Twitter thoughts; An update on COVID-19 and my decision whether to get a second booster
1) I can't get enough of the Elon Musk-Twitter (TWTR) saga...
I confidently predict that there will be multiple books, movies, and podcasts about it, especially now that former President Donald Trump has gotten involved, because Musk is highly entertaining to the average person, and a spectacle like this is pure catnip for people (like me) with an interest in stocks and our legal system. So pop some popcorn, pull up a chair, and enjoy the show!
Twitter's stock jumped 8% yesterday as investors digested the complaint Twitter filed against Musk after the close on Tuesday and concluded – correctly, in my opinion – that the company has an airtight case.
Bloomberg's Matt Levine has the best analysis I've seen of it: Twitter Still Wants Musk's Money. Excerpt:
We have not yet seen Musk's reply, and perhaps I am missing something, but so far this case seems very simple to me. We talked yesterday about the DecoPac case, decided last year by Delaware Chancellor Kathaleen McCormick. A private equity buyer agreed to buy a company, the market went down, the buyer manufactured pretexts to get out of the deal and blow up its financing, and the target sued for specific performance.
The buyer's pretexts there were not as laughable as Musk's here, and the buyer there did not go around tweeting about how gleefully it was violating the terms of the merger agreement, but the judge ordered it to close anyway. "This court has not hesitated to order specific performance in cases of this nature," she wrote, and she didn't.
One of my friends commented:
We may have entered a situation here in which Musk has so angered both Twitter's board and the lawyers involved that they are going to pursue this on a total "We win 100% or we lose everything, nothing else matters" principle.
That sort of thing can happen when someone acts in such extremely bad faith that the victim becomes beset with revenge and embarks on a mission to pursue justice at all costs. That's the sense one gets from reading the 62-page complaint.
I added:
I agree. I think Twitter's board (and shareholders) are so angry and have lost so much money that they won't settle for anything less than a token reduction in the purchase price – and there's no way Musk, with his enormous ego, capacity for self-deception, and unblemished track record of successfully bullying judges and regulators, will agree to that.
So this is going to be a verdict in which the only two outcomes are that Musk is forced to buy Twitter at $54.20 or he walks away, paying nothing more than the $1 billion breakup fee. I think the former is 80% likely. Here's why...
The case will be heard by a single judge who, we just learned, will be Kathaleen McCormick, who became the first female Chancellor (chief judge) of the Delaware Court of Chancery 14 months ago.
I have to imagine that she cares a great deal about the credibility of courts, the rule of law, and the sanctity of contracts. And, in particular, I'm sure she cares a lot about the reputation of the court she now leads.
More than two-thirds of the companies in the Fortune 500 are incorporated in Delaware, which means, in most cases, they're relying on the Delaware Court of Chancery to handle their biggest, most important cases – like this one.
I think Chancellor McCormick recognizes that this case will be cited for generations because it goes to the core of our business legal system, which is rooted in the enforceability of contracts.
If Musk gets away with blatantly ignoring the airtight contract he signed, harming a major company and inflicting tens of billions of dollars of pain on shareholders, it will call into question every contract. I can't even begin to wrap my head around the chaos and damage it would cause...
So I think, rather than being intimidated by Musk, Chancellor McCormick is going to be eager to make an example of him – to rein in a rogue actor and send a clear message to the world that no individual, even the richest in the world, is above the law.
Lastly, the idea that Musk will simply ignore a ruling forcing him to buy Twitter and there's nothing the court will be able to do about it is ridiculous.
It's actually very simple: The court will order the bank holding Musk's Tesla (TSLA) stock to sell as much of it as is necessary to get to the purchase price of $44 billion (including the debt financing in place, other investors, etc.), hand the proceeds to Twitter shareholders, and give the company to Musk.
Musk has been conditioned to think he's above the law, but he's about to get a massive, rude, expensive awakening.
I can't wait to see (and profit) from it...
That said, I always like to present the other side of the argument... so if you want to hear it, read this op-ed in yesterday's Wall Street Journal: Twitter's Lawsuit Against Elon Musk Looks Like a Loser. I think it's one of the stupidest things I've ever read, but you can judge for yourself...
2) It has been a month and a half since I've sent out an e-mail to my COVID e-mail list (to join it, simply send a blank e-mail to: cv-subscribe@mailer.kasecapital.com) because, as I predicted last December, the pandemic is over.
It's now endemic, which doesn't mean it's disappeared, but it does mean that the vast majority of people (in particular, those who are vaccinated and boosted) can go back to their normal lives.
I, for example, haven't worn a mask since I was required to for a Broadway show more than a month ago – and I've traveled extensively since then (my high school reunion in western Massachusetts, a Tough Mudder race in Vermont, a bar mitzvah in Chicago, and a recent 16-day trip to Italy, France, and the U.K.).
But my level of concern has risen somewhat recently in light of the rapid spread of the most transmissible omicron subvariant yet, BA.5. While reported cases have been flat for the past two months (source)...
... this is clearly underreported because few people are getting tested. Anecdotally, many friends and family (both my in-laws as well as an aunt and uncle, all in their 80s) have caught COVID recently.
And there's plenty of evidence regarding BA.5's spread. The percentage of people testing positive has soared:
And the number of people hospitalized and in ICUs has more than doubled in the past three months:
The good news, however, is that daily COVID deaths have not increased – they've been flat at around 300 per day for the last two months:
So, in light of all this, I've been reconsidering whether to get a second booster...
As background, I was early in receiving two Moderna (MRNA) shots in February and March 2021, and a Moderna booster in late October. Nevertheless, I caught COVID in late December when I was visiting my family in Kenya, though thankfully my symptoms were mild.
I'm also somewhat young (55), am in superb health (according to one website, my "fitness age" is 21 and my life expectancy is 104), and have access to the best health care in the world (I live across the street from Mt. Sinai Hospital).
Thus, even though I'm eligible for a second booster shot (as is everyone age 50-plus and those who are immunocompromised), I decided to wait to get one until the new Omicron-specific boosters from Pfizer (PFE) and Moderna are available, likely this fall.
Should I reconsider that decision in light of BA.5?
To shed some light on that tricky question, I turned to my best, most trusted source of everything related to the pandemic: Dr. Kevin Maki. He first asked me to "please include a disclaimer that this is my own risk/benefit analysis and should not be viewed as advice to others. The current situation with BA.5 is not black and white, and I don't want people to be cavalier about the risk."
Then he continued:
I don't give personal medical advice but will provide my thoughts that you can consider in making a decision.
Remember, this is a marathon and not a sprint. Since you have been triple vaxxed and had COVID, you should have pretty good protection against severe illness. We have Paxlovid now readily available in the event you do get infected. Immune resistance does wane over time, and you want to have resistance for many years to come.
This is a risk/benefit calculation. The risk of waiting is getting infected between now and the fall and the benefit is getting better coverage during what I expect to be the peak in case numbers during the cold/flu/COVID season.
As background on my decision: I have not had COVID but have been triple vaxxed. I am 57 years old with high fitness (about 240 minutes a week of aerobic exercise plus resistance training) but am overweight.
I am planning to wait to get my next boost in the fall, as is my wife. That might change if we see a spike in hospitalizations here in southwest Florida, but there is no indication that is the case now, even with case numbers going up (number hospitalized here is still well below 50% of the January 2021 peak).
Several of our vaxxed and boosted friends and neighbors in their 50s to 70s have had COVID recently (presumably BA.5) and all have done well despite having more comorbidities than us.
I believe that there are currently between 300K and 500K cases per day in the U.S. because most cases do not get reported. Among those 50-59, the hospitalization rate is only 2.5 per 100,000 compared to about 8.5 per 100,000 at the peak.
So... my assessment is that risk for serious outcomes is low now (but not zero) for those in the 50-59 year age group who are vaxxed and boosted. Accordingly, I plan to hold off based on the assumptions that there will be more cases nationally during the cold/flu/COVID season.
Note that over-boosting has a theoretical downside because the immune response is likely to be less robust if exposures are too close together. I should emphasize that the last point is theoretical, but a reasonable expectation based on experience with other vaccines.
I hope the above helps!
Thank you, Kevin!
Like Kevin, I am not giving medical advice, but based on what I know and have read, here are the decisions we've made in my family...
My wife, who's healthy and 54, had the same three Moderna shots I did. But unlike the rest of our family, she hasn't had COVID yet. So, absent this "natural immunity," she decided to get a second booster – a fourth Moderna shot – on May 25, a decision I agree with.
My parents (healthy and 80 and 81) have had almost the exact experience I've had: the same three shots and then got COVID (also mild) last December. However, because of their age, I have told them that they should get a second booster as soon as they arrive in the U.S. on August 6 (they live in Kenya, where vaccinations aren't widely available).
In summary, I think most folks who are triple vaxxed and have had COVID don't need a second booster now and can wait, as Dr. Maki and I are doing, until the new vaccines become available in the fall.
However, I would recommend a second booster right away to any friend or family member who is over, say, age 60 (and certainly age 70), or has any risk factors (most notably not having had COVID, having obesity, or being immunocompromised).
I hope this is helpful!
Best regards,
Whitney
P.S. Here are two recent articles for more on this:
- As BA.5 Spreads, White House Warns Covid Is Not Over (NYT)
- BA.5 is here. Time to ride the wave (Dr. Katelyn Jetelina)
P.P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.