Random Ramblings (Post-Election Edition)

Here are some quick post-election thoughts, in no particular order:

One VC trouble-spot: As Fred Wilson wrote this morning, there will still be venture capital funding for smart startups that are attacking important problems. Moreover, many of the best-ever VC investments have come during times of macro market dislocation. But I'd think there is some serious concern today among cross-border VCs who specialize in helping foreign companies access U.S. markets (particularly if those companies are based in China). The odds of tariffs and trade wars just rose exponentially.

Another VC trouble-spot: It has been well documented that many of the best venture investments have been in tech startups founded by immigrants. If legal immigration is in any way curbed, or America's sociopolitical environment dissuades talented foreigners from immigrating, then it will have a negative long-term impact on venture returns. And, for that matter... jobs, macro economic growth, etc.

Reefer madness: If investors today aren't accelerating their search for marijuana-related startups -- particularly in logistics ― then they aren't doing their jobs.

Taxing: Both presidential candidates pledged to change the tax treatment of carried interest from capital gains to ordinary income. But Trump was always the more likely of the two to actually do so, since he was far more interested in comprehensive corporate tax reform than was Clinton. I think that remains so, but with two big caveats: (1) Trump's tax proposal technically raises rates on those managing most alternative investment funds (hedge, private equity, VC, real estate, etc.) but his individual income tax plan slashes ordinary income rates in a way that makes the carry increase largely irrelevant from the federal level. (2) The Republican Congress may not want to include this in any tax plans under President Trump, since it's a carrot they could maintain for future negotiations when Democrats regain political clout.

The big trade: Time Warner shares are down around 3% in pre-market trading, likely based on increased pessimism that U.S. regulators will not approve its proposed takeover by AT&T (something Trump reflexively said he would seek to block). And the context here is that Time Warner stock already was trading well below the proposed buyout price. Some cowboys are going to take this bet and possibly win big, but people on both sides of this trade are doing little more than playing hunches.

M&A madness: Companies cannot wait on the outcome of AT&T-Time Warner before making their own merger plans, as that deal was expected to take well over a year, regardless of the election outcome. But big M&A is about to go on break for the rest of 2016 ― minus, perhaps, a few transactions that are effectively done but not yet announced. Too much uncertainty about too many things (regulation, trade, consumer confidence, etc.).

Too quick on the draw: While most of us were paying attention to election stuff, Smith & Wesson announced plans to change the name of its holding company to American Outdoor Brands Corp. The official reason was to reflect product diversity ― the company will maintain Smith & Wesson brand for handguns ― but it really read like a way to get in front of how markets would treat the company under a Clinton Administration and Democratic Senate. Now looks like a waste of money, exacerbated by how the company's sales are about to struggle under a pro-gun president (yes, counter-intuitive, but this is how it works).

Also while you were distracted: Walgreens is suing Theranos, claiming a breach of contract and requesting $140 million. A key point here, however, is that the civil suit was filed under seal in Delaware. According to the WSJ, "people familiar with the matter said Walgreens claims it was misled by Theranos about the state of its technology when the two companies forged their agreement." I've written repeatedly that Walgreens owes its customers some answers about its due diligence on Theranos, particularly given how rivals like CVS quickly turned down similar partnership opportunities. But by filing under seal, it is basically telling its customers to pound sand.

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Today's soundtrack: