Gamestop’s Ryan Cohen is either the new Buffett or the anti-Buffett

{"text":[[{"start":3.9,"text":"Once there were companies that made things. Furniture, shoes, violins. Then there were companies that bought other companies. And of course there are companies that do both, one of the most famous of which is Warren Buffett’s Berkshire Hathaway. The $475bn conglomerate owns a collection of assets from insurer Geico to confectioner See’s Candies, and held its vaunted annual meeting over the weekend."}],[{"start":29.049999999999997,"text":"Many have tried to excel in this middle ground between running and buying businesses, with varying degrees of success. Usually, leading the charge, is a self-confident billionaire. Bill Ackman has a blank cheque vehicle that is trying to buy Universal Music Group at, it says, a €55bn valuation. Brad Jacobs, a serial US entrepreneur, helms QXO, a so-called roll-up company that has done $30bn of deals in the building products industry within the last year."}],[{"start":61.25,"text":"Now there is GameStop. The pandemic meme stock launched a takeover bid for online auctioneer eBay on Sunday for $56bn, in cash and stock. To the point about self-confident leadership being a common theme in such situations, GameStop — run by former petcare retail tycoon Ryan Cohen — has a $12bn market capitalisation, of which $5bn can be attributed to its net cash position. Cohen today runs a pile of cash more than a company."}],[{"start":91.55,"text":"The differences with Buffett are pretty stark. For one, half of the eBay bid would be in shares, which are of highly uncertain value. GameStop is, after all, a meme stock. It has raised cash through the issuance of convertible bonds, a form of capital that appeals specifically to issuers with highly volatile shares. Buffett generally sticks to cash bids, which are easier to value. Nor does he generally wade in telling the world how much better he would be at running things than the incumbent CEO."}],[{"start":null,"text":"

"}],[{"start":119.1,"text":"Ebay has several potential ways to rebuff GameStop, should it want to. Aside from the choppiness of the equity currency, there’s the fact that a large part of the bid would be funded by, in effect, leveraging up eBay’s balance sheet — something it can do itself already. Its net debt was just 0.6 times its ebitda at the end of the March quarter. Cohen wants to turn GameStop’s 1,600 locations into physical eBay outlets. Again, should the company and its shareholders want to open stores, they can do that too."}],[{"start":149.04999999999998,"text":"The real pitch, then, is that Cohen is a visionary who can outdo eBay’s current management, led by Jamie Iannone. Some people clearly believe him, including Canada’s TD Bank, which has provided a $20bn debt commitment. Also, possibly, GameStop shareholders. The company has proposed awarding Cohen a bonus worth over $20bn if he hits certain targets, though it has yet to be approved by the company’s investors."}],[{"start":176.95,"text":"Buffett, for all his quirks, has seldom engaged in braggadocio, nor taken large chunks of stock options based on future market value targets. Based on the relatively unshowy nature of its shareholder meeting this year, his successors Greg Abel and Ajit Jain will be similarly modest. But there’s another difference worth bearing in mind: even with its heap of cash and Treasuries now worth $380bn, Berkshire Hathaway does not currently want to do deals. Let’s see if Cohen knows better."}],[{"start":216.39999999999998,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1777947851_1805.mp3"}