What You Need To Know for December 12th

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Welcome back! This has been a whirlwind of a week, so let’s get into it:

Earnings Corner 📜 

Trending Up 📈 

GameStop (GME) reported earnings that beat estimates. Revenue was down -20% y/y, but the video game retailer swung back to profitability, with EPS of $0.04. The announcement comes after the stock briefly spiked 14% last week on a cryptic Roaring Kitty X post. The stock was up 7.6% at Wednesday’s close

Academy Sports (ASO) reported earnings that missed estimates. However, revenues were up 7% y/y, and mgmt. noted improving comp. sales trends versus in the first half of 2024. Mgmt. announced they have opened 16 new stores YTD and plan to open 25 more in 2025, lower than initial growth expectations. The stock was up 3.7% at Wednesday’s close

Trending Down 📉 

Oracle (ORCL) reported earnings that missed estimates, with revenue of $14.06B up 9% y/y (vs. $14.12B expected) and EPS of $1.47 (vs. $1.48 expected). Cloud infrastructure was a key growth driver, as AI-related demand helped boost sales 52% y/y to $2.4B. Oracle also announced a new contract with Meta to provide the company with infrastructure for developing its Llama LLM. However, mgmt. released guidance that disappointed analysts, projecting Q3 revenue of $14.3B (vs. $14.65B expected) and EPS of $1.50-$1.54 (vs. $1.57 expected). The stock had its worst day of the year and was down 6.4% at Wednesday’s close

Adobe (ADBE) reported earnings that beat estimates, with revenue of $5.61B up 11% y/y (vs. $5.54B expected) and EPS of $4.81 (vs. $4.67 expected). Adobe’s digital media arm, which includes its creative cloud subscription service, saw recurring revenue grow by 2%, beating analysts’ projections. However, the mgmt. outlook disappointed the street, with FY 2025 revenue projected at only $23.3B-$23.55B (vs. $23.77B expected). The stock was down 9.2% after Wednesday’s close

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Today’s Headlines 🍿 

• The latest on Luigi Mangione: The NYPD has found fingerprints near the scene of the crime that would link him to the attack and to the gun that was found in his possession

• November’s Inflation Numbers: CPI matched expectations, up 2.7% YoY. Driven yet again by expensive eggs, grocery prices rose along with auto insurance and rent. This tees up a rate cut of 25bps for next week’s Fed Meeting

  

• Big Tech’s Buzzing: after a reasonable inflation report boosted Fed rate cut expectations, the Nasdaq surged to a record led by Broadcom and the Mag 7

• Google’s quantum computing is sending shockwaves across multiple industries: Willow is a chip that can solve complex problems in under 5 minutes. Historically, computers were able to solve these problems in 10 septillion years, marking a dramatic improvement in quantum computing ability. There’s initial worries about what this might mean for password security, for your account security, as well as your Bitcoin

• Saudi Arabia will host the 2034 World Cup: Despite human rights groups objections’ FIFA organizers chose Saudi Arabia as the sole host of the 2034 World Cup. The 2026 Games will be based in the USA, Canada, and Mexico, while the 2030 games will be in Spain, Morocco, and Portugal

• MicroStrategy is on track to get added to the Nasdaq-100 on December 23rd, a stunning climb for the bitcoin buying software company

• Mondelez was evaluating acquiring Hershey’s, a major shake-up in the confectionery landscape. However, cold water has now been poured on the deal, with the Hershey Trust rejecting the offer and calling it “too low”. Mondelez will be shifting towards tuck-ins instead. The move might’ve made sense given Mars’ $36B acquisition of Kellanova earlier this year

• Private equity is entering the NFL: Ares purchased a 10% stake in the Miami Dolphins while Arctos, a sports-focused PE firm, led a group buying a minority stake in the Buffalo Bills

• Clean-up for the break-up on aisle 5: after courts blocked a merger between the two supermarket chains in October, Albertson sued Kroger for “willful breach of contract” by not doing enough to win regulatory approval

• Walgreens is in talks to sell itself to Sycamore Partners, a retail focused private equity firm. Walgreens has seen its valuation fall from over $100B in 2015, to now around $18 Billion

• Taylor Swift brought home the bacon: The Eras Tour grossed a record $2.1B in ticket sales across 149 shows. Over two years, some think Swift personally earned around $745mm

• Alcentra, an European private credit pioneer, has seen AUM struggle in recent years. The acquisition of Alcentra by Franklin Templeton two and a half years ago has done little to change the declining AUM trends, following botched leadership changes, staff exodus, and some poor investments. Alcentra is still struggling to raise a new fund

  

• Andrew Ferguson will replace Lina Khan. After four years of aggressive antitrust action, Trump nominated Ferguson, who has promised to rollback corporate policing (except for Big Tech), to run the FTC

• Tilman Fertitta is (likely) the next U.S. ambassador to Italy: the billionaire hospitality magnate and owner of the Houston Rockets is rumored to be Trump’s pick to serve as the diplomat in Rome

• Brazilian President Lula is in the ICU: After an emergency surgery to remove a blain-breed, Lula is recovering in a São Paulo hospital. The President is not expected to take a formal leave of absence

• Adidas is under fire: Criminal prosecutors and investigators raided the German sportswear giant for a second day in a row yesterday, escalating a multiyear probe into tax evasion worth as much as €1.1B

• Comcast subscriber losses were worse than expected: management announced that broadband subscribers will drop ~100k in the final three months of this year, driven in part by Hurricanes Milton and Helene disrupting business in FL

• Activists are targeting Macy’s (again): Barington Capital and Thor Equities are pushing the retailer, down nearly 20% this year, to consider options for Bloomingdale’s and Bluemercury chains and develop a new RE unit to manage assets the activists argue are worth between $5-9B. However, Macy’s just sold their Brooklyn store for a mere $23mm

• Watch out, Jim Cramer took a look at pet stocks: Cramer recommended Chewy over Petco, favorable on the humanization thesis, and preferring Chewy’s balance sheet and management team

• Elon’s Net Worth Surges: After seeing his holdings surge 66% since Trump won, Musk has become the first person ever to reach $400B in personal net worth

• Balmer’s Ballers: A 4,500 seat section of screaming fans at the Clippers new arena is a killer new NBA defense. The section, dubbed “The Wall,” was specifically, and successfully, designed to throw off Steve Balmer’s opponents and draws similarities to European Soccer supporter sections

  

M&A Transactions💭 

The Interpublic Group of Companies (NYS: IPG), one of the world’s largest advertising holding companies, has reached a definitive agreement to be acquired for $13.97B by Omnicom Group (NYS: OMC). EV/EBITDA was 9.16x and EV/Revenue was 1.29x.

Radio Fuels Energy (CNQ: CAKE), a mineral resource company, has entered a definitive agreement to be acquired for $120.0M by Palisades Goldcorp and its management. EV/EBITDA was 47.15x. Fort Capital Partners advised on the sale.

Pactiv Evergreen (NAS: PTVE), engaged in the business of manufacturing and distributing fresh food service and food merchandising products, has entered into a definitive agreement to be acquired for $6.7B by CPP Investments and Novolex Holdings. EV/EBITDA was 18.31x and EV/Revenue was 1.29x. Goldman Sachs advised on the sale.

Mets Logistics, provider of logistics services, was acquired for $129.6M by Growtheum Capital.

Enterprise Bancorp (NAS: EBTC), a holding company engaged in the business of gathering deposits, has reached a definitive agreement to be acquired for $562.0M by 1st United Bancorp (NAS: FUBC). EV/Net Income was 15.65x and EV/Revenue was 3.33x. Piper Sandler advised on the sale.

Core Diagnostics, operator of a laboratory intended to provide diagnostics, was acquired for $292.06M by Metropolis Healthcare (BOM: 542650).

Chicago Bridge & Iron Company, operator of storage facilities construction firm, was acquired for $475.0M by Mason Capital Management, IES Holdings, Nut Tree Capital, 683 Capital Management, First Pacific Advisors, and Undisclosed Investors. Goldman Sachs advised on the sale.

AssuredPartners, operator of a mid-market insurance brokerage firm, has reached a definitive agreement to be acquired for $13.45B by Arthur J. Gallagher & Company (NYS: AJG). EV/EBITDA was 14.34x and EV/Revenue was 4.46x. Jefferies and Morgan Stanley advised on the sale.

Tritax Group (LON: BOXE), an investment company, was acquired for $1.4B by Brookfield Asset Management (TSE: BAM). Barclays, Jefferies, and Lazard advised on the sale.

Spar Nord Bank (CSE: SPNO), a retail bank, has entered into a definitive agreement to be acquired for $3.5B by Nykredit. EV/Net Income was 13.12x and EV/Revenue was 5.39x.

SapuraOMV Upstream, operator of oil and gas production company, was acquired for $957.0M by TotalEnergies (PAR: TTE).

RATP Dev London Transit, provider of bus transport services, has reached a definitive agreement to be acquired for $114.17M by FirstGroup (LON: FGP). 

MoneyLion (NYS: ML), a mobile banking and financial membership platform, has reached a definitive agreement to be acquired for $969.44M by Gen Digital (NAS: GEN). EV/EBITDA was 17.51x and EV/Revenue was 1.94x. Keefe, Bruyette & Woods advised on the sale.

Fully Ecosystem, operator of an ecosystem that contributes to companies building closer relationships, was acquired for $200.0M by Prudential Financial (NYS: PRU).

Bullskin Stone & Lime, operator of a stone quarry, reached a definitive agreement to be acquired for $152.5M by Eagle Materials (NYS: EXP).

1 E, developer of a real-time endpoint management platform, has reached a definitive agreement to be acquired for $720.0M by TeamViewer (FRA: TMV). Arma Partners advised on the sale.

Private Placement Transactions💭 

Tractian, developer of an asset performance ecosystem, raised $122.86M of Series C venture funding led by Sapphire Ventures.

Nscale, provider of AI, high-performance computing, raised $155.0M of Series A venture funding led by Sandton Capital Partners.

Mintifi, developer of an online supply chain financing platform, raised $180.0M of Series E venture funding led by Teachers’ Venture Growth and Prosus at a pre-money valuation of $670.0M.

Noema Pharma, operator of a biotechnology platform, raised $147.01M of Series B venture funding led by Jeito, EQT Life Sciences, and Forbion.

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Noteworthy Chart 🧭

A look at the historical Shiller PE ratio. However, I think the “right” mean to think about probably has more like a 20-handle.

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Until next time!

Obviously, none of this constitutes financial or investment advice.

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