United States

• Albemarle Corp (ALB US) will replace ioneer (INR AU) in the VanEck Rare Earth/Strategic Me (REMX US) at the close on 15 December.
• Constituent changes, float changes and capping changes result in an estimated one-way turnover is 13.4% and in a one-way trade of US$50m.
• The mainland China stocks in the index have been the biggest laggards and this rebalance will reduce their weight in the index significantly.

• ~$900 million supercomputer deal is off the charts compared to all previous deals
• Without the deal, Cerebras would likely soon have run out of cash. With the deal, Cerebras is effectively working as a supercomputer contractor for G42 for the next several years
• Three supercomputers to be built in the US, we suspect the remaining six to be built in the UAE. That’s likely to raise some eyebrows. 

• India is top global sugar producer & exporter. India ordered mills to halt ethanol blending on domestic shortage concerns in addition to export restrictions imposed earlier this year.
• Sugar prices soared to a 12 year high in late Oct. Despite India’s order on blending, global sugar prices have tanked 13% since start of Dec.
• Brazil’s bumper sugar crop will depress near term prices. However, intensifying effects of El Niño could send sugar prices soaring during later part of next year.

• In Q2FY24, Avid Bioservices (CDMO US) reported 27% YoY and 33% QoQ revenue decline to $25.4M, due to annual maintenance shutdown and reduction in process development services from early-stage customers.
• During Q2FY24, Avid Bioservices signed $35M in net new business orders from both new and existing customers, resulting in a record high backlog of $199M, up 35% YoY.
• Avid Bioservices has lowered FY24 revenue guidance to $137–147 million from $145–165 million. For reference, the company reported revenue of $149 million in FY23.

• NTGR has brought back the goal of achieving double digit operating margin after three years of underperformance while turning the business around.
• Unlike prior years where NTGR was relying on unit volume growth to drive operating leverage, NTGR now has a growing base of subscription revenue that is contributing to earnings
• NTGR’s annual investor day highlighted the expectation of exiting 2023 with annual recurring revenue (“ARR”) of $40 million and $50 million in 2024

• Aspira Women’s Health announced today that it has completed the design of the EndoCheck test based on the analysis of samples received from The University of Oxford in October.
• This data shows EndoCheck to be a high-performing blood test for localized endometriosis, including ovarian endometriosis masses known as endometrioma.
• Endometrioma is a localized form of endometriosis that has formed an ovarian mass. It is one of the most common types of endometriosis.

• We are revising our earnings estimates following Culp’s 2QFY24 earnings release and conference call.
• Management’s 3QFY24 guidance suggests that our prior estimate was overly optimistic about the pace of improvement.
• The objective of operating profitability by 4Q remains intact and achievable. We expect, and are modeling, positive net income in FY25.

• TPL has gone through a series of changes within its Board of Directors but that has not been enough to squash investor concerns
• The Delaware Court deciding in favor of TPL in a shareholder lawsuit would allow the Board to increase the number of authorized shares of common stock
• TPL’s Board now has ten members instead of nine last year. The Board has also seen three members turnover giving the Board a total of four fresh members

• The surprise US$1.9 billion acquisition of Hawaiian Holdings (HA US) by Alaska Air Group (ALK US) could potentially rerate the U.S. airline sector 
• US Global Jets ETF (JETS US) is up 16% from our initiation on 13 November, a mere 5% to our target price of US$19
• We advocate to take profits and square this trade in the upcoming days

• In November, Orthofix International Nv (OFIX US) named Massimo Calafiore as incoming President and CEO. Mr. Calafiore has extensive knowledge in orthopedics and spine, and M&A integration expertise.
• Orthofix has performed well and operated smoothly following management transition. In 3Q23, revenue increased 61% YoY on a reported basis and 1% YoY on a pro forma basis to $184M.
• The company expects to deliver much higher adjusted profits next year and to exit 2024 cash-flow positive from an estimated $100 million outflow for 2023.

• Culp, Inc. issued results for its 2QFY24 on Monday, December 4 after market close.
• Revenue and operating profit were better for the just-reported quarter than those posted in 2QFY23 and our estimates, bolstering management’s contention that it would deliver—and investors would witness—sequential quarterly improvements in operating profitability for the balance of FY24.
• Management also noted its belief of posting positive consolidated operating profitability by 4QFY24.

• MariMed has begun manufacturing and processing cannabis products in its new kitchen in Mount Vernon, Illinois.
• As often happens in cannabis, there were construction and regulatory delays, but the company expects to have its award-winning edibles in Illinois stores in time for the holidays.
• Illinois is the sixth-most populated state with 12.7 million residents.

• Ongoing developments have been almost exclusively of the risk-on variety ever since we discussed that risk/reward favored buyers in late-October (10/24/23 and 10/31/23 Compass reports).
• The latest risk-on developments include the Russell2000 (IWM) and DJI breaking above resistances of $180 and 35,650, to go along with bullish 9-month RS reversals for small-, mid-, and micro-caps.
• Breadth improvement and broadening participation was a big reason why we recommended buying the IWM when it was testing $162-$163 support (10/31/23 Compass). We remain bullish

• Brazil’s weather is set to improve with forecasts suggesting milder weather and rainfall; This alleviates concerns over Brazilian Soy crop.
• Seasonal trends during El Niño years differ: Soybean provides negative returns in December-February. Worsening El Niño likely to lead to more favorable conditions for Brazilian Soy crop.
• Technicals point to price reversal and bearish outlook. Options OI and futures positioning per COT report reaffirms bearish outlook. 

• Elastic NV (ESTC US) reported a solid quarter, reflecting strong cloud revenue growth, ~13% non-GAAP operating margin and rapid adoption of ESRE.
• Elastic NV (ESTC US) shares rallied 35%+ during regular trading session and closed up ~37% on Friday at $110.20. I raised PT to $121 from $112.
• However, I downgrade Elastic NV (ESTC US) to Equal-weight from Overweight on valuation and expect the stock to trade in-line with peers.

• Uber Technologies (UBER US), Jabil Circuit (JBL US) and Builders Firstsource (BLDR US) will be added to the S&P 500 INDEX (SPX INDEX) at the close on 15 December.
• There are a bunch of inclusions. deletions and migrations across the S&P 500 INDEX (SPX INDEX), the S&P Midcap 400 Index, and the S&P SmallCap 600 Index.
• We estimate passive trackers will need to buy around US$18bn of Uber Technologies (UBER US). There has been positioning in the stock for just over a month now. 

• The announcement of the inclusion of Uber Technologies (UBER US) in the S&P 500 INDEX was a big one last week. There were announcements for some other indices too.
• There are many indices in China that will be rebalanced at the close on Friday, the biggest being the CSI 300, CSI 500, STAR50, SSE50 and KWEB US.
• Relatively quiet in ETF world with net inflows to China focused ETFs and net outflows for Japan.

• I tally 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals discussed on Smartkarma this week: Glosel (9995 JP)‘s Tender Offer; and the indicative Offer for CIMC Vehicle Group Co Ltd (1839 HK)‘s H-shares. 
• Key updates on: Orecorp Ltd (ORR AU), Tietto Minerals Ltd (TIE AU), and Lansen Pharmaceutical Holdings Co, Ltd. (503 HK) 

• Virtual OPEC+ meeting was held on 30th November after being delayed by five days. Outcome was an increase and extension of supply cuts till Q1 2024.
• WTI rallied 2.5% heading into the meeting but fell 4% shortly after due to scepticism over members following through on cuts and short-term nature of agreement.
• OPEC+ announced that Brazil would join the coalition in early 2024. A move that unites most top crude oil producers in the cartel with major geopolitical ramifications.

• I warned Elon Musk wouldn’t help his beleaguered banks via refi of billions in losing LBO debt they foolishly fronted him to buy Twitter.
• He can’t even stop setting it and himself on fire every day.
• Now he admits Twitter is being killed by the advertiser boycott he again caused—but takes no responsibility for his incendiary actions.

Immix hosted a key opinion leader (KOL) event highlighting the long-term potential for NXC-201, the company’s B-cell maturation antigen (BCMA) targeting CAR-T therapy to address the fragile amyloid light chain amyloidosis (ALA) patient population. This is the only CAR-T therapy in development for the treatment of relapsed/refractory ALA to our knowledge and represents a significant unmet medical need as there are only limited treatment options and no standard of care. Relapse remains a common issue and, although still in the very early stages, the KOLs had optimism in the positive response rates shown thus far in the NEXICART-1 study. We anticipate rolling readouts for the NXC-201 ALA studies (particularly NEXICART-2) as the data become available.

• 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.