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Fitbit and other regulatory notes ?3

13:11 19-Jun-20

Expanding the last link in this note, the House looks set to advance the Invest in America Act, and markup just added to the bill with bipartisan support adds natural gas vehicles and fueling.  This obviously offers a much-needed ray of hope for Westport, but over the longer term any rational analysis would have to conclude that RNG is the future.  Thus I see the bill as a bigger positive for XBC/XEBEF.  This is supported by the increasingly inverse correlation between WTI and Nymex Gas, which will support the trend toward local and renewable sourcing.  This is why I've been turning away from the majors like Shell, no matter how foresighted, and progressively toward smaller more focused plays in the space.

In market terms, infrastructure development will be much more sustainable than the current Fed-induced sugar high.  Golar fits that description as well and Brazil may move quicker than America.  I still like the current pricing on GMLPP for those who want yield and a somewhat safer option, though shipping remains a concern.  Electrification is still the bulk of what needs to be done, and AMSC is ideally positioned to capitalize on that.  However, the evolution of hydrocarbons will play out for years and Xebec represents a rare chance at buying something like Shell many decades ago.

Australia has raised formal concerns about Google's Fitbit purchase.  In response, FIT has done nothing but move with the market, well above the pricing opportunity that I called out on Monday.  That's because all sorts of examination has been expected all along, which is why the spread is what it is.  The ACCC has has been completely unreasonable in other cases, but this is no local merger.  If you care to re-read that note, you'll also understand why it's important to Vodafone that Dish plans to close on Boost mobile on July 1st.  For Resonant, the introduction Qualcomm chips supporting sub-6GHz 5G bands also matters, though not enough to change my stance on the stock.

For Fitbit, we should expect Australian conditions to be specified on August 13th, followed similar actions from the E.U. and U.S.  However in all cases, investor attention should be on time to close rather than the actual concessions.  I doubt that any government wants to see Fitbit fail entirely.  The company's latest move implicitly acknowledges the limits of its devices by requiring manual user input, and signals the that it is more ready than ever to do Google's work.

Finally, this memorandum decision indicates that PG&E exit plan will be approved by the bankruptcy court.  As I projected, it won't be official until around market close tomorrow, but Clearway shares are already up.  My other favorites remain the same as well, and I'll double down on AMSC now that Washington is finally getting around to infrastructure.  Invest carefully.

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