In today’s briefing:
- Hollysys (HOLI US): Merger Agreement Leaves the Door Ajar for a Higher Recco Offer
- [Counting Beans #1] Robust Soybean Exports Driving Prices Higher Despite Record Harvest
- Las Vegas Sands: Our Case for This as a $70 Stock Is Strong but It Lingers in the 40s
- Lockout Rally Continues; Breakouts Piling Up; SPX Breakout Above 2-Yr Resistance at 4600-4607
- Digging Into Cybersecurity Incidents
Hollysys (HOLI US): Merger Agreement Leaves the Door Ajar for a Higher Recco Offer
- Bloomberg reports that the Recco consortium is considering “a significantly higher” Hollysys Automation Technologies (HOLI US) offer than Ascendent’s US$26.50 binding offer.
- The Hollysys 6-K filling outlines the closing conditions – a simple majority YES vote, regulatory approvals, minimum net cash (waivable) and a 10% maximum dissent condition (waivable).
- Recco is a committed suitor and will not easily give up. The merger agreement clauses point to a Recco offer floor of US$27.03 and a ceiling of US$30.48.
[Counting Beans #1] Robust Soybean Exports Driving Prices Higher Despite Record Harvest
- Research shows that El Niño results in milder weather leading to higher precipitation and consequently ~3.5% higher yield leading to depressed bean prices.
- Bean prices have outperformed seasonal trends in November and December. It is surprising given surplus inventory outlook and El Niño effect on production.
- Notifications of large export sales have driven much of the bullishness in prices over the past week. Prices are up 1.7% from last Friday’s settlement prices.
Las Vegas Sands: Our Case for This as a $70 Stock Is Strong but It Lingers in the 40s
- Adelson family interests have sold 10% of their LVS equity to acquire a pro basketball franchise. This triggered am 8.5% decline in the stock when it was actually bullish.
- The market has not yet grasped the magnitude of the Asian gaming recovery arc which points to 2024 reaching baseline 2019 arrivals and GRR pace by mid-2024.
- LVS has the scale and amenities to outperform peers but this is not yet reflected in its trading range dead pooled in the $40s.
Lockout Rally Continues; Breakouts Piling Up; SPX Breakout Above 2-Yr Resistance at 4600-4607
- Since 11/21/23 Compass we have discussed weekly that even a minor 2-5% pullback is far from a guarantee, considering “breakaway gaps” and what appeared to be an ongoing “lockout rally”
- All we got was a 1% peak to trough decline in the S&P 500, while the Nasdaq 100 (QQQ) pulled back 2.9% (though left the 11/14/23 gap unfilled).
- Now, SPX and QQQ are breaking out yet again after a multi-week consolidation period, including SPX breaking above 2-year resistance at 4600-4607. This is what a strong market looks like.
Digging Into Cybersecurity Incidents
- So there we were today, scanning the latest corporate filings to the Securities and Exchange Commission , when we noticed that Johnson Controls ($JCI) had filed its latest earnings report .
- We started reading, and were immediately stopped short by this earnings adjustment, right there in the second bullet point: Fiscal Q4 GAAP EPS of $0.80; Q4 Adjusted EPS of $1.
- Hold up — what cybersecurity incident? When did that happen, and what has Johnson Controls said about it so far?
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