Tiffany & Co. used to be the largest position in my portfolio, and this is the first company that I ever analyzed on YouTube. Therefore, I’m a little sad to see Tiffany & Co. being acquired by LVMH Moet Hennessy Louis Vuitton. But in investing, there should be no emotions. We are here to make money and whenever there is an acquisition or merger, there is always the possibility of making money through arbitrage. Not all arbitrage deals are equal and before we know if a deal is a good one and deserves our money, we should look at the businesses.
Tiffany & Co. is without doubt the most famous jewelry brand in the world with their iconic Tiffany Blue Box. They even have a trademark on that color and have been making jewelry since 1837. I always say that if you had bought a 1 carat diamond at Tiffany’s for $6000 in 1987(the year, the company went public), the same diamond would be worth $20 000 today. If instead you had invested $6000 in Tiffany & Co., you would have $450 000 today. This is one of the fastest growing stocks in recent time and the reasons it grew that fast is because it is a wonderful business.
Another wonderful business, this time in France is LVMH. LVMH was founded by Bernard Arnault, who is now the third richest man in the world. LVMH is currently the third largest company in Europe after Nestle and Royal Dutch Shell. You can think of LVMH as the Berkshire Hathaway of Luxury brands. They own brands such as Dior, Moet et Chandon, Krug, Dom Perignon, Givenchy, Hublot and others. Adding Tiffany’s to their portfolio will be great for them. But is it great for us? How can we make money from this deal?