What you Need to Know for August 21st

Together With The Rundown

Welcome back!

It’s the late August slowdown, but this has been a pretty sluggish week for stocks, with a decent rotation out of high-multiple AI & growth names. This comes after GPT-5’s underwhelming performance and some restructuring noise in Meta’s AI division (which we think is just noise). Meanwhile, we’ve got Jay Powell speaking in Jackson Hole tomorrow morning - while interviews for a new Fed Chair sounds like a September timeline.

As you saw on Tuesday, we launched a paid tier written by institutional investors that is off to a fast start! We published on Tuesday about Meritage Homes and we just published again on Wednesday about SB Bancorp - with the recent noise in the market, we believe selective equity selection is going to be more important than ever and is why we’re excited about the timing of launching the WSR Investing Club.

Earnings Corner 📈 📉

Home Depot $HD ( ▼ 1.34% ) saw revenue grow ~5%, with +1% SSS and with results slightly lower than expectations and guidance maintained. Homeowners continue to defer large projects due to the slowdown in housing, while pro momentum seems to be semi-encouraging. The bulk of HD products sold this past quarter were ahead of tariffs and the Company isn’t expected to pass pricing on quite yet.

Lowe’s $LOW ( ▲ 0.3% ) beat expectations, saw 1.5% revenue growth and SSS of +1.1%, but like HD, saw limited demand for big homeowner projects. Meanwhile, Lowe’s is buying Foundation Building Materials, a drywall distributor backed by American Securities and CD&R, for $8.8B, continuing their push to get more into the Pro segment. Both Lowes and HD continue to push aggressively into the less price-sensitive Pro segment via acquisitions.

Target $TGT ( ▼ 6.33% ) beat expectations, but the business is stagnating a bit and SSS was a -1.9% headwind, with transactions -1.3% y/y and avg. customer spend down -0.6% y/y. CEO Brian Cornell is stepping down early next year, with the COO set to take charge after. The Company has been dealing with mistimed DEI initiative changes that have angered both sides of aisle over the past couple of years. For the FY, Target expects a LSD decline in sales and EPS.

TJX $TJX ( ▲ 2.71% ) meanwhile had solid numbers, beating expectations, with the off-price owner of T.J. Maxx, Marshalls, and HomeGoods continuing to provide value to shoppers. FY Guide was raised to SSS of +3% (vs. 2 to 3% previously) and EPS of $4.52-$4.57 (vs. $4.34 to $4.43 previously)

Toll Brothers $TOL ( ▼ 0.57% ) had a nice beat despite affordability issues in housing, with revenue up 6% y/y driven by home deliveries up 5% y/y and ASP of $973.6k up slightly y/y. FY Guide was maintained, with ASP expected to go down slightly to $950k-$960k.

Pop Mart shares were up 11.8% after the Chinese toy maker behind the Labubu has experience mania styled demand - the stock is up a whopping 240% YTD (OTCMKTS: PMRTY)

Palo Alto Networks $PANW ( ▲ 1.58% ) beat estimates, saw revenue growth of 16% y/y, and issued better than expected 1Q and FY guidance (revenue of $15.4-$15.5B, growing roughly 14% y/y, and EPS of $3.75-$3.85). As a refresher, the cyber security giant is buying CyberArk for $25B.

La-Z-Boy $LZB ( ▼ 12.09% ) had a rough day, with the furniture retailer missing estimates and seeing SSS fall -4% y/y, calling out “an increasingly challenged consumer”. The company has $318.5mm in net cash, but obviously this tariff-stricken large-ticket retailer has taken things on the chin

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Palantir’s stock hits 6-day losing streak

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Short-seller firm Citron Research has warned that Palantir is heavily overvalued, claiming the AI giant’s stock is far too high compared to its business fundamentals.

• Growth delusion: Palantir’s stock has returned more than 2,000% since the beginning of 2023, taking the crown for one of the best performing stocks of 2024 and 2025 year-to-date. Citron notes that Palantir trades at a price-to-sales ratio of more than 100 versus 17 for OpenAI, raising red flags that its valuation rests on overly ambitious growth expectations.

• Insider sell-off: Insiders have also been selling Palantir shares heavily over the past 12 months according to Citron. CEO Alex Karp has sold roughly $2 billion in stock over the past two years. Major investors have sold off their Palantir holdings as well, with Druckenmiller closing out his entire position in Q1 and Cathie Wood of Ark Invest selling nearly $30M worth of shares this month alone.

For more daily insights, check out The Rundown. 

Today’s Headlines 🍿 

• Fed Minutes: July’s meeting summary revealed that inflation is currently seen as the “greatest risk” compared to concerns over a weaker labor market. First-half economic growth was “tepid” and unemployment remains low, but the uncertain effects of tariffs remains the driving concern. While 2 officials dissented in favor of a cut, there was support across the board from the other 16 officials to keep rates steady

• Intel reaches $2B deal: The Japanese conglomerate SoftBank is taking a $2B stake in the chipmaker, agreeing to purchase newly issued shares at $23/share - a slight discount. SoftBank owns Arm, a $150B chipmaker that makes chips for Nvidia’s systems, and hopes Intel will strengthen their push into AI infrastructure

  • Meanwhile, the U.S. government continues to weigh its options for taking a stake in the company, including converting the nearly $8B worth in grants from the CHIPS Act into equity. Intel is also in talks with other investors to receive equity at a discounted price, giving the company a variety of options for funding its new factories

• Chamath IPO: The “SPAC King” (aka Scam Artist) is back after filing to raise $250mm for American Exceptionalism Acquisition A, which will aim to find an acquisition in energy, AI, decentralized finance, or defense. This will be Chamath’s 11th SPAC. The SoFi IPO saw success, but his other nine left investors in the red. Four never even completed deals, while the others have median losses of 75%.

  • But this time there is a warning - investors may lose their entire capital, but there can be “no crying in the casino”

• Citadel sees YOLO crowd stepping off the accelerator: Citadel Securities’ Scott Rubner says retail investors, who’ve been net buyers in 16 of the past 18 weeks, are likely to dial back their frenetic stock and options buying in September before revving back up later in the year

• Bankruptcies on the rise: July saw a sharp spike in corporate bankruptcies, with 71 firms filing for Chapter 11 - the highest single-month total since Covid in 2020. The industrial and consumer discretionary sectors have had the most filings, followed by healthcare. YTD bankruptcies totaled 446 through July, the highest number since 2010

• Trump calls on Fed official to resign: Trump says Governor Lisa Cook should resign or be fired, citing evidence of mortgage fraud. Cook allegedly sought mortgages in two different states back in 2021, but listed both as her primary residence in papers submitted 14 days apart. Fed officials can only be fired “for cause,” and Cook has said she has “no intention of being bullied to step down”

• Trump pours over $100mm into bonds since January: According to his August 12 ethics disclosure, the President has purchased more than $100.0 million in corporate, municipal, and government bonds, completing over 600 separate transactions across sectors like finance and healthcare - while asserting these were managed by a third party, not him directly 

• Blackstone’s Perry predicts a jump in secondaries deals, saying that it’s an underutilized market and that secondaries transaction volume will more than double to $400B by 2030

• Trump declares an end to new renewable projects: President Trump announced he will not approve any further solar or wind energy projects: calling them the “scam of the century” and arguing they inflate electricity prices. The statement follows recent USDA and Treasury actions tightening subsidies and permitting rules for clean energy initiatives

• Claire’s sells North American business amid bankruptcy: The teen accessories chain will offload up to 950 of its North American stores to private equity firm Ames Watson for $104mm in cash (plus vendor and landlord liabilities), aiming to reduce its $690mm debt burden amid Chapter 11 proceedings. Liquidation continues at unsold locations, while the deal is subject to U.S. and Canadian court approval

• Hertz taps Amazon Autos to streamline used-car sales: Hertz is now listing its pre-owned rental vehicles on Amazon’s automotive marketplace, enabling consumers to browse, buy online, and pick up in cities like Dallas, Houston, Los Angeles, and Seattle - with plans to expand to 45 locations. The shift from auctions to digital retail could boost per-vehicle margins by $1.0k to $1.5k while rattling competitors such as Carvana, CarMax and Avis

• Microsoft brings AI to the gridiron: The NFL and Microsoft have expanded their long-term partnership to equip 32 teams with over 2.5k Surface Copilot+ PCs - powered by Azure AI and Microsoft Copilot - for real-time, data-driven analysis on the sidelines. Coaches can now quickly filter plays by variables like down, distance, and penalties

• Meta races toward superintelligence: The company has restructured its AI division into four specialized teams as it boosts spending to as much as $72B this year. Internal tensions are mounting after Meta’s aggressive talent poaching and repeated shake-ups in its superintelligence lab

• Law Firm Rollups: Burford Capital is among the Private Equity sponsors looking towards deregulation opening up the ability to roll-up U.S. law firms

• Catastrophe Bonds are on the rise: Our friend Bullish Securities put out a great piece on how the rise in natural disasters is creating a large increase in catastrophe bond issuance - sub here to read the piece

• Neuberger Berman is closing in on the first close of its new $5B secondary fund: Fueled by growing investor demand for liquidity solutions in private markets, the firm expects to secure at least half of the target by year-end, and is committing at least $50mm of its own capital

• The TPG Touch: TPG’s "Next" platform is anchoring the launch of Vanara Capital, a growth equity firm started by ex-TPG colleagues Neil Kamath and Hayden Lekacz, focused on backing tech‑sector companies

• Merlin Borrowing Costs Soar After Credit Downgrade: Owner of theme‑parks like LEGOLAND and Madame Tussauds saw its senior secured bonds slide sharply after S&P issued a cash‑flow warning and credit downgrade notice. High operational leverage and soft consumer spending make the leisure sector vulnerable

• Thoma Bravo may acquire Dayforce: The PE shop is in discussions to take the HR‑software provider private in a deal valued between $9.0 and $11.2B - paying around $70 per share, a ~32.0% premium

M&A Transactions💭 

Grant Thornton is acquiring Stax, a global M&A due diligence consulting company. The transaction is expected to close in 2025.

Yashili New Zealand Dairy, producer of nutritional milk powder, has reached a definitive agreement to be acquired for NZD 282.0M by a2 Milk Company (ASX: A2M). E&P Capital advised on the sale.

Wilsgaard Fiskeoppdrett, operator of a salmon farming company, was acquired for NOK 1.767B by SalMar (OSL: SALM).

Soho House (NYS: SHCO), a membership platform of physical and digital spaces, has reached a definitive agreement to be acquired for $2.7B by MCR Hotels. EV/EBITDA was 16.46x and EV/Revenue was 2.16x. Citigroup Global Markets and Morgan Stanley advised on the sale.

Gett, developer of a technology travel platform, was acquired for $190.0M by Mizrahi Tefahot Bank, Phoenix Financial, Klirmark Capital, Leumi Partners, Meitav Investment House, and an undisclosed investor.

A Portfolio of Four Industrial Properties in Singapore of CapitaLand Ascendas REIT were acquired by EZA Hill for $256.4M. CBRE Singapore advised on the sale.

AssuredPartners, operator of a mid-market insurance brokerage firm, was acquired for $13.45B by Arthur J. Gallagher & Company (NYS: AJG). EV/Revenue was 2.69x. Barclays, Jefferies, and Morgan Stanley advised on the sale.

Tegna (NYS: TGNA), a media company, has reached a definitive agreement to be acquired for $6.2B by Nexstar Media Group (NAS: NXST). EV/EBITDA was 8.09x and EV/Revenue was 2.2x. Allen & Company advised on the sale.

Sitio Royalties, a pure-play mineral and royalty company, was acquired for $4.1B by Viper Energy Partners (NAS: VNOM). EV/EBITDA was 8.07x and EV/Revenue was 6.68x. J.P. Morgan advised on the sale.

Regrello, developer of a supply chain workflow tool, was acquired for $2.14B by Salesforce (NYS: CRM).

Recharge.com, developer of a digital interface designed to handle online consumer-branded payments, was acquired for EUR 305.0M by Coda. Jefferies advised on the sale.

NorthWestern Energy Group (NAS: NWE), provides electricity and natural gas services, has reached a definitive agreement to be acquired for $3.197B by Black Hills (NYS: BKH). EV/EBITDA was 5.32x and EV/Revenue was 2.09x. Greenhill & Company advised on the sale.

Lynch Group Holdings (ASX: LGL), a vertically integrated wholesale floral company, has reached a definitive agreement to be acquired for $280.0M by Dalat Hasfarm.

Dogwood State Bank (PINX: DSBX), a North Carolina state-chartered community bank, has reached a definitive agreement to be acquired for $597.93M by TowneBank (NAS: TOWN). Raymond James Financial advised on the sale.

Ciclus Rio, provider of integrated management of solid waste services, has entered into a definitive agreement to be acquired for $1.9B by Aegea Saneamento e Participacoes. BTG Pactual advised on the sale.

Capstan Therapeutics, operator of a biotechnology company, was acquired for $2.1B by AbbVie (NYS: ABBV). Centerview Partners advised on the sale.

Golden Ocean Group (OSL: GOGL), a Bermuda-based dry bulk shipping company, was acquired for EUR 3.2B by CMB.TECH. EV/EBITDA was 15.55x and EV/Revenue was 6.17x. DNB Markets Norway advised on the sale.

Private Placement Transactions💭 

Eight Sleep, operator of a sleep product brand, raised $100.0M in venture funding led by Hongshan Capital Group.

Aalo, manufacturer of compact nuclear power systems, raised $100.0M of Series B venture funding led by Valor Equity Partners at a pre-money valuation of $350.0M.

Motional, developer of driverless technology, raised KRW 629.1B of venture funding from Hyundai Motors Group at a pre-money valuation of KRW 38.0T.

Databricks, developer of a data analytics platform, is in the process of raising a Series K investment that values the company at over $100.0B.

Odds of the Day 🍒 

Kalshi traders are pricing in a 27% chance of Gavin Newsom being the democratic nominee in 2028.

*New Traders on Kalshi receive a $20 bonus of trading credit when depositing $100+ with the code “HYH”.

Noteworthy Chart 🧭

Meme of the Day 😆 

A great video meme from Guy In Finance

Until next time!

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