Fortnite, Call of Duty and GTA

It's been a big week in gaming, with Microsoft acquiring Activision Blizzard for $68.7 billion, Take-Two, the maker of GTA acquiring Zynga, best known for its Facebook game Farmville and the return of the iconic Tilted Towers to Fortnite.

As always, if you want to join our team or have any feedback, please drop us a message.

For this week's community highlights, we look at greenwashing, songbook investing and the commodities super-cycle.  We cover Take Two's acquisition of Zynga in our M&A Deal of the Week and in our latest podcast, we speak to Ankush Jain, the Chief Investment Officer at Aaro Capital.

Our crypto pick last week, Fantom ($FTM) seen a close to 50% rise in price since we posted it, but the cryptocurrency market has had a poor start to the week, with BTC making its way back down to $40k.

Our poll on what city you'd most like to work in ended up very close, with London taking the edge by just 1% in front of New York. This weeks poll is about the information you hear back from recruiters, vote below!

☘️ When Sustainability Is Only Greenwashing

Large corporations have embarked on a crusade to present themselves as champions of sustainability, but every so often their message lacks substance. This money manager has pinpointed how Unilever has lost focus on profitability to insist on matters that often have nothing to do with real issues. The idea that everything that sounds "green" would sell with consumers is misleading and can backfire: a company is only sustainable when it also creates value for its shareholders.

🏀 Pimco and BMG join the bandwagon to invest in songbooks

Pimco h speculatively joined forces with BMG to acquire music catalogues as revenue in the recorded music sector has grown for six consecutive years, especially with a 7.4% rise in 2020 to $21.6bn. It joins the likes of large private equity groups KKR, Blackstone and Apollo Global Management, who have invested billions of dollars into song copyrights in the last year, especially as streaming, which offers steadier revenues than sales of physical discs.

💰 Commodities Super-Cycle

Commodities have recently seen a continuous rally across the market, with the prices of various goods rising, including WTI oil reaching a high near to $84bbl, and copper trading above $10,000 a ton for the first time since October, allowing the metal to sit just below an all-time high. Alongside this, nickel saw its ten-year high, reaching $23,000 a ton due to a combination of high demand (owing to its use in Electric Vehicle batteries), and it's diminishing supply. Aluminium, another metal used heavily by EVs, is also seeing falling supply, and a resultant rise in prices.

For more bite-size market updates, visit our community!

Grand Theft Auto's creator Take-Two Interactive bought out Zynga for $12.7 billion

Acquirer: Take-Two Interactive Software, Inc. (NASDAQ: TTWO)

• Take-Two is an American video game holding company based in New York and founded in 1993.
• The company owns Rockstar Games and 2K and are home to some of the most beloved series in the world, including Grand Theft Auto®, Red Dead Redemption®, Midnight Club®, NBA 2K®, BioShock® and Borderlands®

Target: Zynga Inc (NASDAQ: ZNGA)

• Zynga Inc is an American social game developer running social video game services and was founded in April 2007 with headquarters in San Francisco.
• The company primarily focuses on mobile and social networking platforms with some of Zynga's biggest titles including CSR Racing™, Empires & Puzzles™, FarmVille™, Zynga Poker™ and Golf Rival™

Rationale

• Take-Two’s buyout of the FarmVille creator will boost them into a prominent position in the mobile game industry, which now accounts for over half of the wider $180 billion gaming industry. This move is significant as it has finally allowed Take-Two into the market, in a similar fashion to EA’s acquisition of Glu Mobile and Playdemic last year, and Activision Blizzard’s acquisition of King in 2016.
• It can be seen that the mobile gaming industry is where all the money is at today: last year saw console revenues falling by 6.6%, while the mobile sector saw a 7% rise in revenues. Alongside this, mobile gaming is the most accessible of all the available forms of gaming, and their production requires a tiny cost proportional to that of a console game.
  

This week we are joined by Ankush Jain, the CIO at Aaro Capital.

This episode covers:

• The journey from an Analyst to Chief Investment Officer
• Traditional fund of funds versus crypto fund of funds
• Insight into blockchain technologies
• How Aaro Capital evaluates crypto funds
• Is postgraduate education for you?

$CSTM - Constellium

Constellium is a global leader in the development and manufacturing of high value-added aluminium products and solutions. Constellium design, develop, and engineer products and solutions in partnership with our customers for a range of markets, including Packaging, Automotive, Aerospace & Transportation.

Rise in demand for Electric Vehicles  - On average, EVs require around 200kg per vehicle. Aluminium plays an important factor in producing lightweight EVs which helps in improving the EV’s energy efficiency due to the smaller batteries.

Competent recycling capabilities - Recycling scrap aluminium requires 95% less energy and lower the firm’s greenhouse emission by 95%, making Constellium profitable and attractive for investment. The firm currently recycles 40% of their produced aluminium with emphasis to widen this percentage to lower their costs further and benefit from the rising aluminium prices.

Catalysts - Their efforts in expanding European recycling capacity will lower their cost and meet the high demand for aluminium. The expected high demand for aluminium in the production of semi-conductors and EVs, to meet the Cop26 objectives, will eventually drive prices higher and Constellium’s shipments will increase.

Risks - With the rise in demand for the element, labour and transportation costs will rise leading to the increase in costs of the business.

We'll catch you again next week, until then, make sure you're signed up to our community, and follow us on LinkedIn, Instagram, and Twitter! If you have any feedback or want to join our team, send us a message!

- Salman @ Finance Focused