In today’s briefing:
- OpenAI, AMD Enter Into Strategic Partnership. Guys, This Is Getting Ridiculous!
- Yext Receives Privatization Offer: Board Evaluates Strategic Alternatives Amid Potential Bidding War
- Amazon: Still Riding the Tech Volatility Wave
- Monthly Macro Markets (October): Diverging Volatility Trends Highlight Risk Sensitivity
- Corteva (NYSE: CTVA) To Spin-Off Its Seeds Business; Targets Sharper Focus and Valuation Upside
- U.S. Tire Industry Navigates Growth, Tariffs, And Strategic Shifts In 2025
- Yext’s Management-Led Privatization Proposal: Evaluating Strategic Alternatives Amidst AI Pivot and Shareholder Dynamics
- Asia base oils supply outlook: Week of 6 October
- Valero Energy Corporation VLO: Margins Improving on All Fronts
- Downgrading Financials to Underweight; Growth Themes Galore; Health Care Breaking Out
OpenAI, AMD Enter Into Strategic Partnership. Guys, This Is Getting Ridiculous!
- OpenAI agrees to deploy 6 gigawatts of AMD GPUs based on a multi-year, multi-generation agreement. The deal could be worth upwards of $100 billion to AMD through 2030
- AMD issued OpenAI a warrant for up to 160 million shares of AMD common stock, structured to vest as specific milestones are achieved, including AMD share price appreciation to $600
- Could a strategic partnership with Intel now also be on the cards? After all, OpenAI needs CPUs as well as GPUs, especially as they ramp into enterprise. Just saying…
Yext Receives Privatization Offer: Board Evaluates Strategic Alternatives Amid Potential Bidding War
- The company received a non-binding privatization offer from the CEO at a 10% premium to pre-announcement levels.
- A committee of independent directors is evaluating the offer and exploring other strategic alternatives, indicating the company is open to bids.
- There is a high single-digit spread to the offer price, with limited downside due to strong recent earnings.
Amazon: Still Riding the Tech Volatility Wave
- Amazon is navigating a dynamic tech landscape, leveraging its strong position in AI infrastructure and cloud services to drive long-term value creation and maintain a premium valuation in the market.
- The company is making strategic investments in AI chips and foundational AI companies like Anthropic, aiming to optimize efficiency and scalability in its AWS segment.
- Despite a current range-bound stock price, Amazon’s financial metrics and company culture approach underscore its commitment to growth and competitive advantage in the evolving tech ecosystem.
Monthly Macro Markets (October): Diverging Volatility Trends Highlight Risk Sensitivity
- October seasonals, despite their reputation, show most markets with better than 60% odds of finishing higher albeit with meager returns.
- Volatility trends have diverged, with implied vols climbing even as realized vols fell, raising questions about early signs of risk sensitivity.
- Implied vols on most markets have been trending higher vs the SP500 despite the US being ground zero for policy uncertainty.
Corteva (NYSE: CTVA) To Spin-Off Its Seeds Business; Targets Sharper Focus and Valuation Upside
- Corteva plans to spin-off its Seeds business in to a separate publicly liated company. Parent will retain the Crop Protection business
- The separation enables sharper focus and capital allocation between two fundamentally different businesses.
- The seed / trait business is viewed as the higher growth, higher innovation leg (gene editing, trait licensing, intellectual property). These attributes tend to attract premium multiples.
U.S. Tire Industry Navigates Growth, Tariffs, And Strategic Shifts In 2025
- U.S. tire shipments projected at a record 340.2 million units in 2025
- Dynamics shift, with Chinese tire imports falling and SE Asian imports rising
- Top players pursue expansion, innovation, and portfolio revamp
Yext’s Management-Led Privatization Proposal: Evaluating Strategic Alternatives Amidst AI Pivot and Shareholder Dynamics
- Yext received a $9/share non-binding privatization offer from its CEO, with a 7% spread to the offer price.
- The CEO’s funding sources are undisclosed, and he owns 2.5% of Yext, needing to raise nearly $1bn.
- Major shareholders include Lead Edge Capital (10.2%) and Lynrock Lake (8.5%), with cost bases around $6-$7/share.
Asia base oils supply outlook: Week of 6 October
- Asia’s base oils price-premiums to gasoil recover amid lower crude oil prices.
- Firmer margins, and signs of crude prices mostly holding in lower range, curb pressure on refiners to adjust base oils output.
- Rise in Asia’s base oils supply coincides with more muted demand in China and southeast Asia and more complicated arbitrage to move heavy grades to India.
Valero Energy Corporation VLO: Margins Improving on All Fronts
- Valero Energy Corporation (NYSE: VLO) is one of the world’s largest and most efficient producers of downstream oil products and low-carbon transport fuels and among the best-positioned refiners for the changing energy landscape.
- Its diversified low-carbon fuels business offers multiple future pathways for growth and its low-cost oil refining operations lead the North American refining industry on margins.
- Operations include complex oil refining capacity of 3.2 million barrels per day in the US, Canada, and the UK, 1.2 billion gallons per year of renewable diesel (RD) and synthetic aviation fuel (SAF) capacity (joint venture [JV] with Darling Ingredients, Inc. [NYSE: DAR]), and corn ethanol capacity of 1.7 billion gallons per year in the Midwest.
Downgrading Financials to Underweight; Growth Themes Galore; Health Care Breaking Out
- We remain bullish since our 4/22/25 Compass, and we will maintain our bullish outlook as long as market dynamics remain healthy and the S&P 500 (SPX) is above 6028-6059.
- For now, we continue to expect support to show up at the 4-month uptrend, which generally coincides with the 20-day MA.
- Speculative growth themes (quantum,nuclear, hydrogen, space, robotics, drones, data centers, solar, biotech, WGMI,ARKK,ARKQ,ARKX,ARKW,ARKG, etc.) have been rolling, and we’ve been recommending them in this section every week for 1+ months.
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