• Dunkin Going Private: Dunkin Brands Group, Inc. (ticker: DNKN) announced that it is in talks with Inspire Brands (a company backed by the Atlanta-based private equity firm Roark Capital) to be acquired. The potential $8.8 billion deal would result in DNKN being taken private for $106.50 per share. The pro forma company would include the Dunkin’ and Baskin Robins brands along with Buffalo Wild Wings and Jimmy Johns, which are already in Inspire Brands portfolio.
• Large Hedge Funds Struggle:  Since 2010 around $170 billion has been invested with hedge funds, of which $135B went to the largest ones. Traditionally, larger hedge funds have outperformed smaller funds during market downturns, however, that did not prove to be the case in 2020. According to Eurekahedge data larger funds, including Bridgewater Associates, Renaissance Technologies and Winton, are down an average of -4.4% while an index of smaller hedge funds have gained 0.64%. This underperformance has been impacting institutional investors that make up a large portion of these funds’ investor base.
• Treasury Positioning Continues: Many traders believe that, if polls are correct, there may be a Democratic sweep which will result in significant fiscal spending and consequently higher treasury yields. As the trades around this narrative have become crowded others have taken advantage of the relatively less expensive contrarian view that treasury yields will remain range-bound. In fact one trade last week with a $21 million premium will pay off should the 10-year treasury yield remains between 0.65% and 1% through 12/24.
• Coca-Cola Makes Moves: Coca-Cola European Partners Plc agreed to buy Australian bottler Coca-Cola Amatil Ltd on Monday. The $6.6 billion deal (a 19% premium to last trade) highlights the consolidation that may continue to occur in the soft-drink industry that has seen slowing sales due to coronavirus and consumers shift to more health-conscious beverages. This acquisition comes as CEO James Quincey is considering cutting over half of the companies 500 brands worldwide brands to focus on higher growth areas such as energy drinks and coffee-linked products.