John Malone Describes Amazon As "Death Star" Moving "In Striking Range Of Every Industry On The Planet"

Famed cable and media investor John Malone, a man who repeatedly manages to cobble together some of the most complicated, and profitable, financial transactions in the world, appeared on CNBC this morning with a message for anyone in the "B2C business"...Amazon is going to use their scale to destroy you.  Speaking with CNBC"s David Faber, Malone hilariously described Amazon as a "Death Star moving into striking range of every industry on the planet."

The internet "makes scale even more important in the media business, where scale always was important. It"s all about scale," he said. Netflix was "the first wave. And I think Jeff [Bezos] is gonna be the most disruptive. As [his] Death Star moves into striking range of every industry on the planet."

 

He explained that Amazon"s business dominance is growing stronger. Malone said any company that sells products to consumers is at risk of being crushed by the e-commerce giant.

 

"If you"re in the B2C business, if you"re selling anything to any consumer anywhere on the planet, you gotta believe that Amazon is gonna have a look at that opportunity to commoditize you to use scale to serve the public," he said. Bezos is "reducing cost to the consumer and providing great convenience ... You just got to take your hat off and envy what he has built."

Ironically, just yesterday we noted that Amazon"s "Death Star" had moved the grocery industry directly into its sights and is preparing to fire (see: Amazon Says It"s "Almost Ready" To Get 1,000s Of Grocery Store Cashiers Fired)...

Late last year we noted Amazon"s efforts to "disrupt" the traditional grocery retail model by introducing small format stores that allow customers to simply walk in, pick up what they want and walk out.  The concept store, dubbed AmazonGo, tracks a customer"s every move, including each item they remove from store shelves, allowing them to skip long, often frustrating, check out lines (see: Amazon Goes Offline With Bricks-And-Mortar Grocery Chain; Envisions Opening 2,000 Stores).

 

Now, after nearly a full year of testing their Seattle concept store with employees, Amazon says their cashier-less grocery store is just about ready to go live.  As Bloomberg notes this morning, the company has already begun hiring construction managers and marketing staff to build out a store base.

 

The e-commerce giant unveiled Amazon Go last December, saying it planned to open the store to the public early this year. However, the company encountered technical difficulties and postponed the launch to work out the bugs, The Wall Street Journal reported in March.

 

Seven months later, challenges remain, but the “just walk out” technology has improved markedly, says the person, who requested anonymity to speak freely about the project. And in a sign that the concept is almost ready for prime time, hiring for the Amazon Go team has shifted from the engineers and research scientists needed to perfect the platform to the construction managers and marketers who would build and promote the stores to consumers.

With that, here is the full interview with Malone:

David Einhorn's Presentation How GM Can Unlock Between $13 And $38 Billion In Value

Moments ago, General Motors holder Greenlight Capital released a presentation in which David Einhorn recommended that GM should distribute, on a tax-free basis, a second class of common stock that the holder calls “Dividend Shares.”

Greenlight wants GM to split its common stock into two classes: one that pays dividends and a second that would entitle its holders to all earnings, including stock buybacks, after the dividend is paid, according to people familiar with the matter. Greenlight believes the move could attract new investors who are willing to pay more for potential earnings growth. GM has a market value of about $52.2 billion, and it pays an annual dividend of $1.52 per share.

The Dividend Shares should trade separately from the existing common stock. As shown in the presentation below, Einhorn believes that the proposed plan will unlock between $13 billion -$38 billion of shareholder value.

However, as CNBC"s David Faber reports, GM said to not agree with Greenlight’s proposal as it would jeopardize GM"s IG investment rating. Even so, GM shares are up 3% after Einhorn"s activist presentation.

As Bloomberg confirms, GM rejected the proposal to create 2 classes of stock, saying proposal is too risky and David Einhorn’s plan is “unproven." Somewhat ironically, GM also said that Einhorn proposal could lower share price, and that it has spent months talking about the proposal.

To be sure, this is not the first time Greenlight has pushed for higher prices at GM, which is one of his top holdings: Einhorn has said as far back as October 2012 that GM had a cheap valuation.

His full presentation below (link).

Stocks Slide After Catalyst Confirms It Was Behind The Market Ramp

Confirming what we detailed previously, the levered option fund "Catalyst" CEO just announced that their forced-buying has concluded.

In a statement issued to CNBC"s David Faber, Catalyst Fund"s CEO admitted that it had a number of short call options for Feb S&P500 expiration this week but that it no longer has kind of position "at this time", adding that it had taken action "to buy back options, though wasn’t forced to sell" which caused some losses to the fund and has had some drawdowns, though not under duress "or anything like that" currently and its positions are "pretty neutral."

Per the Catalyst statement provided to CNBC:

... we no longer have that type of short position at this time. Consistent with our overall risk management strategy we have some draw-downs where we decided to take action and we are pretty neutral with our positions at this point.  

We finished adjusting the portfolio.

I"ve seen some things in the press about the fund and short term forced-buying, we"ve had no margin issues.

The fund is under no duress or anything like that. We weren"t forced to sell."

The Catalyst Hedged Futures Strategy Fund (HFXAX) net asset value has tumbled 13.5% YTD, and has $3.4b assets under management, according to Bloomberg data,.

And just as we warned was likely, once that forced buying ended, stocks tumbled:

So now we find out, just how much of the last 150 S&P points are due to the liquidation of "Catalyst" (and strategies like it)?

As RBC"s Charlie McElligott warned:

This equities upside short-gamma grab has taken out a ton of ‘bid on the downside’ in equities index, in the case that we were to see any sell-off post a Trump speech disappointment.  This lack of cover-demand on a vacuum-move could see sloppiness develop, as it seems that the data and Fed itself are no longer dictating the market story at this stage - whether stocks, fixed-income or vol.  “Policy” is now firmly “in the driver’s seat,” and that is where I see the least degree of confidence in the market.

I’m worried that this stock ‘melt-up’ move is extraordinarily mechanical right now - almost entirely the aforementioned forced-covering, not high conviction induced-buying - and may be sending a “false signal” which is potentially dragging-in new buying on the breakout to new highs.

As he concludes: "This could lead to a scenario where a market can “collapse under their own weight." Indeed, because if one removes the forced buying from the "blowing up fund", there is certainly a long way down.