Bill Ackman’s Market Timing

Plus: Major banks want to get into your digital wallet ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

January 24, 2023

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Good morning.

Newspaper baron? Been there, done that. Now Jeff Bezos may want to trade the money-losing Washington Post, which isn’t especially known for its sports coverage, for a football team.

The Amazon founder has reportedly mulled over the idea of selling the storied newspaper in order to buy the Washington Commanders, according to The New York Post. While the DC-based swap is hardly like-for-like, Bezos’ potential switcheroo would happen as a gesture of goodwill to Commanders owner Dan Snyder, who has had his management style pilloried in the pages of Bezos’ paper. A Bezos spokesperson denied that WaPo is for sale but that will likely not stop the Beltway rumor mill from buzzing.

Morning Brief

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Wallet, clip, rubberband, or digital?

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Amazon versus Flipkart turns into a dogfight.

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Bill Ackman loves watches.

Banking

Major US Banks Develop Digital Wallet to Compete with PayPal and Apple Pay

What’s in your digital wallet? Every major US bank is hoping it’ll be one of them.

Wells Fargo, Bank of America, JPMorgan Chase, and four other banks are close to debuting a digital wallet, The Wall Street Journal reported Monday. Though some of these financial institutions have been in the game for literal centuries, they now find themselves running scared trying to keep up with the likes of Apple Pay, PayPal, and Venmo.

Why Go Digital?

Convenience and security. Like the old American Express ads, folks today don’t leave home without their phone, but carrying both that and a wallet can get annoying. Plus, digital wallets are a lot quicker for online shopping. While phones can be just as easily stolen as real billfolds, the digital wallets within phones often come with extra layers of security like facial recognition. They’re also highly encrypted, meaning thieves won’t get your info even if they hack your favorite coffee shop. Still, not every place accepts digital payments just yet, so you might want to keep that emergency $20 stuffed in your… actually, don’t tell us.

The yet-to-be-named digital wallet would be managed by Early Warning Services, the same company that handles Zelle – a money wiring platform that’s restricted to specific bank accounts. It’s set to release in the second half of the year with Visa and Mastercard already on board, sources told the WSJ.

Executives like JPMorgan CEO Jamie Dimon have long been fintech doomsayers – traditional banks, as Dimon delicately put it, “should be scared s—less” by companies like Paypal and Square. So the digital wallet is the latest step by banks to at least put up a fight against their Silicon Valley rivals:

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Big Tech companies like Apple, Google, and Amazon already have built-in customer bases, so getting those same people to start using digital wallets isn’t a big stretch. By 2019, 64% of the globe was using at least one fintech app, according to Ernst and Young, and the digital banking global market size is expected to reach $10.3 trillion by 2028.

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For the fintech sector, digital lending funding was down 53% year-over-year, falling to $11.5 billion in 2022, according to CB Insights. But traditional banks were hit even harder. Globally, banking funding fell by 63%.

If You Can’t Beat ‘em, Buy ‘em: Beating competitors is no doubt very satisfying, but buying them outright is so much easier. In the past few years, traditional banks have invested heavily in fintech firms that could pose any threat. In September, JP Morgan purchased the cloud payment firm Renovite. Last Spring, Truist acquired Long Game, which is like a gamified version of banking, to appeal to a younger demographic. In November, Reuters noted that fintech valuations have plunged, and now is a good time for banks to pounce on them to bolster their tech and digital payment departments.

-Griffin Kelly

E-commerce

Amazon’s Air Freight Business Comes To India

(Photo Credit: Patrick Feller/Flickr)

With India’s population getting ready to overtake China’s, Amazon’s seeing rupee signs…

Amazon announced Monday it’s launching Amazon Air, the company’s air freight business, in India, making it the first e-commerce company in the country with its own “dedicated air cargo network.”

Flipping The Script

Amazon’s air freight business first took to the skies in 2016 but a former employee told Wired that its roots go back to 2014, when the company found crates full of the Kindles it so desperately wanted to be delivered to customers bottlenecked at a Seattle airport. As of December 2022, Amazon’s fleet of planes made over 200 flights per day, and the breakneck speed with which the company set up an air cargo business is typical of Amazon — and the primary reason it was hit with protests by Amazon Air staff last summer.

India is a key market for Amazon, but the Big Tech goliath is not the only show in town. Its bitter e-commerce rival there is Flipkart, which has historically commanded a bigger market share and just so happens to be backed by Walmart. Using planes to ship cargo around India’s vast geography could give Amazon the edge on speed, which has always been its guiding mantra:

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Amazon said it’s teaming up with local airline Quikjet to operate flights between cities including Hyderabad, Bengaluru, Delhi, and Mumbai.

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Amazon Air already operates in the US and Europe, making India its third market. Amazon didn’t disclose how much it’s spending on priming itself for India’s skies, but planes are expensive, and given the company is currently going through a historic cost-cutting exercise it must be confident the bet will pay off.

Flying on Sunshine: In other aviation news, Airbus is getting into the telecoms biz. The French aviation company has hired Morgan Stanley to help spin off a program that makes solar-powered drones. The idea is that the drones would cruise around the globe well above the height commercial planes fly at, acting like satellites that aren’t quite in space. An exciting concept, although Airbus will need to do some work if the drones are to become permanent fixtures in our skies — its last one having crashed after 64 days of continuous flying. Heartbreakingly enough the drone was mere hours away from breaking the world record for flight endurance. Better luck next time, little guy.

– Isobel Asher Hamilton

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Luxury Goods

Watchmaker Bremont Scores a High-Profile New Backer

Bill Ackman’s got time on his hands. Literally and figuratively.

After buying several Bremont watches last summer, the indefatigable online activist investor told the Financial Times he grew so smitten with his new timekeepers that he decided to personally invest in the company. The billionaire also specified to the FT that he sent a handwritten note to Bremont’s founders, brothers Nick and Giles English, to declare “I love watches.”

He Who Watches the Watchmen

Via his hedge fund Pershing Square Capital Management, Ackman built a reputation as a stormy change agent — successfully infiltrating and executing boardroom shakeups and strategy overhauls at the likes of Wendy’s, Chipotle, Borders bookstores (RIP), and JCPenny. But recent endeavors have proven more troubling, highlighted by an ill-timed three-month investment last year in Netflix that spanked the firm to the tune of $430 million. Around the same time, Ackman announced Pershing would move away from its preferred role of agitator.

Ackman is using his personal funds — completely apart from Pershing — to invest in Bremont, but he plans to tackle the venture with the same newfound relaxed attitude. The former gadfly gazillionaire participated in a roughly $52 million funding round with other investors that valued the company at around $108 million, and, so far, he’s promising not to keep his eyes glued to the ticking minute-and-hour hands before it pays off:

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“There is a benefit to having us invest versus private equity or a sale,” Ackman told the FT of his decision to take on the bet solo. “Bremont has a very long mandate and we can be a forever investor.”

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Eventually, Ackman says he thinks Bremont could rival Breitling, the Swiss watchmaker that scored a $4.5 billion valuation last year after a private equity takeover courtesy of Partners Group.

Give No Quarter: Keeping with the time theme, Ackman shared his guiding philosophy for personal investments with the FT: “If it takes more than 15 minutes, I won’t do it. Investing in great companies is my version of art collecting.” Now that’s timeless.

– Brian Boyle

Extra Upside

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I Don’t Believe In It: Customers frustrated over gratuity prompts sometimes as high as 30%.

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Not My Chocolate: M&Ms will slow down on divisive candy mascots.

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