Dillard’s Shares Skyrocket After Buffett Protege Discloses New Stake

Plus, stimulus negotiations are still at an impasse, Twilio is buying consumer data infrastructure company Segment, and Mallinckrodt filed for bankruptcy.

Stocks were higher to start Monday with the Dow gaining 151 points, or 0.6%. The S&P 500 added 0.8%, while the Nasdaq rose 1.2%.

A bid to break the stalemate on stimulus negotiations fell flat over the weekend, even after President Donald Trump pushed for a larger deal. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi are expected to talk more this week, though even if they strike a deal, there’s little chance of getting legislation written and passed by Congress before the election. Trump’s whipsaw position changes last week—first calling off negotiations in a tweet, then proposing piecemeal bills, then calling for a bigger package than even Democrats have proposed—may have hardened Pelosi’s resolve to stick with a $2.2 trillion proposal House Democrats passed recently that Mnuchin countered with a $1.8 trillion stimulus plan. On Sunday, Pelosi called the White House’s counter offer a “miserable and deadly failure,” while Trump accused Pelosi of dragging out negotiations in an effort to “influence the election.” White House economic adviser Larry Kudlow said the Trump administration may increase its offer, but didn’t provide any specifics, telling CNN, “The bid and the offer is narrowing somewhat between the two sides.”

As the U.S. approaches 7.8 million confirmed coronavirus infections, new cases and hospitalizations are on the rise in 36 states causing some experts to sound the alarm on the start of a new wave. “We are all seeing increasing numbers of COVID-19 patients who are coming into our ERs, who are getting really sick, requiring hospitalization and even intensive care,” Dr. Megan Ranney, an emergency medicine physical with Brown University in Rhode Island, told CNN. “We are all deeply afraid that this is the beginning of that dreaded second wave. We still don’t have adequate personal protective equipment for physicians and nurses on the front lines across the country. We still don’t have adequate testing supplies. We’re quite fearful for what we are heading into.”

Twilio shares are up more than 5% this morning after the cloud communications provider announced that it is acquiring Segment, a customer data infrastructure company, for $3.2 billion in Twilio Class A common stock. “Together, Twilio and Segment have an incredible opportunity to build the customer engagement platform of the future,” said Peter Reinhardt, Segment’s co-founder and CEO. We created Segment to help businesses set themselves apart in the digital age and deliver rich, connected customer experiences built on high-quality data. By joining forces and applying our customer data platform to Twilio’s engagement cloud, we’ll be able to make the entire customer experience seamless from end-to-end.” Twilio CEO Jeff Lawson said Segment helps companies “break down silos” of information across disparate systems to offer a complete picture of their customer. Combined with Twilio, the companies can create a “more personalized, timely and impactful engagement across customer service, marketing, analytics, product and sales,” Lawson said.

Dillard’s shares have skyrocketed nearly 33% this morning after Ted Weschler, an investment manager at Berkshire Hathaway, disclosed a stake of 1.08 million shares of the struggling department store. While Dillard’s shares are down more than -42% so far this year, the retailer reported a much smaller-than-expected quarterly loss thanks to inventory and cost control measures. Weschler joined Berkshire Hathaway in early 2012, and has been responsible—alongside Warren Buffett’s other protege Todd Combs—in recent years for steering Berkshire into some winning bets in the technology sector.

And Mallinckrodt is down more than -30% after the company filed for bankruptcy protection today. The drug manufacturer has been saddled with lawsuits alleging it fueled the U.S. opioid epidemic and lost a court battle to avoid paying higher rebates to state Medicaid programs for its top-selling drug. Mallinckrodt listed both assets and liabilities in the range of $1 billion to $10 billion in a filing with the U.S. Bankruptcy Court for the District of Delaware. The drugmaker has said it will implement a restructuring support agreement that would provide for an amended proposed opioid claims settlement—after saying in February that it planned to have its generic drug business file for bankruptcy as part of a tentative $1.6 billion opioid settlement to resolve claims by state attorneys general and U.S. cities and counties—and a financial restructuring. In bankruptcy protection, Mallinckrodt said it seeks to resolve opioid-related claims and to reduce its debt by about $1.3 billion, while surviving on cash-on-hand and cash generated from operations.

Stocks We’re Watching

Zoom Video Communications (NASDAQ: ZM): Zoom shares got a boost on Friday after Mizuho Securities analyst Siti Panigrahi issued a Buy rating for the stock and a $550 price target – nearly 12% higher than the price as of this writing. “Zoom’s meteoric rise during COVID-19 has been driven by uptake of its best-of-breed video conferencing tool, which became a global sensation almost overnight,” Panigrahi wrote in a note to clients. “We believe Zoom can continue to deliver outsized revenue growth due to its position as a market leader, its global recognition, cross-sell opportunities, and its position in a growing and underpenetrated long-tail market.”


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