Daily Brief United States: Monolithic Power Systems, Inc, Apollo Global Management , Intel Corp, Fortive , Adeia, Crude Oil, Cadrenal Therapeutics , ChampionX , Gevo, Ryder System and more

• Monolithic Power Systems (MPWR US) is a direct addition followed by AppLovin (APP US) which is a conditional addition but close to be direct. Demand is ~$1.8bn and ~3.5 ADV.
• Dollar Tree Inc (DLTR US) is a direct deletion with the highest exclusion probability as it is  ranked above the exit rank of 125. 
• Super Micro Computer (SMCI US) , ARM Holdings (ARM US) and Moderna (MRNA US) are amongst the prioritized constituents preventing eligible candidates from entering the index. 

• The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
• In this insight, we take a look at the upcoming constituent changes in the run up to the December 2024 index rebal event.
• We expect two regular changes in December 2024. There are also several live spin-off and M&A events which could trigger intra-review index changes in the late-2024/early-2025.

• Intel is spinning off their foundry division into its own entity within the company, with financial independence and guardrails in place.
• The company is not selling off assets as a whole but is making strategic deals, such as a partnership with Amazon.
• A letter from Intel’s CEO to the team hints at potential activist investor issues and the company’s legal obligations in response to potential acquisition offers.

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• On September 4, 2024, Fortive Corp (NYSE: FTV) announced plans to separate its Precision Technologies business into a separate publicly listed company (NewCo), via a tax-free spin-off transaction.
• NewCo, being more volatile and lower margin, versus the parent, has been a drag on the overall valuation of FTV.
• FTV (ex NewCo) will be a high recurring revenue business with strong free cash flow generation profile. We believe that FTV (ex NewCo) will command a higher multiple.

• Q3 is coming to an end and ADEA has yet to announce new licensing deals its management has been asserting would happen this year. 
• ADEA has maintained a revenue forecast of $380 million to $420 million on the expectation there would be at least two major new licenses announced this year.   
• Our earning model currently calls for ADEA to generate $400 million in revenue with the third quarter being a smaller step up in revenue compared to the fourth quarter.

• For the week ending 20/Sep, US crude inventories declined by 4.5m barrels, surpassing expectations of a 1.3m barrel drawdown. Gasoline and distillate stockpiles also decreased more than analyst estimates.
• US natural gas inventories rise 47 Bcf for the week ending 20/Sep, lower than analyst expectations of a 52 Bcf buildup. Inventories are 7.1% above the 5-year seasonal average.
• BP and Shell experienced rating downgrades and target price reductions, while TotalEnergies and Exxon Mobil saw upward revisions in their target prices.

• We are initiating coverage of Cadrenal Therapeutics, Inc. (CVKD) with a valuation of $30.00.
• Cadrenal is a clinical stage biopharmaceutical company developing tecarfarin, a novel oral and reversible anticoagulant intended to prevent deaths due to blood clots in patients with rare cardiovascular conditions, including those with left ventricular assist devices (LVADs), end-stage kidney disease (ESKD) with atrial fibrillation (AFib), and mechanical heart valves with difficult to control time in therapeutic range (TTR).
• The company will be meeting with the FDA to discuss the design of a Phase 3 clinical trial of tecarfarin in patients with LVADs. Cadrenal has also been in discussion with Abbott, the maker of the only LVAD for sale in the U.S., regarding the Phase 3 trial, which we anticipate initiating in the first half of 2025.

• ChampionX Corporation recently discussed their fourth quarter and full year 2023 earnings, revealing a mix of achievements and strategic initiatives that position the company for future growth while acknowledging some market challenges.
• The company reported a solid performance for the fiscal year 2023, marking significant financial milestones.
• ChampionX expanded its adjusted EBITDA margin by 430 basis points and achieved a 25% growth in adjusted EBITDA.

• CEO and Director Patrick Gruber joined us on the WTR Small-Cap Spotlight to discuss Gevo’s recent acquisition of Red Trail in North Dakota.
• Those interested can listen to this podcast on Apple Podcasts, Spotify, or on our website
• With the planned $210-million Red Trail acquisition, Gevo will add low-carbon ethanol and carbon capture and sequestration (CCS) as new operational business lines. 

• Ryder System has demonstrated a resilient financial performance in the second quarter of 2024, overcoming challenges in a demanding freight environment.
• The company’s strategic adaptations and acquisitions have strengthened its market stance, making major contributions toward revenue growth.
• The integration of Cardinal Logistics and Impact Fulfillment Services (IFS) is proceeding as planned, enhancing Ryder System’s offerings in dedicated transportation solutions and its supply chain capabilities, respectively.