🍋 Goldman Banker Saves P.F. Chang's

October 31, 2022

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"Making money isn’t a thing that you do - it’s a skill that you learn." — Naval Ravikant

Good Morning! Happy Halloween everyone. Elon Musk owes three fired Twitter execs over $200 million, which he might not pay, and he plans on laying off more workers while he cleans house. Musk calls himself ‘Chief Twit’ and claims to have no idea who Twitter’s CEO is.

Credit Suisse reportedly tapped 20 banks for capital increases and wants to raise $4 billion for its new restructuring plan. Goldman sees interest rates peaking at 5% in March. Secretary of Transportation Pete Buttigieg thinks self-driving cars are safer than humans driving.

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1. Story of the Day: Goldman Banker Saves P.F. Chang's

If you feel like you’re underachieving at your age, P.F. Chang’s new CEO won’t help you feel any better. Damola Adamolekun is 33 years old and became head honcho at the fast-casual Asian chain after stints at Goldman Sachs, Harvard Business School, and the private equity firm Paulson & Co.

Adamolekun became involved with P.F. Chang’s while he was a partner at Paulson. The private equity investors saw potential in the underperforming chain, though they took a unique approach to P.F. Chang’s turnaround. Private equity firms typically choose a CEO and advise from the sidelines, but Adamolekun decided to roll up his sleeves and run the portfolio company himself.

June 2020 was a rough time to become CEO of a restaurant chain - many parts of the country were still under Covid-19 lockdowns. But Adamolekun’s team saw an opportunity to reinvent themselves while navigating through a decimated industry.

Ademaolekun brought data-driven decision-making from his Wall Street career as he helped the chain innovate and grow. During the pandemic P.F. Chang’s began investing in digital infrastructure, real estate, and delivery services as well as the in-restaurant experience. So far, things are looking good - revenue rose 32% last year.

Takeaway: Few investors would have felt comfortable owning a dine-in restaurant chain in June 2020. But Paulson & Co. and its ‘whiz-kid’ millennial partner Damola Adamolekun saw the chance to bring a data-driven process to the battered food industry. In the years following Covid, restaurants realize there are many revenue streams beyond the in-dining experience, and private equity is leading the way in capitalizing on them.

2. Markets Rundown

If you want access to Wall Street insider interviews, industry deep-dives, and investment ideas, check out our Insiders newsletter.

The stock market rallied to close last week, though the Fed is expected to hike rates on Wednesday.

Movers & Shakers

  • (+) Intel ($INTC) +11% after the company announced $10 billion in cost reductions through 2025.

  • (+) Apple ($AAPL) +8% because higher iPhone and Mac sales drove revenue higher.

  • (–) Amazon ($AMZN) -7% after poor earnings, mounting recession fears.

Private Dealmaking

  • Nuveen Investments bought Arcmont Asset Management for $21 billion

  • OpenWeb, an engagement network for publishers, raised $170 million

  • Udaan, a B2B platform for retailers, raised $120 million

  • SiMa.ai, a machine learning company, raised $67 million

  • CloudPay, a pay solutions platform, raised $50 million

  • Neocis, a medical equipment manufacturer, raised $40 million

Top Reads

  • Interest rates yank Wall Street moon shots back to Earth (Axios)

  • The biggest tech stocks have lost $3 trillion in market cap this year (CNBC)

  • Dot-com bust 2.0 is becoming a reality (Axios)

  • Lula defeats Bolsonaro to again become Brazil’s president (CNBC)

  • Meta is trying to do what Google did with Android (YF)

  • What Musk could change now that he owns Twitter (CNN)

  • Musk and Zuck show just how expensive power can be (Axios)

  • U.S. consumer spending seeing mitigation, not a slowdown (CNBC)

  • Bad S&P 500 earnings are playing right into Fed’s hands (BB)

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4. Book of the Day: Power and Prediction

Artificial intelligence (AI) has impacted many industries around the world—banking and finance, pharmaceuticals, automotive, medical technology, manufacturing, and retail.

But it has only just begun its odyssey toward cheaper, better, and faster predictions that drive strategic business decisions. When prediction is taken to the max, industries transform, and with such transformation comes disruption.

The authors explain that the two key decision-making ingredients are prediction and judgment, and we perform both together in our minds, often without realizing it. The rise of AI is shifting prediction from humans to machines, relieving people from this cognitive load while increasing the speed and accuracy of decisions.

This sets the stage for a flourishing of new decisions and has profound implications for system-level innovation. Redesigning systems of interdependent decisions takes time—many industries are in the quiet before the storm—but when these new systems emerge, they can be disruptive on a global scale.

Decision-making confers power. In industry, power confers profits; in society, power confers control. This process will have winners and losers, and the authors show how businesses can leverage opportunities, as well as protect their positions.

“Disruption resulting from the proliferation of AI is coming.”

5. Short Squeez Picks

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6. Daily Visual: End of the Line for Credit Suisse

Credit Suisse Price to Book Ratio

Source: Axios

7. Daily Acumen: You Can't Just Sit Around Waiting For The Answers

"Young lawyers frequently come to me and say, ‘How can I quit practicing law and become a billionaire instead?’

I say, well, it reminds me of a story they tell about Mozart.

A young man came to him, and he said, ‘I want to compose symphonies. I want to talk to you about that.’

Mozart said, ‘How old are you?’ ‘Twenty-two.’

And Mozart said, ‘You’re too young to do symphonies.’

And the guy says, ‘But you were writing symphonies when you were ten years old.’

He says, ‘Yes, but I wasn’t running around asking other people how to do it.’”

8. Crypto Corner

9. Memes of the Day

 

 

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