Daily Brief United States: Sable Offshore, S&P 500 INDEX, Ethereum, SGX Rubber Future TSR20, Exxon Mobil, Kaanapali Land, Cerebras Systems , Natural Gas, Crude Oil, NB Private Equity Partners and more

• We are initiating coverage of Sable Offshore (SOC) with a Sell Rating and $6 target.   
• SOC is attempting to restart oil production off the coast of Santa Barbara, California that is unlikely to gain the necessary regulatory approvals to move forward.   
• The offshore oil platforms, previously owned by XOM, have been shut down since 2015. SOC acquired the assets on the expectation it could win approval to restart production. 

• The $SPX continues to hold below 5783, the upper-end of an important target/resistance area (5670-5783) we’ve discussed since our 8/13/24 Compass, just after SPX hit our 5100-5191 “expected pullback zone.”
• The current “breakout” above 5670 is an extraordinarily weak one, which suggests a false breakout/bull trap is brewing; SPX has spent nearly three weeks above 5670, with zero upside follow-through.
• As long as the SPX does not have a weekly close above 5783 we continue to recommend reducing risk and shifting to defensives.

• The crypto market showed some positive momentum over the weekend.
• We will not repeat ourselves on why we are highly bullish going into this fourth quarter, so we will spare you that for now.
• What is notable is the steady stream of major financial institutions announcing new digital asset services on a weekly basis.

•  A chemical used in tire manufacture has been causing controversy since 2020.  
•  The United States Tire Manufacturers Association (USTMA) is investigating a series of potential alternatives, following new legislation from California that requires any company selling tires in California to either declare that they do not contain 6PPD, or demonstrate that they are seriously seeking alternatives.  
• As of now, no major fines have been imposed on tire manufacturers specifically for 6PPD use, but there is growing regulatory scrutiny, particularly in regions like the Pacific Northwest where environmental harm has been documented.

• ExxonMobil’s Q3 revenue is expected to rise 6.3% YoY and 3.7% QoQ but its EPS is anticipated to fall 11% YoY and 5.6% QoQ.
• Management expects upstream earnings to decline by USD 0.6-1 billion due to falling crude oil prices. Earnings from the energy products segment are also projected to drop significantly.
• Exxon expects production in 2024 to be around 4.3 Moebd, with 1.2 Moebd coming from the Permian. The total capex for the year is estimated at USD 28 billion.

• Kaanapali Land is a company that owns 4,000 acres of land on Maui in Hawaii, near the Kaanapali resort community
• The company operates in the agricultural sector, focusing on coffee cultivation, and has a market capitalization of $59 million
• Controlled by JMB Realty, Kaanapali Land is facing challenges with regulatory issues and delays in land development, exacerbated by the Maui wildfires in August 2023.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Cerebras Systems, a fast-growing maker of wafer-scale AI chips, which power the world’s largest supercomputers, will reveal IPO terms soon.
• Given the company’s hyper-growth trajectory, $1B+ deal with UAE’s G42 and unique architecture, I expect Cerebras Systems is likely to get a premium valuation.  
• The AI company plans to raise up to $1B while selling stockholders will offer additional Class A shares in this IPO.

• US natural gas prices fell by 1.65% for the week ending 04/Oct, ending a streak of five straight weekly gains. The decline was due to expectations of softening demand.  
• Henry Hub Put/Call volume ratio fell to 0.98 (04/Oct) from 1.03 the previous week as put volumes fell by 20.2% WoW, while call volumes declined by 16.7%.
• Put OI increased for contracts expiring in October and November, while call OI rose for expiries in December, January, February, and March.

• WTI futures rose by 9.1% for the week ending 04/Oct, its strongest weekly gain since October 2022. The surge was led by escalating tensions between Israel and Iran.
• WTI options Put/Call volume ratio fell to 0.64 (04/Oct) from 0.76 (27/Sep) as call volume jumped by 120% WoW while put volume grew by 86.6%.
• WTI OI PCR fell to 0.76 for the week ending 04/Oct from 0.77 last week. Call OI rose by 11.4% WoW, while put OI grew by 10.4%.

• In our initiation, we highlighted that NBPE is uniquely focused in the co-investment sector of PE.
• Our report underlined why this sector has especially appealing return, cashflow, asset selection, risk management, and GP access characteristics.
• In this note, we review how the manager, NB, adds value in this attractive market.