CAPIS Morning Note – 12/12/23: Market To Run Gauntlet Next Three Days, Stocks Flat

Executive Summary: Today begins a three day barrage of economic, earnings and Fed data. Inflation numbers are out this morning and tomorrow with Retail Sales on Thursday. Notable earnings from Adobe, Nordson, Costco, Lennar, Jabil and Darden. Then Wednesday the FOMC comes down from the mountain to weigh in on jobs, inflation and interest rates.

• November CPI is due out at 8:30 a.m. EST and is expected rise to 0.3% from 0.2%.
• The U.S. Treasury holds a 30 Year Treasury Bond Auction at 1:00 p.m. EST and it could move markets.
• Short interest – The latest NYSE and NASDAQ Short Interest Data is out for the period of November 13th through the 28th and NYSE fell by -0.93% while NASDAQ fell by -0.45%. NYSE had risen two times in the last four reports while NASDAQ rose five of the last six times. During the latest collection period the S&P 500 rose 3.25%.

• IPOs Priced or News:
  • General Atlantic confidentially files for U.S. initial public offering. (MarketWatch/Bloomberg)
• New SPACs launched/News:
  • Integrated Rail and Resources Acquisition Corp. (IRRX) Announces Extension.
• Secondaries Priced:
  • CBUS: Prices 2,106,723 Class A shares at $9.00 per share.
  • GPOR: Prices block trade by selling shareholders of 653,464 Shares of Common Stock for gross proceeds of $84.2 million.
  • KNTK: Prices secondary offering of 6.5 million shares of common stock at $31.50 per share.
  • LQDA: prices offering of 3,491,620 shares of common stock at a public offering price of $7.16 for total gross proceeds of approximately $25.0 million.
  • SNCY: Prices secondary offering of 4 million shares of its common stock by an affiliate of certain investment funds managed by affiliates of Apollo Global Management (APO).
  • SBOW: Prices secondary offering of 2.2 million shares of common stock.
• Notes Priced of note: None of note.
• Common Stock filings/Notes:
  • ACON: Filed Form S-1.. 25,925,926
  • AMC: Successfully Completes $350 Million At-The-Market Equity Offering and Reduces Debt by $62 Million, Bolstering Liquidity and Strengthening the Balance Sheet.
  • CTSO: Filed Form 8K.. entered into a securities purchase agreement
  • ETNB: Announces Closing of its Upsized Public Offering and Full Exercise of Underwriters’ Option to Purchase Additional Shares.
  • MGRX: Filed Form S-1.. 5,000,000 Shares Common Stock.
  • OMH: Filed Form F-1.. Ordinary Shares.
  • SNCY: Announces Launch of Secondary Public Offering of Common Stock and Concurrent Share Repurchase.
• Direct Offering:
  • CBUS: Announces $20.3 Million Registered Direct Offering
• Selling Shareholders of note:
  • GPOR: Files for 653,464 shares of common stock by selling shareholders.
  • KNTK: Announces secondary offering of 6 million common stocks by Apache Midstream, a subsidiary of Apache Corporation (APA). (JPM, BCS, RBC and TD Bookmanager)
  • NN: Files for 448,466 shares of common stock by selling shareholders.
  • SNCY: Announces launch of secondary public offering of 4 million common stocks by an affiliate of certain investment funds managed by affiliates of Apollo Global Management.
  • SBOW: Announces that an affiliate of Strategic Value Partners, LLC intends to offer for sale 1.7 mln shares of common stock in public offering.
• Private Placement of Public Entity (PIPE): None of note.
• Mixed Shelf Offerings:
  • AGRX: Filed Form S-1.. $15,000,000 Mixed Shelf.
  • CMND: Filed Form F-3.. $50,000,000 Mixed Shelf .
  • RGTI: Files $250 million mixed shelf securities offering.
• Debt/Credit Filing and Notes: None of note.
• Tender Offer:
  • GAB: Extends Expiration Date of Tender Offer to January 5, 2024 for Series C and Series E Auction Rate Preferred Stock.
  • UTHR: United Therapeutics and Miromatrix Medical (MIRO) announce successful tender offer.
• Convertible Offering & Notes Filed: None of note.

Capital Raise Summary From The TradeXchange, bringing traders and investors real time news and Squawk Box, and other sources.

News After The Close :

• After Hours Movers: 
  • CNTB: +45% Announce Top-Line Data from the Global Phase 2b Trial of Rademikibart in Patients with Moderate-to-Severe Asthma on December 12, 2023
  • INAB: +21% Positive Clinical Update Demonstrating Continued Durable Complete Remission in 100% of Evaluable Patients in Phase 1 Trial of INB-100 in Leukemia
  • BLBD: +8% Earnings
  • EGLE: +6% Star Bulk and Eagle Bulk Shipping to Combine
  • ORCL: -7% Earnings
  • HAS: -5% Form 8K.. The Company currently anticipates that approximately 900 incremental positions will be eliminated as part of the Additional Actions, which are expected to be substantially completed over the next 18 to 24 months.
  • LCID: -3% Departure of Chief Financial Officer Sherry House

• News Items After the Close:
  • Oracle (ORCL) shares slide as revenue misses estimates. (CNBC)
  • Hasbro (HAS) Cutting 1,100 Jobs After Sluggish Toy Sales Persist Into Holidays. (WSJ)
  • Ford (F) cutting F-150 Lightning production by half in 2024, suppliers told. (AutomotiveNews)
  • Amazon (AMZN) drone delivery executive who oversaw safety, FAA relations departs the company. (CNBC)
  • KKR Nears Deal to Buy Stake in Cotiviti From Veritas Capital.  The deal would value the healthcare IT company at about $11 billion. (WSJ)
  • ICF International (ICFI) was recently awarded a $78 million task order by the U.S. Department of Agriculture’s U.S. Forest Service.
  • GE: – GE Vernova–MYTILINEOS Consortium Awarded £1billion Contract to Construct the UK’s First High-Capacity East Coast Subsea Link.
  • Assets Under Management Month over Month: VCTR $159.6 billion, IVZ $1.54 trillion (up 6.4%), APAM $143.1 billion, AB $696 billion from $652 billion, BEN $1.41 trillion from $1.33 trillion, VRTS $165.5 billion, CNS $78.7 billion – up $6.5 billion, LAZ $235.9 billion + $13.7 billion.

• Exchange/Listing/Company Reorg and Personnel News:
  • Allarity Therapeutics (ALLR) Announces Thomas Jensen as Interim CEO and Appointment of Jeremy R. Graff, PhD as Key Executive Advisor.
  • Aramark’s (ARMK) CFO, Tom Ondrof, to retire from current position on January 12, 2024; Jim Tarangelo, Senior Vice President Finance & Treasurer, has been appointed to succeed Mr. Ondrof.
  • The Arena Group (AREN) Announces Termination Of CEO Ross Levinsohn, Appoints Manoj Bhargava As Interim CEO.
  • Cedar Fair (FUN) Announces Strategic Changes to Its Corporate Leadership Team.
  • Discover Financial Services (DFS) names Michael Rhodes as CEO. (MarketWatch)
  • Grocery Outlet (GO) CFO Charles Bracher to step down. (MarketWatch)
  • Harbor Custom Development, Inc., (HCDI) Announces Chapter 11 Bankruptcy Protection Filing.
  • Lucid Group (LCID) announces departure of CFO Sherry House. (MarketWatch)
  • MaxCyte (MXCT) names Maher Masoud as its next CEO, replacing CEO and founder Doug Doerfler.
  • Moatable (MTBL) Announces Receipt of NYSE Non-compliance Letter Regarding ADS Trading Price.
  • Olaplex (OLPX) appoints Amanda Baldwin as CEO, effective immediately; suceeds John P. Bilbrey, who served as interim Chief Executive Officer from October 12.
  • Orthofix (OFIX) announces appointment of three new independent directors to its Board following cooperation agreement with Engine Capital Management.
  • RedHill Biopharma (RDHL) Regains Compliance with Nasdaq Minimum Bid Price Requirement.
• Buyback Announcements or News:
  • Abacus Life (ABL) Announces $15 Million Stock Repurchase Program.
  • Centene (CNC) reaffirms FY23 guidance; sees FY24 outlook above expectations; authorizes $4.0 billion increase to stock repurchase program.
  • Prudential (PRU) authorizes the repurchase of up to $1.0 billion of its common stock from January 1, 2024 to December 31, 2024.
  • Waste Mgmt (WM) a refresh $1.5 billion share repurchase authorization. (see Dividends)
• Stock Splits or News: None of note.
• Dividends Announcements or News: 
  • Farmland Partners (FPI) has declared a one-time special dividend of $0.21 per share.
  • First Trust Enhanced Equity Income Fund (FFA) Declares its Quarterly Distribution of $0.315 Per Share.
  • nVent Electric (NVT) increases quarterly dividend by 9%.
  • Pentair (PNR) increases quarterly dividend ~5% to $0.23 per share from $0.22 per share.
  • Waste Mgmt (WM) to increase its dividend rate by 7%.
• Insider Sales Of Note: None of note.

What’s Happening This Morning: Futures value reflects the change with fair value.

Sector Action – (1/3/6/12/YTD Updated Weekly with Monday release):  

• Daily Positive Sectors: Industrials, Consumer Defensive, Financial, Technology, Utilities of note.
• Daily Negative Sectors: Communication Services of note.
• One Month Winners: Real Estate, Industrials, Financials of note.
• Three Month Winners: Technology, Financial, and Industrials of note.
• Six Month Winners: Technology, Communication Services Financial  of note.
• Twelve Month Winners: Technology, Communication Services, and Consumer Cyclical of note.
• Year to Date Winners:  Technology, Communication Services, Consumer Cyclical, and Industrials of note.

Gains across a swath of stocks on Monday offset declines in big technology shares, keeping major indexes steady ahead of coming inflation data.  Monday extended a recent trend: Since a lower-than-expected inflation reading last month, investors have piled into the stocks of moderately sized companies, while cooling on the giant tech firms that had previously driven this year’s rally.  The so-called Magnificent Seven stocks of Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon.com (AMZN), Nvidia (NVDA), Tesla (TSLA) and Meta Platforms (META) each fell at least 0.8%. Meta led the declines, dropping 2.2%. But only one out of 11 S&P 500 sectors fell. Even the information technology subindex ticked higher, reflecting gains outside of the largest companies in the sector.  Overall, the S&P 500 rose 0.4%. The Dow Jones Industrial Average also advanced 0.4%, or about 157 points, while the Nasdaq Composite ticked up 0.2%.  (WSJ – edited by QPI)

Upcoming Earnings Of Note: (From Chartroom Software – sorted by market cap, highest to lowest with most visible names)

• Gap Up: ICVX +46%, ADCT +12%, TARO +8%, BLBD +7%, HUT +4% of note.
• Gap Down: ORCL -8%, KNTK -6%, SBOW -6%, HAS -5%, SNCY -4% of note.

Insider Action: MACK, GLP, UNP, YMAB sees Insider buying with dumb short selling.  HHH, PLSE sees Insider buying with smart short sellers.

Rags & Mags: Repeated stories from prior days never listed, i.e. “rehashed news”. Sorted by Global, U.S. and stock specific.

• What You Need To Know To Start Your Day. (Bloomberg)
• 5 Things To Know Before the Stock Market Opens on Wednesday. (CNBC)
• Bloomberg Lead Story: Inflation Expected to Stay Flat Giving The Fed Room to Cut Rates.  (Bloomberg)
• Bloomberg Second Most Shared Story:  Goldman reshuffles private credit in bid to double assets. (Bloomberg)
• Bonds gain and Dollar drops with CPI data to come: Market Wrap. (Bloomberg)
• U.S. and Ukraine to meet today in Washington, look to change some tactics. (NYT)
• Chinese property developed Country Garden looks to be able to avoid default. (CNBC)
• Fed to start cutting rates mid 2024 says CNBC survey. (CNBC)
• Alphabet’s (GOOGL) Google unit loses antitrust fight with Epic Games over Google Play. (Bloomberg)
• Top Goldman Sachs (GS) Trader who made $100 million since 2020 steps down. (Bloomberg)
• Choice Hotels (CHH) goes hostile for Wyndham Hotels (WH) with exchange offer representing a 30% premium to current price.
• Ford (F) cuts production of electric F-150 in half. (CNBC)
• Michael Milken says Fed will not move too early and risk a rise of inflation like in the 70s. (CNBC)
• Bloomberg The Big Take:  Being American is very expensive. (Podcast)
• NPR Marketplace:  Climate friendly food is a global issue. (Podcast)
• NY Times Daily:  Ukraine counter offensive fizzled with U.S. funding maybe next to fizzle.(Podcast)
• BBC Global News Daily Podcast:  Big backlash to COP 28 draft deal over as phase out of “fossil fuels” is dropped. (Podcast)
• Wealthion:  Navigating the Uranium surge. (Podcast)

Moving Average Update:

• 100%.  Day 2.

Geopolitical: 

M&A Activity and News: 

• Icosavax (ICVX) to be acquires by AstraZeneca (AZN) for $15.00 pre share plus a non-tradable contingent value right to receive up to $5.00 in cash.
• Star Bulk Carriers (SBLK) and Eagle Bulk Shipping (EGLE) enter into definitive agreement to combine in all-stock transaction; Total considerable is approximately $52.60 per share for EGLE shareholders.
• Taro Pharm  (TARO) agrees in principle with Sun Pharmaceutical Industries’ revised proposal to acquire TARO for $43.00/share in cash and that it has agreed to negotiate definitive agreements.
• Watts Water Tech. (WTS) to acquire Josam Company, expected to close in January 2024.

Top Tier Sell-side Upgrades & Downgrades:

The recommendations listed below in this “Upgrade/Downgrade” section are compiled from what we believe are Tier I, II and III firms. Recommendations posted are taken from a variety of sources each day and we only post upgrades or significant initiations as well as downgrades to underweight or sell. The purpose of this posting is to make the reader aware of market-moving recommendations. None of these recommendations should be interpreted as actual recommendations from CAPIS or its employees.

Today’s Upgrades and Downgrades:

Previous Day’s Upgrades and Downgrades: