United States

• Sam returned as the CEO of OpenAI days after his surprise removal. Its board was overhauled with new members – Larry Summers and Bret Taylor.
• The surprise removal of Sam was driven by philosophical differences over AI safety. Fears of employee exodus to Microsoft is the primary driver of his return to OpenAI leadership.
• Recent events have solidified Microsoft’s partnership with OpenAI and Sam. Outcome from fallout suggests Microsoft will have a larger role in shaping OpenAI’s future.

• Memory names have rallied strongly, with Nanya Tech outperforming since the start of November.
• DRAM bottomed and NAND flash prices have jumped. Micron says that 2025E could be a record year for the Memory industry.
• High valuations make near-term upside for Memory names uncertain. For Long/Shorts one can consider Long Micron vs. Short SK Hynix or Long Micron vs. Short Nanya Tech.

• Improving outlook with Q1F24 revenue forecast slightly above the high end of the guided range
• 2024 is being positioned as a “recovery year”, helping reset investor expectations about the nature and speed of the recovery
• Micron’s share price typically rallies strongest into record revenue years. 2024 will not be a record revenue year. As such, we think the present rally is premature. 

• Nvidia’s quarter was surprising to me because it was boring. There were a few incremental pieces, but the big news was everything to do with China.
• As you know, there was another round of export restrictions with a myopic focus on AI Accelerators.
• This impacted results and the outlook.

• SDRL reported third quarter results exceeding expectations and announcing slight extensions to when near-term contracts would expire.
• There had been minimal news from SDRL to expect contract extensions. SDRL’s peers had been reporting a slowing in contract activity.
• The free cash flow SDRL is generating is being used for stock buy backs with the authorization doubled to a total of $500 million.

• We are reiterating our Buy rating and $32.50 price target for Guess?, after the company reported mixed 3QFY24 (October) results, with EBITDA handily beating Street consensus, but EPS a miss, driven by a higher than expected tax rate and slightly weaker top line results, as Europe saw slowing traffic and the domestic stores remain negative.
• Jeans), the recapture of the company’s license for domestic outerwear and a normalization of the expense base.
• As such, we are reiterating our Buy rating and $32.50 price target on GES, which now translates to 6.5X our new FY25 EBITDA.

• We are cutting our projections and price target for Express, but maintaining our Buy rating after the company missed 3Q projections and guided to a materially weaker than expected 4Q.
• Further, with inventories heavier than expected ahead of the Holiday season (up 14% YoY, or flat if Bonobos is excluded) we expect the season to remain aggressively promotional and, in the near term, offset any gains from cost savings and other S,G&A reductions (and probably spill over into Q1FY24).
• Our new price target of $20 (down from $40) translates to 8.2X our new, materially lowered FY24 EBITDA projection.

• We are reiterating our Buy rating, projections and price target for Express after visiting stores in Long Island and Connecticut.
• We believe, after a tough Xmas last year, Express offerings are materially more versatile, priced better and more inline with the split between fashion and basics to create multiple exciting looks and outfits.
• As such, we reiterate our Buy rating and price target for EXPR.

• Airbnb delivered an all-around beat in the previous quarter, reporting a net income of $4.4 billion, including a one-time income tax benefit of $2.8 billion from releasing a valuation allowance.
• Excluding this benefit, adjusted net income reached a significant $1.6 billion, representing a historic adjusted net income margin of 47%.
• The quarter’s free cash flow amounted to $1.3 billion, with a trailing 12-month free cash flow hitting an all-time high of $4.2 billion.

• Amgen delivered a mixed set of results for the previous quarter, with revenues well below analyst expectations but managed earnings beat.
• The company achieved significant quarterly sales for seven key brands and witnessed substantial volume growth across general medicine, inflammation, and hematology/oncology portfolios.
• In bone health, Prolia reported a 14% year-over-year sales increase in the third quarter, buoyed by a 7% volume growth and higher net selling prices.

• ECVT held an investor day asserting the Company is in a growth mode through multiple product lines, including those for emerging markets
• ECVT has set the goal of achieving as much 8 percent a year organic adjusted EBITDA growth through 2028.
• The growth would come from the current business growing and taking market share and ECVT having commercially available products for emerging new end markets.

• On November 29, 2023, Blockchain.com announced it is partnering with SoFi so users can migrate their crypto accounts to the Blockchain.com platform.
• Bakkt provides the platform for Blockchain.com in seven states: HI, LA, NJ, NV, TN, TX, and VA.
• The additional SoFi accounts in these states will come onto the Bakkt platform for crypto trading.

• Growth resumed for both sales and EPS in 4QFY23, the first time in 16 quarters that both grew simultaneously.
• While sales growth flattened out a bit in the 1QFY24 (September), top-line momentum continued in the US, driven by the success of the LV360 initiatives, and company-wide EBITDA grew 41.1%, driven by a 230- basis-point improvement in margins.
• The resumption of growth could be sustainable, driven by a wide range of company-specific initiatives, most importantly its LV360 initiatives, including a sweeping overhaul of its consultant compensation plan, and robust new product activity.

• New York-based biomaterial company TômTex has secured US$4.15 million in a seed investment round led by Happiness Capital.
• Earth Venture Capital, SOSV, Parley for the Oceans, and MIH Capital also participated.
• The funding will support the growth of TômTex’s Brooklyn team, fill key leadership roles, and enhance manufacturing capabilities.

• Aspira Women’s Health made two reimbursement announcements this week.
• On November 27, Aspira announced that the Centers for Medicare and Medicaid Services (CMS) approved the crosswalk of the fee to be paid to the company for OvaWatch to the fee paid historically for Ova1.
• Aspira will be reimbursed at a rate of $897 for all OvaWatch and Ova1 tests processed for Medicare patients meeting applicable coverage requirements beginning on January 1, 2024. 

• Discussed risk/reward favored buyers in late-October as supports were being tested (October 24 and 31), then we outlined on 11/7/23 our belief that a significant year-end rally was likely underway.
• New market-generated information has continued to be risk-on, which has only reinforced our bullish outlook on the broad equity market.  We continue to expect a rally into year-end and beyond
• Gold and silver are bullishly inflecting, and we are buying GLD, SLV, and the miners (GDX, GDXJ)

• Despite Hollysys Automation (HOLI US) receiving a myriad of proposals over the past three years, nothing moved forward.  Calling an SGM to spill the board would change that status quo. 
• But Hollysys’ board stonewalled the SGM, pinning its reason – and a proposed injunction – on the subjective ownership of Ace Lead, and in turn, its 6.7% holding in Hollysys. 
• That injunction was dismissed last week. An SGM will now be held late January. A firm merger proposal is expected in the middle of next month. This is a buy.

• BTC is up ~140% since its bottom 1yr ago. Prior instances imply BTC is in the early innings of a new bull cycle with most of its expected gains ahead.
• Market breadth is expanding as we are seeing industry wide participation in recent weeks.
• Onchain borrowing activity is picking up, as are average lending rates and utilization rates on stablecoins, which are some of the most popular assets to borrow during market uptrends.

• We are initiating coverage of Eventbrite (EB) with a Buy Rating and $12 target.
• Eventbrite benefits from social change where in-person meet ups are celebrated more so than virtual events.
• Eventbrite fills the void of online dating apps. The popularity of online dating apps is dwindling, and Eventbrite should benefit from this growing trend.

• Global Fund exposure in ServiceNow, Inc. hits all-time high with 20.6% of funds invested. Funds move to overweight.
• Positive Rotation Across All Metrics Driven by Growth and Aggressive Growth Managers.
• Positioning relative to technology sector peers suggests room for even broader market penetration.

• MariMed closed a $58.7 million secured credit facility with a US chartered bank on November 17, 2023.
• The refinancing will result in a $4.7 million reduction to principal and interest expense in the first 12 months and $3.5 million annually for the next four years.
• MariMed estimates its new weighted average cost of debt is now about 8%, down from more than 11% previously.

• ZEEKR is expected to IPO in December. The company plans to raise up to $1B and Geely Auto may purchase additional shares of ZEEKR in a concurrent private placement.
• I have a favorable view of the upcoming ZEEKR U.S. IPO and value ZEEKR shares using a 50/50 blend of EV/Sales analysis and long-term discounted cash flows analysis.
• ZEEKR’s last round was a $750M Series A in February 2023 at a $13B post-money valuation. My ~$21B target valuation suggests 61% potential upside vs. last round valuation of $13B.

• Q3FY24 revenues of 18.1 billion, up 34% QoQ and up a staggering 206% from the year ago period. It was also ~$2 billion higher than the guided number
• NVIDIA’s current quarter forecast was for a further revenue raise of almost $2 billion with gross margins staying roughly flat at 74.5%
• Share price reaction was negative, closing down 2.5% the following day. But why?

• The Hollysys Automation Technologies (HOLI US) Board has finally succumbed to shareholder pressure by targeting a special meeting of shareholders in the week commencing 22 January 2024.
• The special meeting is a side event as the Board targets a binding proposal by mid-December, with some bidders proceeding to the confirmatory due diligence stage.
• The BVI takeover structure and Hollysys’ undemanding valuation facilitate a competitive bidding process. A 10% uplift to the current highest offer (Recco’s US$26.50 offer) is possible.

• By offering 15k and 30k/m 3nm capacity by 4Q24/4Q25 to Intel, TSMC will see Intel becoming one of its top 3 customers by accounting for 12% of TSMC 2025 sales
• By leveraging 3nm outsourcing, Intel will have incremental sales/capacity growth of 19-20% per year by accounting for 28%/44% of sales in 2024/2025, beating consensus’ 14%/9% y/y sales growth for 2024/2025.
• We estimate 30-35% 5 years EPS CAGR for Intel, driven by TSMC’s 2/3nm foundry support, lower cost and process R&D, lower capex and depreciation cost, and AI PC CPU launch.

• Welcome to our weekly EIA watch paired with a few remarks on the postponed OPEC meeting.
• We have had a look at OPEC production and export numbers, and it seems like production is much more price bullish than actual net exports (meaning a draw on local OPEC inventories)
• Interestingly, the US, Nigeria, Iran, UAE (among others) have managed to fill a lot of the production gap left open by left open by Saudi Arabia.

• Cirrus Aircraft (0153126D US) is looking to raise up to US$200m in its upcoming HK IPO.
• Cirrus Aircraft designs, develops, manufactures, and sells premium aircrafts. Its two aircraft product lines, the SR2X Series and the Vision Jet, are currently certified and validated in over 60 countries.
• We had covered the company’s performance in our earlier notes. In this note, we talk about its PHIP updates.

• Medtronic Plc (MDT US) reported Q2FY24 revenue of $8B, representing 5% organic growth, topping guidance of 4.0–4.5%. Cardiovascular, neuroscience, and medical surgical grew mid-single-digit with diabetes accelerating to high-single-digit.
• The company now expects FY24 organic revenue growth of 4.75% versus the prior 4.5%. Medtronic raised FY24 adjusted EPS guidance to $5.13–5.19 from $5.08–5.16 earlier.
• In November, the company has received FDA approval for innovative renal denervation device for the treatment of hypertension, which should open a multi-billion-dollar market opportunity.

• The VIX INDEX has reached very OVERSOLD levels, it could bounce soon. Our models predict a short-lived bounce, probably 1-week.
• An increased VIX could trigger panic selling also in Asia-Pacific markets, dragging down returns and increasing volatility.
• The S&P500 is also WEEKLY OVERBOUGHT, the combination of VIX OVERSOLD and SPX OVERBOUGHT for us is a clear indication: WEEKLY pullback incoming!

• Nvidia’s street-beating results indicate strong growth to continue; Generative AI demand will next expand from startups, consumer internet, and cloud service providers increasingly to enterprise AI-linked demand.
• Nvidia is not expensive despite recent market concerns. We believe Nvidia can meet or even beat its current calendar year 2024 earnings expectations and forward PE is cheap.
• Short a basket of Taiwan AI concept stocks vs. a core Nvidia long position rather than take profits in Nvidia. We have swapped one Taiwan stock in our short basket.

• BILL Holdings is a cloud-based provider of SaaS, payments, spend and expense management products, which automate accounts payable (AP) and accounts receivable (AR) transactions
• The company has successfully completed its IPO in 2019 and raised $200M+ in net proceeds. Today, BILL Holdings includes subsidiaries such as Bill.com, DivvyPay, Invoice2go, Cimrid and Finmark Financial.
• My bear case assumes a ~5% ten-year revenue CAGR from FY24 through FY34, maximum competitive pressure, high customer churn, headwind to float revenue and volatile transactional revenue.

• IPAR issued its initial 2024 sales and EPS guidance proving clarity as investors value the stock for the year ahead.
• IPAR is forecasting sales and EPS in line with our current estimates suggesting there could be ample upside to the numbers if the current demand for fragrances were to continue.
• IPAR expects 2024 sales of $1.45 billion and EPS of $5.15. Both of which are in line with our estimates of $1.42 billion and $5.16, respectively.

The FDA has accepted Immix’s Investigational New Drug (IND) application for lead CAR-T asset NXC-201. In our view, this decision from the FDA represents encouraging progress for Immix in delivering, potentially, the first outpatient CAR-T therapy, provided the data continue to be supportive. This regulatory decision enables Immix to start dosing patients with amyloid light chain amyloidosis (ALA) in the US as part of the NEXICART Phase Ib/IIa clinical trial, which has previously been operating in Israel. Further, management has communicated that the favourable tolerability profile of the therapy to date could warrant a potential expansion into autoimmune indications; we await additional updates on this front. NXC-201 has demonstrated a desirable safety and efficacy profile in 72 patients with ALA or multiple myeloma (MM) to date, potentially supporting NXC-201 as the first outpatient CAR-T therapy.

• A fortnight after co-COOs pitched a US$25/share indicative Offer for Hollysys (HOLI US), Ascendent Capital, holding 13.7%, tabled a US$26/share Offer. The Recco/Dazheng consortium offered US$26.50 a week later.
• There is currently a dispute over the ownership and control of Ace Lead’s shares in Hollysys, which was subject to an injunction hearing in the Hong Kong High Court.
• That hearing took place today. So I went along to hear first-hand the key arguments from both sides. 

• Nvidia reports/guides a better than expected 3Q/4Q23 sales, margin, and EPS on stronger AI GPU sales growth of nearly 3x.
• Nvidia reports a healthy 3.04 MOI, down 5% q/q and down 37% y/y and contributes nicely to account for 9% of TSMC sales.
• In spite of concerns on good news priced in, seasonal weaker 1Q24, and MI300X/ASIC alternative AI solutions, we expect more raise to come in 2024-2025E.

• The broad equity market has been on an absolute tear since we discussed in our 10/31/23 Compass how risk/reward favored buyers as key supports were being tested on SPX/QQQ/IWM
• Furthermore, we discussed in our 11/7/23 Compass our belief that this was more than just another counter-trend rally, and that it is likely the start of a significant year-end rally.
• Bullish developments have only continued; among them includes 3.5-month downtrend reversals on the S&P 500 and QQQ. We expect more upside into year-end and beyond.

• Welcome to this US rates nugget with three charts on why November data from the US economy could refuel the hawkish bias within the Federal Reserve.
• First, our ISM Services model hints at a large rebound in the ISM number released on December 5.
• ISM Services jumps to >60 in our models when you adjust for the spreadsheet wizardry of the Institute of Supply Management (remember the abysmal prints in Nov/Dec of 2022) as the seasonal adjustment factors are much more helpful than a year ago.

• US Global Jets ETF (JETS US) surged by 6.6% last week, bringing the YTD to -2.1%. The strong move was in tandem with U.S. major indexes, but at 3x greater
• Positive fund inflow of US$92m, the second month in a row, reversing 17 months’ downtrend. Accumulation suggests the bottom is over, and investors turning positive on the aviation sector 
• Maintain TP of US$19 (+14% UPSIDE), but it might be a good idea to protect the downside with a short-term Put option, last week’s action was too fast and furious 

• Reports 3Q23 revenues of $5.8 million and positive adjusted EBITDA of $405K, up from $2.1 million and negative ~$2 million, respectively, in 2Q23.
• The improved results reflect additional contributions from new projects that began ramping up in 2Q23, along with lower SG&A that reflects the cost-cutting efforts enacted earlier in 2023.
• We note that comparisons to 3Q22 are not meaningful given the company’s pivot to mostly hosting contracts at its data centers rather than proprietary Bitcoin mining where it recognized both higher revenues and costs.

• ATNI is getting set to undergo management change right when the Company was to begin harvesting cash flow from several years of capital expenditures
• In 2024, CEO would move to Executive Chairman and the CFO plans to retire. In their place, ATNI has named Brad Martin as CEO and Carlos Doglioli as CFO
• Current COO has overseen the investment in Alaska and other markets ATNI has been placing fiber lines in an attempt to thwart competition before there was a severe pricing pressure

• ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
• Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
• We have looked at the company’s past performance in our earlier notes . In this note, we will undertake a peer comparison.

• OpenAI was founded in 2015 by investors, including Elon Musk, Reid Hoffman, Peter Thiel, AWS, and YC Research.
• The goal was to pursue Artificial General Intelligence (AGI) safely for the benefit of humanity.
• There was an initial pledge of $1 billion, but the money that came in was $100 million from Elon Musk and $30 million from Open Philanthropy.