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The Race in Aerospace – Positions of Private Equity Firms

~$40bn Apollo acquisition – GE Capital Aviation Services (GECAS), GE’s aircraft leasing operations

  • Bidder: Apollo, an offer as much as $40 billion according to Bloomberg & Reuters
  • GECAS has a fleet of more than 1,900 planes, which it provides to airlines under long-term leases.
  • 1/4/2019

~$1bn KKR investment – Altavair, focusing on the acquisition of new and used commercial aircraft for leasing to passenger airlines and cargo operators

  • Investor: KKR, $1 billion capital commitment to acquire commercial aircraft in partnership with Altavair + a 50% interest in Altavair; Altavair will be KKR’s partner for aircraft leasing investments going forward
  • Since its inception in 2003, Altavair has completed over $8 billion in commercial aircraft lease transactions with over 40 airline customers in 27 countries representing over 200 individual Boeing and Airbus aircraft
  • 1/3/2019, KKR Commits to Invest $1 Billion with Altavair

~$5bn Carlyle acquisition – StandardAero, largest independent maintenance, repair and overhaul (MRO) providers

  • Bidder: Carlyle, for more than $5 billion (Reuters) from Veritas
  • Veritas acquired StandardAero from Dubai Aerospace Enterprise Ltd (DAE) for $2.1 billion, including debt, in 2015
  • Carlyle first acquired StandardAero in 2004. In 2007, DAE simultaneously purchased StandardAero and Landmark Aviation, also an aircraft maintenance services company, from Carlyle in a transaction valued at $1.8 billion, including debt.
  • 12/18/2018, The Carlyle Group to Acquire Leading Aircraft Engine MRO Provider StandardAero from Veritas Capital

~$15bn Apollo acquisition – Arconic (ARNC), aluminum products used around the world by aerospace manufacturers

  • Bidder 1: Blackstone, Carlyle, Onex and Canada Pension Plan Investment Board
  • (winning) Bidder 2: Apollo, seems winning with a potential acquisition price of $22; also considered is a spin-off of its cladding operation with potential liability from the Grenfell Tower fire of two years ago.
  • 10/8/2018, early report on bidders
Arconic in 2018 | Source: Bloomberg

Half of the 2018 Top 10 Movies in US Are Made by Disney…

2018 Top 10 movies in US

Here is the list by gross sales in US, according to boxofficemojo.com

Rank Movie Title (click to view) Studio Total Gross / Theaters Opening / Theaters Open Close
1 Black Panther BV $700,059,566 4,084 $202,003,951 4,020 2/16 8/9
2 Avengers: Infinity War BV $678,815,482 4,474 $257,698,183 4,474 4/27 9/13
3 Incredibles 2 BV $608,581,744 4,410 $182,687,905 4,410 6/15 12/13
4 Jurassic World: Fallen Kingdom Uni. $416,769,345 4,485 $148,024,610 4,475 6/22 10/4
5 Deadpool 2 Fox $318,491,426 4,349 $125,507,153 4,349 5/18 10/18
6 Aquaman WB $270,596,781 4,184 $67,873,522 4,125 12/21 –
7 Dr. Seuss’ The Grinch (2018) Uni. $269,848,350 4,141 $67,572,855 4,141 11/9 –
8 Mission: Impossible – Fallout Par. $220,159,104 4,395 $61,236,534 4,386 7/27 10/18
9 Ant-Man and the Wasp BV $216,648,740 4,206 $75,812,205 4,206 7/6 11/1
10 Solo: A Star Wars Story BV $213,767,512 4,381 $84,420,489 4,381 5/25 9/20

* BV (Buena Vista) was the brand name which was historically often used for divisions and subsidiaries of The Walt Disney Company, whose primary studios, the Walt Disney Studios, are located on Buena Vista Street in Burbank, California

Top 3 are all from Disney, as are #9 & #10, making Disney occupy half of the Top 10 seats of best-selling movies in US.

And according to ComScore, 2018’s movie business hit all-time benchmarks of $11.9 billion in North America and $41.7 billion globally, with Disney taking in nearly a fifth of that figure. (Variety)

Among Disney’s domestic box office of $3.09 billion, its top 3 got ~$1.99 billion (64.32%), top 5 got ~$2.42 billion (78.25%).

Besides, Disney’s movies in Top 10 all have rating of 7.0 or above, averaging at ~7.56 on IMDb (beating the Top 10 average of 7.35)

2018 US Top 3 Movies | Source: IMDb

Overall…

Total US movie sales is barely growing. The figures below are not inflation-adjusted.

But the number of movie productions is increasing, partially due to a lack of funding after financial crisis (bottomed in 2009 with 521 movies that year).

Yearly US Box Office 2008-2018 | Source: boxofficemojo.com

As streaming is disrupting the market, increasing the number of production seemed to be a way to make up for the total revenue?

Then expenses are up and industry margin is low. It is a sure thing that movies are hard to survive alone.

Then no wonder the consolidation kicked in.

Disney bought Marvel for $4 billion in late 2009, bought Lucasfilm for $4 billion in late 2012. Before the financial crisis, Disney also got Pixar in a $7.4 billion in stock.

With the completion of $71 billion acquisition of Fox, Disney will add X-Men and Avatar to its list of movie series.

Warner Bros. will be under a new umbrella – AT&T’s, together with HBO and Turner.

Universal has been under Comcast since 2011.

Paramount is under Viacom and has teamed up with Netflix.

Movie is not a studio business anymore.

Tesla Model 3 Sales in 2018 Q4 – Not so Exciting

Model 3 has Little QoQ Growth

Tesla had very impressive numbers in Q3, when Model 3 delivery (55,840) was almost tripled from Q2 (18,440).

While no one is expecting another jump, the Q4 numbers are kinda lackluster, especially when adding Model 3 delivery and in transit numbers.

Tesla shares fall 9% on Wednesday when those numbers were reported.

$2,000 Price Cut and Phase-out of Tax Credit

Tesla also announced a price cut of $2,000 for Model S, Model X and Model 3 in the US. The move will partially offset the phase-out of the $7,500 federal tax credit for EV.

[Phase-out will start in the second calendar quarter when the manufacturer has 200,000 plug-in registered in US. The credit is reduced to $3,750 for the next 6 months, then to $1,875 for the next 6 months before expiring completely.]

Source: InsideEVs

According to InsideEVs’ estimate, Tesla hit the 200,000 first in the second half of 2018, while General Motors was second with a breakout month of sales for the Bolt and Volt in November 2018.

The next four manufacturer in EV are Nissan (126,875), Ford (111,715), Toyota (93,011), BMW (79,679).

A combination of flat delivery + in transit Model 3, and a price reduction, warned people about the actual demand for Model 3.

Good news are: 1) people may just be waiting for the basic Model 3, aka $35,000 version that Elon touted but analysts said money-losing for Tesla; 2) Tesla is still way ahead in the EV market

2018 Monthly Sales Chart

Tough Year for Stock Markets, Okay for Wine and Art

US Equity in 2018

S&P 500 -6.2%

Dow Jones Industrial Average -5.6%

Nasdaq Composite -3.9%

In the fourth quarter specifically, the S&P 500 and Nasdaq plunged 13.97 percent and 17.5 percent, respectively, their worst quarterly performances since the fourth quarter of 2008. The Dow notched its worst period since the first quarter of 2009, falling nearly 12 percent. (CNBC)

Meanwhile, assets like fine wine and art are gaining

Liv-ex Fine Wine 1000 index – 2018 | Source: liv-ex.com

According to The Liv-ex Fine Wine 1000 index, which tracks 1,000 wines from across the world, the price has been on a steady rise since May 2016.

People who put money into art at the beginning of the year saw an average gain of 10.6% by the end of November, according to Art Market Research’s Art 100 Index. (WSJ)

And in December’s Art Basel in Miami Beach, one of the world’s preeminent art fairs, things seemed going smooth. In a detailed report, owners of Mark Rothko’s Untitled (Yellow, Orange, Yellow, Light Orange) (1955), a painting purchased at Sotheby’s in 2014 for $36.6 million, was asking $50 million for the painting and said was on reserve later on. “The price tag is high even for the elite Art Basel franchise of fairs.”

In a summary…

Luxury Goods Outperform as Markets Swoon | Source: WSJ

 

「2018 书单」（4）

16. The Elegant Universe: Superstrings, Hidden Dimensions, and the Quest for the Ultimate Theory by Brian Greene
／《宇宙的琴弦》—— 布赖恩·格林
11 月读完

一本深入浅出讲述物理上的弦理论的书。广义相对论和量子力学的**不兼容**是物理学中的世纪难题，superstring theory (超弦理论) 是目前可以**统一两者**，并可能成为**物理学“终极理论”**的理论 (M 理论)。作者先分别阐述了广义相对论和量子力学，之后尽可能易懂地描述了超弦、高维空间等。部分内容读起来还是比较难，但这已然是最好的科普级别。

17. Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It by Peter Peterson
／没有找到中文译本
12 月读完

一本 2004 年的书，作者是上面提过的 Blackstone co-founder，不留情面的描述了美国的 twin deficits (财政赤字和贸易赤字)，以及美国两党 – 在选民面前，共和党抓着 tax cuts，彰显 how little they can give to government，民主党抓着 healthcare，彰显 how much they can take from government；与当下的美国对比起来极其有趣。

—
19 年再接再厉。

「2018 书单」（3）

11. 《腾讯传1998-2016》—— 吴晓波
7 月读完

一本按时间顺序补习腾讯发展历史的书。相比于《激荡三十年》，这本书有更多的官方意味，即腾讯让吴晓波来谈谈自己。此外，由于互联网行业发展速度所致，作者了解和写作的主体也在不断变化，更难把握，能写出不过时的内容相当不易。尽管部分章节更多的是陈列一些官方 fact，但有时逻辑可以自己找，不用靠作者提供。作为书的主角，腾讯虽然时不时会受到不同角度的批评，但仅是**自身革新和进化能力**就相当值得尊敬。

12. 《乞力马扎罗山的雪》—— 欧内斯特·海明威
7 月读完

一本海明威的短篇小说集，还包括了《印第安人营地》《大双心河》《白象似的群山》等。海明威生活的年代和个人经历使他能够写出别人很难体验到的感觉。他对于**死亡和生命**认识之深，并能如此艺术地简洁表达出来，在人类历史上也是为数不多的。

13. 《论人类不平等的起源和基础》—— 卢梭
7 月读完

这是卢梭《社会契约论》之前的文章，以科学严谨的方式尝试推导社会和不平等的形成，着重阐述了最原始的人最自然的状态，以及从感知自我存在到社会不平等的过程。相当具有哲学逻辑的行文，读的时候时常需要回头看看。

14. The Alchemy of Finance by George Soros
／《金融炼金术》—— 乔治·索罗斯
9 月读完（8 月回国进度略慢）

书中强调的一个重要逻辑，**反身性 (Reflexivity)**，适用广度不止金融。索老在金融市场找到了可以严格推导证明的案例，并在部分历史时期运用得炉火纯青。相差 19 岁，他和 Dalio 对于债务危机的理解可能自成一个层次。同时，书中回顾的历史与今年的部分危机（如阿根廷）息息相关，事件是一个个的延续发展，不是孤立和机械的重复。

15. 《邓小平时代》—— 傅高义
10 月读完

这么说，如果要看中国建国后历史，我觉得这本书是**必读**。2013 年在中国大陆出版，内容相当客观有干货。教授毕竟是教授，文字中没有一丝的浮躁，仅是阅读本身就可以提高做其它事情的认真度。