Welcome back! So to no surprise, the Fed cut 25bps yesterday to a new fed funds range of 3.5%-3.75%. Notably, there were 3 dissents in the 9-3 vote. Miran, the temporary Trump appointee wanted a 50bps cut, while Goolsbee and Schmid didn't want to cut. Miran is a lap dog so his "dovishness" is not a surprise, but the dissent to hold is interesting and potentially sets up a steady state rate environment. |
Notably, the outlook for '26 appears to favor just a singular 25bps rate cut. The dollar weakened following the cut, as Powell was generally more dovish than people anticipated. As of now, it looks like the Fed is successfully walking the inflation/labor tightrope, but we're skeptical on whether the Fed can get inflation back down to 2% in this current economic environment. Stocks had a nice rally after the cut, overall the economy feels like its on good footing and our Karpathy related AI fears seem to be pushed off for the time being. |
You'll want to watch $ORCL ( ▲ 0.67% ) this morning which was down 11% after hours following earnings. Oracle has really gotten beaten up for going AI overboard, we'll see if the market keeps punishing them and if it spreads to Meta, Microsoft, and others. |
Let's get into it. |
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Earnings Corner 📈 📉 |
Oracle $ORCL ( ▲ 0.67% ) Missed on revenue by about $150M but beat on EPS at $2.26. Oracle's backlog is strong, but there's investor concern on margin, Oracle's aggressive spend, heavy borrowing, and whether the backlog spend will materialize. Oracle now sees $50B in FY capex, $15B higher than they forecasted last quarter. |
Adobe $ADBE ( ▼ 0.35% ) This quarter underscored a theme that AI is becoming a revenue source for Adobe, despite the potential disruption AI might have on the overall business. Record ARR and cash flow from its AI powered tools gave the company the confidence to guide to double digit ARR growth. |
Vail Resorts $MTN ( ▼ 2.65% ) Raised prices to offset softer sales and a slow start to the season, creating a mixed quarter despite steady guidance. |
Toll Brothers $TOL ( ▲ 4.26% ) Toll Brothers is starting to feel the slowdown as high rates cool luxury demand and shrink its backlog, pushing the builder to lean on spec homes and walk away from multifamily to keep margins intact after posting a mixed quarter. |
Autozone $AZO ( ▼ 2.16% ) is opening stores and expanding out its network so quickly that the added costs and margin pressure are outpacing earnings for now, masking otherwise okay demand. |
GameStop $GME ( ▼ 4.28% ) Revenue was a sizable miss. The Company is leaning on collectibles, pivoting to digital downloads and streaming, and aggressive cost cuts as its core gaming business declines. The Company has been buying Bitcoin as well, and saw a hit there given the recent selloff. |
The Campbell's Company $CPB ( ▼ 1.02% ) Campbell's is still seeing softer volumes and tighter margins across soup and snacks because of inflation and tariffs, and it's turning to pricing and its growing Rao's brand to make up the difference. |
Chewy $CHWY ( ▲ 1.52% ) Chewy's core business is growing, though its softer Q4 outlook reflects higher holiday costs and a pet market that's still slow. The Company is expanding its physical vet care locations and saw discretionary up 18% y/y |
For deeper, stock market research upgrade to the WSR Investing Club. |
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Today's Headlines 🍿 |
SpaceX to IPO: SpaceX is moving ahead with plans to IPO next year, and is looking to raise well over $30B in what would be the biggest listing of all time. The company is targeting a valuation of about $1.5T, significantly more than its most recent valuation of $400B. This comes just a few days after the WSJ reported that SpaceX is kicking off a secondary share sale to value the company at $800B Part of these new funds will be used to bring data centers to space, as both Elon's SpaceX and Bezos' Blue Origin have plans to build orbital data centers. These satellites would draw power from the sun while transmitting data back to earth, providing a way to mitigate the ultra-high power and energy costs that data centers require
First Brands' Senior Loan Crashes as Creditors Dump Stakes: The Company's most secure loan plunged below 60 cents after major investors—including Marathon and Redwood—sold stakes amid fears of missing cash, alleged fraud, and looming funding needs. The company rushed to calm lenders, but concerns deepened as advisers warned fresh financing will be required Netflix and Paramount latest: Paramount is making its case to WBD shareholders, with CEO David Ellison meeting certain investors to enlist their support and encourage them to talk with WBD's management and board in support of Paramount's offer. Many think that a higher offer from Paramount is still in the cards The Trump administration may also prefer Paramount's success, but for a different reason; Paramount's offer includes the purchase of CNN, whereas Netflix is only interested in the studio and streaming business. Trump has said that CNN needs to be a part of a sale process, so it will be interesting to see how the Netflix proposal is viewed by regulators and if Netflix has to revise higher
Balyasny says AI is the biggest tail risk for 2026: The hedge fund's CIO says that AI surprising, on either the upside or the downside, is the biggest tail risk for next year. On one hand, a slowdown in demand could prompt AI companies to scale back their spending plans. On the other, the industry could accelerate faster than expected, causing employers to cut jobs. Either scenario could create instability, although Balyasny expects the industry to "continue to grow the way it has" PE in College Sports: The University of Utah is nearing a $500mm private equity deal with Otro Capital to establish a for-profit entity that will oversee the financial operations of the University's athletics department. The entity, which Otro will operate and hold a minority stake in, will manage sponsorships, ticketing, NIL, and other event-related revenues Jon Gray's Optimistic: Blackstone's COO says he's seeing a "pretty good macro environment," with revenue of the firm's PE portfolio companies up 9% in Q3, driven in part by the AI CapEx boom. Water parks, theme parks, and hotels are indicating some weakness in the consumer, while a weaker labor market and slowing inflation numbers improve chances of a December rate cut Goldman's CFO says the PE deal boom is finally here: Sponsor-led activity is finally accelerating, with announced deal volumes up 40% this year. Goldman has advised on more than $1.5T of deals so far this year, and data center investments and other AI-related bets have fueled a wave of "jumbo" deals across the industry Aegon Targets Growth in Alternative Fixed Income and CLO Strategies: CEO Lard Friese says the firm's asset manager plans to expand third-party inflows into higher-margin areas like alternative fixed income and CLOs to boost fee revenue. The move reflects a shift away from traditional fixed-income products toward structured credit strategies that generate stronger returns for the business GE Vernova Soars to Record High after Investor Day: The Company's shares jumped nearly 16% after it boosted its full-year sales and cash-flow outlook and doubled its quarterly dividend. Analysts say the firm could outperform its upgraded targets as rising power demand and AI-driven infrastructure needs bolster long-term growth It's all about the data: Our Data Center roundup Gavin Baker Says Space Data Centers Are "Superior," Laying Out Physics-Based Case for Off-Planet Compute: Tech investor Gavin Baker argued that orbiting data centers are economically inevitable, saying space provides free 24/7 solar power, near-free cooling, and lower-latency laser communication. He said these advantages explain why Alphabet, OpenAI, and others are racing toward orbital compute as AI demand overwhelms Earth's power and cooling limits Starcloud Runs First AI Model in Space: The Nvidia-backed startup used an H100-powered satellite to run Google's Gemma LLM in orbit, proving high-performance AI compute can operate off-planet CyrusOne Weighs €600 Million Debt Sale: The KKR-backed data-center operator is exploring an asset-backed or CMBS-style offering tied to its European facilities for a potential 2026 launch. A recent outage at its Chicago site isn't expected to derail the plan as demand for AI-driven data-center financing continues rising Argo Doubles Down on Data Centers: Argo Infrastructure Partners is boosting its ownership in TierPoint ahead of its acquisition by Apollo, giving the buyout giant a larger foothold in rapidly expanding AI data-center infrastructure. The move deepens Apollo's push into digital assets as TierPoint continues issuing investment-grade securitizations to meet soaring demand for colocation and compute capacity
Finastra Hires PJT to Explore Sale of US Banking Software Unit: The Vista portco is shopping its mid-size–bank software division, which could fetch over $200 million and draw PE and strategic interest. A sale would further streamline the company, leaving it focused on lending and payments after a series of divestitures and a major refinancing this year Trump approves Nvidia chip sales to China: Trump announced that Nvidia will be allowed to sell its H200 chips to "approved customers" in China, on the condition that the U.S. government gets 25% of the sales. Trump added that the same approach would be used for Intel, AMD, and other U.S. companies Altman Says He "Can't Imagine" Raising a Newborn Without ChatGPT: OpenAI CEO told Jimmy Fallon he relies heavily on ChatGPT for parenting help, sparking online backlash from critics who called the comments embarrassing and harmful. Many viewers argued the remarks normalize overdependence on AI for guidance that can be unreliable — and slammed Fallon for not challenging him Buyside Hub Comp Reports: Hey there, the team at The Wall Street Rollup also works on Buyside Hub, a wall street compensation analytics platform and free job board. We've run some very detailed comp surveys, check them out here.
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M&A Transactions💭 |
US Salt, producer and processor of evaporated salt products, has reached a definitive agreement to be acquired for $907.5M by ContextLogic Holdings, Abrams Capital, and BC Partners. Rothschild & Co advised on the sale. |
Symmetry Energy Solutions, operator of a retail natural gas marketing and logistics company, has reached a definitive agreement to be acquired for $800.0M by NextEra Energy Resources. EV/Revenue was 7.21x. |
Spirit Aero Systems (FRA: S9Q), manufactures aerostructures, particularly fuselages, cockpits, wing sections, engine pylons, and nacelles, was acquired for $8.498B by Boeing (NYS: BA). EV/Revenue was 1.33x. Jefferies, Moelis & Company, and Morgan Stanley advised on the sale. |
SILAC Insurance Company, provider of indexed annuity and insurance services, has entered into a definitive agreement to be acquired for $550.0M by Hildene Capital Management. EV/Revenue was 42.83x. Piper Sandler advised on the sale. |
The Low Voltage Motors Business Unit of Siemens has entered into a definitive agreement to be acquired by Innomotics by INR 22.0B. EV/Revenue was 2.19x. |
Profectus Capital, provider of non-banking financial services, was acquired by U Gro Capital (BOM: 511742) for INR 14.0B. Avendus Capital and DC Advisory advised on the sale. |
Mountain Commerce Bancorp (PINX: MCBI), operates as a bank holding company, has reached a definitive agreement to be acquired for $213.094M by Home Bancshares (NYS: HOMB). Piper Sandler advised on the sale. |
Hornetsecurity, provider of cloud-based email security and data protection, was acquired for $1.8B by Glynn Capital, Thoma Bravo, and Inflection Ventures. |
HG II Energy Midstream Holdings, operator of midstream energy infrastructure assets, has reached a definitive agreement to be acquired for $1.1B by Antero Midstream (NYS: AM). Jefferies, Truist Financial, and Wells Fargo advised on the sale. |
HG Energy, producer of natural gas and oil intended to service the energy sector, has reached a definitive agreement to be acquired for $2.8B by Antero Resources (NYS: AR). Jefferies advised on the sale. |
Evac, provider of integrated water and waste management systems, has reached a definitive agreement to be acquired for EUR 600.0M by Altor Equity Partners and its management. EV/EBITDA was 13.24x. Citigroup advised on the sale. |
Crawford United (PINX: CRAWA), engaged in providing industrial products, has reached a definitive agreement to be acquired for $300.0M by SPX Technologies (NYS: SPXC). EV/EBITDA was 10.03x and EV/Revenue was 1.72x. |
Confluent (NAS: CFLT), provides a data streaming platform, has reached a definitive agreement to be acquired for $11.947B by International Business Machines (NYS: IBM). EV/Revenue was 10.73x. Morgan Stanley advised on the sale. |
Compania Minera Condestable, producer of silver, gold, and copper, has reached a definitive agreement to be acquired for $238.831M by Rio2 (TSE: RIO). BMO Capital Markets, Edgehill Advisory, and Calder Associates advised on the sale. |
Bamboo, provider of insurance services, was acquired for $1.01B by CVC Capital Partners. Evercore Group and Piper Sandler advised on the sale. |
ADS Tech, provider of precision automation systems, was acquired for KRW 280.0B by Sungho Electronics (KRX: 043260). |
Teleflex Medical OEM, manufacturer of medical device components and interventional systems, was acquired for $1.5B by Kohlberg & Company. Centerview Partners advised on the sale. |
Intersurgical has reached a definitive agreement to acquire The Acute Care and Interventional Urology Business Unit of Teleflex (NYS: TFX) for $530.0M. Centerview Partners advised on the sale. |
Campbell's NAS: (CPB) has reached a definitive agreement to acquire a 49% stake in La Regina, manufacturer of tomato-based food products, for $286.0M. Houlihan Lokey advised on the sale. |
Tornado Infrastructure Equipment (TSX: TGH), a truck manufacturer, was acquired for CAD 294.899M by The Toro (NYS: TTC). EV/EBITDA was 14.74x and EV/Revenue was 1.83x. |
Steelcase (NYS: SCS), a furniture company, was acquired for $2.802B by HNI (NYS: HNI). EV/EBITDA was 13.45x and EV/Revenue was 0.86x. J.P. Morgan and Wells Fargo advised on the sale. |
Morgans, provider of financial advisory services, was acquired for $650.0M by Titan Wealth Holdings. |
Heidrick & Struggles International, a leadership advisory firm, was acquired for $1.3B by Advent International, Corvex Management, Salem Capital Management, Mousse Partners, HighSage Ventures, and its management. EV/EBITDA was 19.19x and EV/Revenue was 1.07x. Bank of America advised on the sale. |
Coastal Cloud, provider of information technology consulting services, has reached a definitive agreement to be acquired for $700.0M by Tata Consultancy Services (NSE: TCS). |
Private Placement Transactions💭 |
Airwellex, operator of a global payments and financial platform, raised $330.0M of Series G venture funding led by Addition at a pre-money valuation of $7.67B. |
Saviynt, developer of cloud security and identity governance software, raised $700.0M of Series B venture funding led by Kohlberg Kravis Roberts at a pre-money valuation of $2.3B. |
Naked Surf Club, provider of an online retail platform, raised $100.0M of Seed Funding from Wadiz Partners. |
Fal, developer of a generative media platform, raised $140.0M of Series D venture funding led by NVentures and Sequoia Capital at a pre-money valuation of $4.36B. |
Boom Supersonic, manufacturer of supersonic aircraft, raised $300.0M of Series B venture funding led by Darsana Capital. |
Quantum-Art.Tech, developer of quantum computing system technology, raised $100.0M of venture funding led by Bedford Ridge Capital. |
Impulse Dynamics, developer of a cardiac contractility modulation technology, raised $242.13M of venture funding from Redmile Group, Sands Capital, and Perceptive Advisor. |
Highland Electric Fleets, provider of fleet electrification services, raised $150.0M of venture funding from Alga Capital Partners. |
Fervo Energy, operator of geothermal power projects, raised $462.0M of Series E venture funding led by B Capital Group. |
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Odds of the Day 🍒 |
Kalshi traders are pricing in a 81% chance of the Fed holding in January |
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Noteworthy Chart 🧭 |
Here's the Fed Dot Plot from this past meeting: |
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Meme Cleanser 😆 |
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Until next time! |
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