Trian Fund Management Takes a Stake in Comcast

Activist Alert

Trian Fund Management LP has made a big investment in Comcast Corp. (CMCSA), the cable-TV and entertainment giant. Comcast, which has a market value of roughly $200 billion, owns NBCUniversal, Xfinity, DreamWorks Animation, and numerous other brands.

Trian is an activist hedge fund famous for pushing the companies it targets to make large operational changes. Trian is betting that the entertainment conglomerate’s stock is undervalued and has bought about 20 million shares of Comcast for close to $900 million—equivalent to 0.4% of the company.

Comcast’s Businesses Have Seen Mixed Results Recently

Some of Comcast’s businesses have suffered during the COVID-19 pandemic and some have seen growth. Sky, the British media and telecommunications conglomerate which Comcast acquired for $38.8 billion about two years ago, saw its revenue drop 16% during the second quarter and its advertising revenue fall by 43%. NBCUniversal has also been battered by the COVID-19 pandemic, with revenue falling 25% due to theatrical releases being canceled, theme parks being closed, and advertising revenue sinking.

In contrast, Comcast’s broadband business has seen rapid growth as people work, study, and entertain themselves at home. The company expects to add about 500,000 new broadband customers during the third quarter.

Looking Ahead

Trian, which manages about $8.8 billion, has a reputation for pushing the companies it targets to become more efficient, often by selling or breaking up divisions that are not performing. It made large changes to the structure of companies like General Electric (GE) and Procter & Gamble (PG).

Investors are expecting that Trian will suggest big changes for Comcast as well, though it is hard to say what those changes will entail—especially at a time when the entertainment landscape is ever-changing. Activist hedge funds like Trian can have a lot of power over the way companies are organized. When an activist hedge fund becomes involved in a company, it’s important for other investors in the company to pay attention to decisions and recommendations from the fund, and how they may impact the company’s future.

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Worries About a Second Wave of COVID-19 Impact Restaurant Stocks

The Predicted Fall Uptick Has Arrived

Public health leaders were anticipating a fall spike in COVID-19 cases as students return to school and temperatures drop. This uptick appears to have arrived in the US and around the world. The number of cases in the US rose over 15% during the 10-day period ending September 21—the sharpest rise seen since early spring.

In other parts of the world, Israel is putting a three-week lockdown in place as cases rise, despite the country’s success in curbing the spread of infections early on. France and Spain are also seeing cases jump after loosening lockdown restrictions.

Dine-In Restaurants May Suffer

Earlier this week, stocks tumbled around the world as the reality of a second wave of COVID-19 set in. Many investors had their eyes on restaurant companies, which were battered during the first wave of infections.

During Monday’s sell-off, restaurants that depend heavily on dine-in traffic saw their stocks decline. For example, Red Robin Gourmet Burgers (RRGB) and Ruth’s Hospitality Group (RUTH), which owns Ruth’s Chris Steakhouse, both saw their shares drop by 8%. Though shares of both companies have seen slight upticks midweek, analysts still expect a difficult road ahead for these and other dine-in restaurants.

Quick Service Restaurants May Fare Better

In contrast, quick service restaurants like Chipotle (CMG) and Starbucks (SBUX) have fared better this week. Analysts noted that these companies have struggled because consumer habits, like grabbing coffee before heading into the office, have been broken. However, they are ramping up safety measures like drive-through options and social distancing as a way to bring customers back.

People may turn to these types of restaurants for a low-cost, safe taste of normalcy—especially heading into a fall and winter that will likely be abnormal in many ways. Investors will continue to watch carefully to see how a second wave of COVID-19 will impact restaurants and other industries.

Medical School Applications Hit Record Highs

Pandemic Inspires a Wave of Med School Applications

The COVID-19 pandemic shined a spotlight on the importance of healthcare systems and workers. This has inspired more people than ever to apply to medical school.

According to the Association of American Medical Colleges, as of the end of August, the number of medical school applications is up almost 17% from a year earlier. Medical school applications have been gradually rising since 2008, but this marks a significant spike.

Schools Relax Application Requirements Due to COVID-19 Hardships

Applicants to medical school have faced unprecedented circumstances this cycle. Many have finished college online, or have had shadow and internship programs canceled this summer. Additionally, the MCAT and other standardized tests have been canceled at many locations due to COVID-19.

For these reasons, a number of medical schools are not requiring MCAT scores and/or have pushed their application deadlines into late fall. These loosened restrictions have contributed to the surge in applications.

Additionally, as unemployment remains high, some people, especially recent college graduates, see this as a good time to go to school rather than to join the workforce.

An Application Cycle Like No Other

Due to this rise in applications, this cycle may be more competitive than most. Additionally, in-person interviews and visits, which are usually a big part of the med school application process, will likely be virtual this year.

Despite difficult circumstances, tens of thousands of people are forging ahead with their medical school applications. As Dr. Sahil Mehta, a med school admissions coach noted, “You kind of have to take the bumps as they come. That's part of medicine."