Daily Brief United States: NVIDIA Corp, S&P 500 INDEX, Lions Gate Entertainment , Destination Xl Group, Duke Energy, HCA Healthcare, Inc. , Crude Oil, Perfect , SmartRent, Baillie Gifford US Growth Trust and more

• Project Digits is a supercomputer on everybody’s desk for $3000. Seems crazy but feels like 1977 Ken Olson moment “no reason anyone would want a computer in their home”
• Lack of data center revenue growth predictions likely spooked investors and triggered a ~10% pullback. Just buy the dip, you know you want to…
• Micron and MediaTek both jumped on news of their further involvement in NVIDIA’s AI acceleration hardware supply chain. 

• Common perception is that Trump = Volatility. We look at average monthly historic volatility and returns across 2017-2020 and compare with prior 19 years.
• Trumps term in office included “Volmageddon”, the Christmas Massacre and Covid but we still find that the returns and historic volatility were not out of line.
• Although a small sample size, we see a pattern to how historic volatility deviated from the average over his last term in office. 

• Galapagos NV (GLPG), a Belgian biotechnology company, announced on January 8, 2025, its plan to split into two publicly traded entities by mid-2025.
• Vivendi (VIV), the French media conglomerate, has recently undergone a significant restructuring by spinning off several of its key divisions into independent entities.
• On December 30, 2024, Lions Gate Entertainment (LGFA/LGFB) filed its latest proxy related to the spin-off of Lionsgate Studios (LION). You can read it here.

• Destination XL Group received a non-binding $3/share proposal from Fund 1 Investments, holding a 21% stake.
• Fund 1’s offer values DXLG at 6.1x EBITDA, with potential for a higher bid if additional value is identified.
• DXLG repurchased 6.6% of shares in Q3 2024 at an average price of $2.80/share, totaling $10 million.

• On the All Thoughts podcast, Tracy Alloway and Joe discuss Tracy’s new solar panel and energy challenges during a snowstorm.
• Duke Energy’s Senior VP of Pricing and Customer Solutions discusses the complexities of energy pricing, renewable energy, and the future of the grid.

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• HCA Healthcare recently held its third-quarter earnings call, and the insights provided offer a complex view of the company’s current position and future outlook.
• The financial results reflected strong performance despite notable challenges, particularly from recent hurricanes.
• Positively, HCA Healthcare reported substantial year-over-year growth in several key financial metrics.

• For the week ending 03/Jan, U.S. crude inventories fell by 1m barrels, missing expectations of a 1.8m barrel decrease. Gasoline and distillate stockpiles rose more than expected.
• U.S. natural gas inventories fell by 40 Bcf for the week ending 03/Jan, moderately beating analyst expectations of a 39 Bcf drawdown. Inventories are 6.5% above the 5-year seasonal average.
• Analysts lowered 12-month PTs on Exxon, BP, Halliburton, TotalEnergies, and SLB. Morgan Stanley upgraded rating on Shell to Overweight and raised PT to USD 79.8 from USD 66.5.

• Perfect Corp. provides an AI and machine learning based B2B SaaS platform for virtual try on and marketing of beauty and fashion products as well as six mobile apps sold B2C for makeup suggestions, try-on, tutorials, photo and video editing and most recently, Gen AI creation and editing.
• It is expanding its offering to new verticals and has strong IP as well as the largest database for AI training in the industry.
• It has a dominant market share and serves almost all the major beauty brands worldwide.

• SmartRent’s recent performance and strategic initiatives provide a complex landscape for investment consideration, marked by both challenges and opportunities.
• The company’s third-quarter results paint a picture of a business in transition, underscored by a leadership change and a strategic refocus on maximizing shareholder value through sustainable practices.
• Positively, SmartRent demonstrated resilience with a 23% year-over-year increase in SaaS (Software as a Service) revenue, indicating strong growth potential within its recurring revenue model.

Baillie Gifford US Growth Trust (USA) invests in exceptional US businesses with the potential to grow substantially faster than the market and deliver above-market returns. Such businesses tend to operate at the cutting edge of technology-led change and USA has exposure to companies focused on AI, space travel and online services. This note reiterates USA’s unique investment proposition and scrutinises a recent proposal from Saba, a US hedge fund manager, aimed at ousting USA’s board and replacing its investment managers. Saba currently owns less than 28% of USA shares in issue. The trust’s board has urged shareholders to reject Saba’s hostile takeover at the general meeting scheduled for 3 February 2025 and we agree with this recommendation, for reasons discussed below.