A Must Read DD, I made an earlier post here today - I suspect we will be in the dark until Feb 17, so here's some info to help until we make lots of money. This post is long and speculative - it's weeks of thinking and many hours of research. Let me know what y'all think.
To preface this post - I suspect in a few weeks, we will start to see articles like the following: Link
Background
PSTH is playing out very similarly to the QSR (Restaurant Brands International) merger from 2014. Here's a quick summary for you:
3G Capital (Alex Behring and Jorge Paulo Lemann) bought a controlling stake in Burger King in 2010
Alex Behring graduated with Bill Ackman from Harvard's MBA program in 1995.
Jorge Paulo Lemann is close friends with Warren Buffett. They are both heavily invested in Kraft/Heinz.
3G Capital is a Brazilian/American fund
In 2014, Ackman coordinated a deal for 3G Capital to buy Tim Horton's. This created Restaurant Brands International (QSR). 3G Capital through Burger King put forth $9b and Warren Buffett provided a $3b pipe.
This was likely coordinated through Ackman/Behring's friendship from school partnered with Lemann's friendship with Buffett.
This merger between Burger King and Tim Horton's was a wild success. All parties benefited greatly and saw massive returns.
Then and Now
PSTH now enters the picture, but the only remaining player is Bill Ackman (and the analysts on PSTH - many are the same as the BK merger). Bill has created the largest SPAC in the history of SPACs with an investor friendly structure that indicates long hold positions - let's speculate!
On the previous PSH Investor call, Bill mentioned the following:
And you can now see a 13F list of our investors. You can form your own view on the ones that have to file 13Fs, but there are many extraordinary investors that don’t file 13Fs, including sovereign wealth funds that own less than 5% of PSTH and the large number in the dozens of family offices globally kind of billionaire family offices that have -- that bought stakes in the IPO and we think this shareholder list will be -- and is actually will be an asset for us in finding a potential target.
As many of you have noted in this subreddit - this was the smoking gun. How does this all work?
In this statement, Bill is confirming that he is recruiting for PSTH. I do not want to speculate on the sovereign wealth fund, but I do want to speculate on the others.
3G Capital is a unique fund - similar to PSH, they invest in few holdings, but they also file certain positions into private funds that are not disclosed in a 13F. In reviewing their information on WhaleWisdom, we see there are private funds set aside for their QSR, Kraft, and other investments. These are not public, and have $100m's set aside for investments.
Speculation: 3G Capital has built an investment in PSTH via a Private Equity Fund
We already know 3G has a history with Ackman given his relationship with Behring and the BK merger. 3G as a Brazilian investment firm clearly does not release all information on their holdings. If they did release a stake in PSTH, everyone would clearly understand what is happening.
3G Capital has two private equity funds:
3G SPECIAL SITUATIONS FUND IV LP - $3.4b under management
3G RADAR SPECIAL SITUATIONS FUND I LP - $47m under management
Both funds are closed private equity funds, meaning they do not disclose positions. We effectively have $3.5b undisclosed assets that could easily be positioned in PSTH.
3G has two major plays in the past 3 decades - Restaurant Brands (BK/Tim Horton's Merger with Ackman), Ambev, and Kraft Heinz (Kraft and Heinz merger with Warren Buffett). They've since left their Ambev investment (at least it isn't disclosed on their website or elsewhere), and the remaining two deals account for ~ 83% of their net assets. They are on the hunt for their next major investment.
When 3G Capital enters positions - they enter long term equity positions and look to push the company to new heights. If you look at the history of their BK/Heinz/Ambev - they are top class in mergers and growth style investing. Interestingly enough - their latest 13F show new acquisitions in a plethora of tech unicorns, indicating they have a new found interest in this sector.
Other interesting notes about 3G capital:
3G and Buffett attempted to take over Unilever in a $143b bid: Link
3G has a position in CSX from 2008-2011, which Ackman tried to merge with CP: https://www.railwayage.com/regulatory/cp-ackman-cashes-out/
Speculation: Buffett is a pipe investor
Buffett unfortunately does not have the same luxury as 3G Capital and clearly posts his positions every quarter. However, last quarter, Buffett did note an undisclosed position on his 13F filing. It is estimated that Buffett's undisclosed position is $9b.
A few things to note about Stripe/Buffett:
Stripe recently raised new funding worth between $70-100b: Link - the details have not yet been announced and funding is not confirmed
Speculation here: Buffett has recently been building a position in fintech companies - including STNE (#3 holder) and Paytm (private)
Buffett could not have invested in PSTH - if he has 5% of a publicly traded equity, it has to be disclosed unless the SEC chooses to hide it. Buffett likely went as a pipe investor for Burger King in order to not disclose the details too early.
My guess here is that the $9b (or some portion of it) went towards funding Stripe. PSTH is the other player involved in the funding. The fact that we haven't heard an update on Stripe's funding is super convincing for me - Ackman and Buffett teamed up to give Stripe a $100b valuation with a chunk of cash. Why would that happen? The most they can offer Stripe is $16b for 16% of their company (?).
Speculation: Stripe is buying Plaid
Many of you know that Plaid was offered a buyout by Visa for $5.3b, which the DOJ shot down: Link
Since then, Plaid has received valuations between $15-20b (link). That's a 3-4x their Visa deal. Additionally, Plaid has started hiring M&A roles (Communications) (both located in SF where Stripe is located).
Plaid has obviously shown an interest in being bought, is hiring for M&A in SF, and is being given a 3-4x valuation over a recently failed deal.
Thesis: Stripe is going public via PSTH and buying Plaid
With the iron hot, Stripe has a 1x chance to buy Plaid. They've recently developed successful integrations, and are an easy candidate to grow their business. Stripe is gearing up to go public (via recent hiring postings) and would need to raise capital to purchase Plaid. The easiest way to get the required capital would be PSTH + Buffett pipe.
Why Ackman and Buffett? Well they have a few unique options to bring to the table:
Elite merger management with 3G Capital
A world class investor list (via 13Fs and undisclosed investors like Buffett) - Patrick Collison has expressed a liking to Buffett (see Yolocapitalmanagement's posts)
Only Spac/Pipe able to provide the required capital for acquiring Plaid
Timeline for the announcement (given the deal is already signed):
Feb 15: Holiday
Feb 16: 13F disclosures are due - we likely will not see Buffett or 3G capital on PSTH
Feb 17: Reviewing 13F details (10-Q ruled out, unless they post their 10-K)
Feb 18: PSH (Ackman's fund) Investor Meeting (2-4pm) followed by Stripe Meeting (4-5pm) - this is when we hear about Plaid
Feb 19: Massive CNBC/Media Coverage
A shortened week allows for Ackman to dominate the media with the largest Spac/Merger announcement of the new decade.
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