Bireme Capital Execs Bet Musk Will Be Forced To Close $44-B Twitter Deal
Musk shocked the markets on July 8 by declaring his intention to terminate his agreement to buy the social media giant at $54.20 a share, a price that valued it at $44 billion, Shawn Tully reported for Fortune.
Photo Insert: As shocking as Musk's Twitter purchase announcement was his backing out of the deal.
In mid-July, Evan Tindell and Ryan Ballentine, made a wager that veered far from their usual Benjamin Graham/Warren Buffett–inspired deep value strategy.
The founders of midsize money manager Bireme Capital invested $9 million in a stock whose fundamental value stood well below where it was trading, but that they deemed was a lock to soon be sold for 40% more—at the full price that a wild man, mega-billionaire celebrity tycoon signed a contract to pay, in a horrendous deal he was now flailing to flee in an epic attack of cold feet.
It was a sport these two warrior-athletes in their mid-thirties couldn’t resist: Tindell was a three-time All-American tennis star at MIT and tried his hand as a professional poker player, and Ballentine captained MIT’s hockey and lacrosse teams.
You won’t have to guess that they lined up to serve and took to the ice in the most watched, handicapped, mythologized takeover game in history: Elon Musk’s zany quest to dump the broken property that weeks before, he’d committed a king’s ransom to fix—Twitter Inc.
Tindell and Ballentine bought their Twitter stake at between $35 and $36 a share around the time Musk shocked the markets on July 8 by declaring his intention to terminate his agreement to buy the social media giant at $54.20 a share, a price that valued it at $44 billion.
On the news, Twitter tanked from $39 to the low- to mid-$30s. “Most investors were missing something big,” says Tindell.
“We figured the chances the deal would close at $54.20 was over 90%, yet in the mid-$30s, investors were only giving it a 50% to 60% chance of happening. That was a huge gap between our view and the market’s view. You don’t get a lot of opportunities like that.”