direct quote as usual. I don’t like doing direct quotes from companies, but this is just laughable. The company did say, “It was intended to ensure the stability and continuity of the company’s workforce and eliminate any potential misalignment of interests that would likely arise if existing performance metrics were retained”. Very, very interesting messaging from the company. I did want to focus a little bit more on that bad corporate governance as we do have one example that hits a little bit closer to home Encana which re domiciled in into the US and change their name into Ovintiv. Which I will disclose that we are short to the company but Eric Nuttall of Ninepoint Partners. A fund manager for a small and mid-cap energy fund, pointed out this was on March 25th that Ovintiv CEO actually got a 6 percent total compensation increase despite their stock falling 86 percent year to date, which is absolutely ridiculous to be getting an increase at a time like that.
Well, also, he also brought to light the fact that their CEO only had about ninety thousand shares that he held himself. And at their share price, which I believe is sub $4, makes up a few hundred thousand dollars where his total compensation, I believe was around twelve million dollars, which including that 6 percent increase. So just that, you know, his yearly compensation being in the $12 million range, really not at all aligned with shareholders where you compare that to, say, Canadian Natural Resources, a Calgary based company that has actually cut their CEO’s salary 20 percent, where they were also making cuts to the salaries of their frontline workers as well. But their CEO did take a higher cut, which optically is just a lot better solution. And lastly, sticking moving outside of the energy industry just on a little bit of corporate governance, not only just corporate governance, that seems to be outright fraud, where Luckin Coffee, which was a popular company, they were competing with Starbucks in China and they IPO. There was much fanfare to their IPO in March of 2019 but basically what happened here was that about over three hundred million dollars worth of their sales were fabricated last year, which works out to about 40 percent of their annual sales.
Julian Klymochko: Yeah, massive fraud.
Michael Kesslering: Yeah, absolutely. Like this is the biggest, biggest stock fraud that I’ve seen in the Chinese market as their market cap topped out around I believe it was $12 billion USD. The companies announcing that investors should no longer rely upon their previous financial statements, just an absolute disaster. And I guess bringing light to this fraud were a few firms being this was, I believe, a couple of months ago when Muddy Waters came out with their, it was an anonymous short report, but it was later confirmed that it came through Muddy Waters, a activist short seller where they called into question. They brought up outright fraud, as well as bringing into question the overall unit economics of their business as not having been a customer. But I guess they do use very aggressive discounting strategies where many customers described never having paid full price for a coffee there. So really just an unsustainable business model, plus a fraud, which is a short seller’s absolute dream. So the shares are down 90 percent from their high of around 50 dollars per share in IPO just in March of 2019, so really only a year old at seventeen dollars at just over $5 now. Looks like it should be a zero but that is the difficulty. Where on the way down as a short seller, there can be some dead cat bounces as the stock does go to zero, and I believe Jim Chanos was also short this stock and along with Muddy Waters. And he was on CNBC I believe it was this past week saying that he’s already covered his shorts, so it looks like the shorts have already got out on the 90 percent drawdown.
Julian Klymochko: The other thing to consider, they actually trick a lot of smart investors, a lot of smart investors on the shareholder register, on Luckin Coffee but with respect to corporate governance, I mean, I can wax-poetic all day on poor corporate governance. It is something that investors should really consider when considering buying or shorting a stock, but I digress on that. Basically, these egregious executive compensation, you can’t own a stock that, like you said, were short Ovintiv, horrible corporate governance, egregious executive comp for incredibly poor operating performance. That is something you definitely don’t want to see as a long, lonely investor. It is a great sign if you are a short seller. I mean, that is a great indicator of future share price performance. And you also mentioned on the opposite end of the spectrum, Canadian Natural CNQ, a stock that we got to disclose that we are long a stock that has good corporate governance, great operating performance. And as I indicated, investors got to be aware that corporate governance, executive compensation, all these things have decent predictive ability of future share price performance so take that into account when evaluating securities for your portfolio.With that said, that wraps it up for episode 60, one of The Absolute Return Podcast. If you liked it, you can check out more at absolutereturnpodcast.com. You can check us out on Twitter or my handle is at @JulianKlymochko, K-L-Y-M-O-C-H-K-O, and Mike, your handle is?
Michael Kesslering: @M_Kesslering. That K-E-S-S-L-E-R-I-N-G
Julian Klymochko: That is it Ladies and Gents, we hope you have a great week in your investing and trading. And until next week, we’ll chat with you soon. Cheers.
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