>>> Silicon Valley insider: “If 2000 was a bubble factor of 10, we are at an 8 t

Silicon Valley insider: “If 2000 was a bubble factor of 10, we are at an 8 to 9 right now.”

If someone mentions the Dotcom Bubble, Pets.com is easily the first thing to come to mind.
The online pet product store failed hard and it failed fast. In just 268 days, the company went from IPO to liquidation, managing to lose $300 million in the process.
Yet it had looked good to investors, at least for a while.
Pets.com spent exorbitant amounts of money on advertising; its sock-puppet mascot was the 90s equivalent of a viral phenomenon.
But while the company spent hand over fist on advertising, Pets.com’s was losing money on every sale because they priced their inventory at BELOW cost. Duh.
Pets.com went public on the NASDAQ in February 2000 (right as the bubble burst) at $11 per share.
The stock peaked at $14, valuing the company at over $300 million. Not bad for a company whose business model virtually assured they would lose money.
But reality set in just nine months later. The company’s stock fell over 99%, and management announced they would liquidate.
Now… we could criticize Pets.com management all day long for a ridiculous business model. But bear in mind, investors bought the story.
People believed that profits didn’t matter. And back then it was typical for loss-making companies to be valued at hundreds of millions of dollars.
Have things really changed since then?
Facebook bought revenueless Instagram for $1 billion in 2012. Snapchat, the revenueless sexting app, is now valued at $10 billion.
There are so many examples like this. And like 1999, no one seems to care.
Silicon Valley investors keep writing huge checks. “Likes” are the new valuation metric. Not profits.
Several top Silicon Valley insiders are now hoisting the red flag saying enough is enough.
Bill Gurley, one of the most successful venture capitalists in the world, told the Wall Street Journal last week that “Silicon Valley as a whole . . . is taking on an excessive amount of risk right now. Unprecedented since ’99.”
Fred Wilson of Union Square Ventures echoed this sentiment on his blog, railing against the widely accepted model that it’s acceptable for companies to be “[b]urning cash. Losing money. Emphasis on the losing.”
George Zachary of Charles River Ventures wrote, “It reminds me of 2000, when investment capital was flooding into startups and flooded a lot of marginal companies. If 2000 was a bubble factor of 10, we are at an 8 to 9 in my opinion right now.”
As with all bubbles, it all comes down to there being too much money in the system.
Capital is far too cheap, and that pushes people into making risky and foolish decisions.
When you’re guaranteed to lose money on a tax-adjusted, inflation-adjusted basis by holding your savings in a bank account, almost anything else looks like a better alternative.
That’s why stocks keep pushing higher, why junk bonds yield a pitiful 5%, and why bankrupt governments can borrow at 0%.
Jared Flieser of Matrix Partners in Palo Alto summed it up when he told the Wall Street Journal, “You can’t afford to sit on the bench.”
In other words, money managers view NOT investing as losing, even if investing means taking huge risks.
It’s an abominable position to be in. If you do nothing, you lose. If you do anything, you take on huge risks.
This, of course, is thanks to a monetary system in which a tiny central banking elite conjures trillions of dollars out of thin air in its sole discretion.
History tells us that this party eventually stops, creating all sorts of unpleasant financial carnage. This has happened so many times before, and it would be arrogant to presume that this time is any different.
But it begs the question: what does one do? Is it worth trying to ride the bubble and try to get out before it all collapses?
Perhaps. But there are still pockets of value in the world that I would submit are more secure places to be.
In public markets, the junior mining sector has many companies that are trading for less than their tangible cash value. It is the exact antithesis of Pets.com.
In private markets, Startups in other thriving communities around the world (from New Zealand to right here in Chile) are valued at much more appropriate levels.
For yield, we’ve seen US dollar bank accounts in certain parts of the world paying upwards of 7%, and one low-risk company owned by the debt-free government of Singapore issuing bonds yielding over 5%.
There are options.
It’s like music. A lot of people think that music is dead. Where are today’s Led Zeppelin, Pink Floyd, Grateful Dead, Bob Marley, and Bob Dylan?
And based on the crap spewed out over the centralized, corporate-controlled radio, they’d be right.
But music is definitely not dead. There’s some amazing stuff out there. The corporate titans that control the system aren’t going to play any of it for you.
But it’s there. Just like the great investments. You have to look where no one else is looking. And you have to dig a little bit more to find gold.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

(BofA-ML) New US anti-tax inversion rules - thoughts on SHP & AZN

* Rules unlikely impact Shire completion. Pot’l barrier to AZN
The US treasury announced new measures overnight intended to dis-incentivise tax
inversion deals such as the proposed merger of US pharma Abbvie and Shire and
the previously failed bid for AZN by Pfizer (PFE). The new measures (here) are
based on the US treasury’s unilateral reinterpretation of the existing tax code
without new legislation (has been a prior sticking point and unlikely before mid-
2015) and were largely expected based on recent commentary from US treasury
secretary Jack Lew. Overall, we view the proposed rules as unlikely to prevent
completion of Abbvie’s acquisition of Shire (No Rating) but see them as potentially
further deterring a tax-inversion driven renewed bid for AZN (Neutral) by PFE post
its Nov 26th ban on making a new offer under the UK takeover code (although would
not preclude an

* Unlikely to impact Shire deal completion
Although they directly target the provisions likely to be used by Abbvie to extract tax
benefits from the Shire deal, we see the proposed rule changes as unlikely to
prevent completion of the Abbvie/ Shire merger since: 1) We believe that the new
treasury rules are likely subject to legal challenge by inverted companies to test if
they over-stretch the treasury's legal authority, a process likely to take several
years; 2) We highlight there are no specific tax inversion legislation conditions in the
acquisition agreement; 3) Abbvie has stated that tax is not the primary for the Shire
deal and that it has “excellent strategic fit” and “compelling financial rationale well
beyond the tax impact”; 4) We estimate the estimated £13/share tax inversion
benefit was already heavily risk-adjusted in the deal price given our base case valn
of £46 plus £6 upside from meeting Shire’s long-range plan and £5-9 of synergies
could justify the initial c£53 offer price without assuming tax benefits.

* Downside fair value is £46-£52 per share if Shire deal breaks
In the event the deal falls through, however, we highlight our base-case fair value of
£46 per share, or £52 assuming that the Shire long range plan is met, and that +ve
newsflow (Vyvanse litigation, 2Q EPS beat) occurred since the initial deal (ie wasn’t
reflected in the prior undisturbed share price).

* Rule changes a pot’l addn’l deterrent to PFE returning for AZN
For AZN, we view the rule change as reducing further the likelihood that PFE
returns with a new tax inversion driven bid post its 26 November block on making a
new offer under the UK takeover code (although would not affect any potential allcash
offer). Specifically, we would expect the rule changes to increase the risk
adjustment that PFE would need to apply to tax benefits in a renewed offer relative
to its last rejected proposal at £55 per share. When combined with a significant
increase in perception of AZN pipeline value through recent clinical data (eg AZN’s
PDL1 and 9291 at ASCO), the bid-ask spread only appears to be getting wider in
our view. See here for more details on our views on PFE/AZN.

(UBS) European Pharma. tax inversion

Tax inversion: Treasury actions a statement of intent, but Pfizer / AZN would still be accretive

* US Treasury takes 4 measures to limit benefits of tax inversion
Yesterday, US Treasury announced 4 actions to make corporate tax inversions tougher:
1) preventing 'hopscotch' loans, 2) preventing restructuring, 3) preventing the transfer
of cash/property, 4) making it harder for the US parent to lower ownership of NewCo
below 80%. These 4 measures, to apply to any deal that closes from now, seem a
statement of intent, although this is clearly not the final word: "Treasury will continue
to examine ways to reduce the tax benefits of inversions." We give our preliminary view
on these points below. This all makes a Pfizer bid for AZN less likely, in our opinion –
though these measures alone do not seem to rule out all tax benefits. We still argue
AZN would be EPS-accretive for Pfizer even without any tax inversion benefit (see page
2) – our stand-alone, pipeline-driven price target for AZN remains GBP50 per share.

* Action 1: hopscotch loans designed to avoid tax are now a target
Our interpretation is that this action stops "hopscotch" loans / creative loans from the
CFC: the previous practice where loans made by the foreign CFC to the US parent were
classified as foreign property, and therefore not taxed as a US dividend. This enabled
the US co to minimise its taxable earnings, and hence minimise group tax. We believe
these hopscotch loans were one of the significant drivers of the benefits of tax
inversions, so this measure looks as if it will have a meaningful effect on the tax
inversion benefits achievable

* Actions 2 and 3: restrictions on restructuring and transfer of cash/property
Action 2 is designed to prevent a foreign parent taking control of NewCo by
restructuring, and Action 3 prevents a new foreign parent from selling its stock in the
former US parent, in exchange for cash or property.

* Action 4: makes it tougher for former US parent to lower stake of NewCo
This action "strengthens the requirement that the former owners of the U.S. entity own
less than 80%" of NewCo. This looks less relevant to situations such as AZN and Shire;
the US acquirer seems to genuinely comply with the 80% maximum ownership. This
seems likely to impact those inversion deals where the US holding is very close to 80%.

>>> Smith & Nephew: Summer Street comments on potential Stryker (SYK)-SNN deal i

Smith & Nephew: Summer Street comments on potential Stryker (SYK)-SNN deal in light of evolving inversion news; maintain Buy
Summer Street notes, in light of the evolving inversion news, firm reminds clients that it has never viewed a potential SYK-SNN as an inversion deal - it would be a strategic deal ala ZMH-Biomet. Specifically, SNN has a reasonably high tax rate with a majority of sales in the US and taxed in the US. Lastly, firm views pending MDT-COV as an inversion deal first and foremost. Firm strongly believes both SYK and MDT should have an interest in SNN for expanding sales and manufacturing prescences in the BRICS. Firm now feels most of the SNN acquisition premium is out of the stock.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: ASNA -11.1%, ALCS -6.9%, KMX -6.3%

M&A news: BUD -1.1% (cont spec surrounding M&A)

Select Tax Inversion related names showing weakness: SHPG -5.2%, AZN -4.8%, COV -3.9%, SNN -3.7%, MDT -3.7%, ABT -3.3%, BKW -1.8%, MYL -1.8%, PFE -1.8%, PRGO -1.3%, VRX -1.1%

Other news: MTL -28.4% (continued bankruptcy concerns), AVNR -7.5% (announced offering of $200 mln of common stock), GEL -4.9% (announces public offering of 4.0 mln common units), ALIM -2.8% (disclosed sales agreement to issue and sell $35 mln common stock), TSLA -1.8% (cont weakness), YHOO -1.7% (cont weakness post BABA IPO), BABA -1.6% (cont weakness post IPO),SYY -1.5% (may face antitrust lawsuit over US Foods deal, according to reports), TOT -1.4% (trading lower in Europe following news out yesterday afternoon), HCLP -1.4% (unfavorable commentary on Monday's Mad Money)

Analyst comments: DKS -5.9% (downgraded to Mkt Perform from Outperform at William Blair ), ONNN -3.1% (downgraded to Neutral from Overweight at JP Morgan), BBBY -1.3% (downgraded to Mkt Perform from Outperform at William Blair), CLX -1.2% (downgraded to Neutral from Buy at Citigroup), GMAN -0.6% (downgraded to Hold from Buy at Canaccord Genuity)

>>> US Gapping up

Gapping up

Gapping up In reaction to strong earnings/guidance: SUPN +9.5%, MM +1.7%, (also, to acquire Nexage for ~$107.5 mln)

M&A news: SLXP +8.2% (Allergan (AGN) plans to reject offer from Actavis (ACT) and may now bid for SLXP itself, according to reports), CF +7.2% (Yara ASA confirms discussions with CF (CF) regarding potential merger of equals)

Select metals/mining stocks trading higher: HMY +3.4%, GOLD +2.3%, SLW +1.9%, AU +1.9%, GG +1.6%, ABX +1.4%, NEM +1.4%, GDX +1.4%, GLD +1.2%, RIO +0.9%, BHP +0.8% Other news: SYN +36% (still checking), NXTD +24.5% (cont momentum higher), TTOO +18.1% (announced FDA approval of first direct blood test for detection of five yeast pathogens that cause bloodstream infections), RWLK +11% (announces reimbursement coverage by major German insurance company ), SAEX +9.9% (announced $40 mln of new project awards), TKMR +9.6% (is collaborating with an international consortium to provide an RNAi based investigational therapeutic for expedited clinical studies in West Africa), NAVB +7.1% (Awarded $1.67 mln Fast Track NIH SBIR Grant for Evaluation of Lymphoseek in Cervical Cancer), JRJC +6.6% (entered into a strategic partnership agreement with Zhongshan Securities), ECYT +3.6% (announces late-breaking abstract presentation on randomized, phase II trial comparing vintafolide versus vintafolide plus docetaxel, versus docetaxel alone in second-line treatment of folate-receptor-positive non-small cell lung cancer patients at the European Society for Medical Oncology Conference), MBLY +3.4% (favorable commentary on Monday's Mad Money), HLF +2.7% (following 12%+ move lower on some chatter that Icahn is unwinding his position; after the close Gasparino tweeting that sources say Icahn has not sold any of his HLF stake), DRL +2.2% (co stated its remains confident in the rule of law and that it will prevail' as DRL vs. Hacienda trial concluded), CNET +1.9% (cont momentum), PHG +1.7% (establishes two companies in Lighting solutions and in HealthTech; sees 2H adjusted EBITA slightly below same period last year), MGA +1.7% (expands in India; targeting start of volume production in 2015), DRI +1.4% (issues open letter to shareholders; recommends darden shareholders vote 'for all' on the BLUE Proxy Card ), ASTM +1.1% (Great Point Partners discloses 9.99% stake in 13G filing), LDOS +1% (awarded contract by Naval Medical Logistics Command), .

Analyst comments: SGMO +4% (initiated with a Buy at Jefferies), NRG +1.8% (resumed with a Buy at Deutsche Bank), BKU +1.6% (resumed with a Outperform at Wells Fargo), FOE +1.2% (upgraded to Buy from Hold at KeyBanc Capital Mkts), FRC +1% (resumed with a Outperform at Wells Fargo)