What you Need to Know for Feb 19th

Welcome back!

Stocks had a nice day yesterday, but the big news was re: Fed minutes revealing that the Fed is split on where rates should go from here (currently 3.5% to 3.75%). Generally, cuts seem on pause for now unless inflation goes down - but some officials even argued a rate hike could be possible. With tariff related inflation likely to cool, we think the Fed’s focus should primarily be on the Labor market this year. A notable amount of high-earning, white collar work is on the path to be disrupted by AI, and our hot take is that the conversation will shift towards that in the latter half of the year. Let’s get into it.

Earnings Corner 💸 

$PANW ( ▼ 6.82% ) Top and bottom line beat as customers continued consolidating vendors onto its AI driven security platform, driving strength in ARR and platform adoption. EPS guidance came in light as acquisition and integration costs, including the $25B CyberArk deal, pressure near term margins. Shares fell on the weaker profitability outlook.

$TOL ( ▼ 2.34% ) Beat on revenue at $2.15B vs $1.86B and topped EPS, as higher average selling prices and resilient luxury demand offset affordability pressure from elevated mortgage rates. Operating margin fell to 10.2% and backlog declined 13% y/y as slower order growth weighed on forward visibility, tempering the outlook.

$DASH ( ▲ 6.8% ) Missed on revenue and EPS, though revenue rose 38% y/y, as heavier spending on platform integration, Deliveroo, AI infrastructure, and autonomous delivery more than offset order growth. Orders rose 32% and GOV beat on higher frequency and international growth, but elevated investment and higher Dasher costs pressured margins. Light EBITDA guidance reflected continued platform investment and a $20M storm impact. Shares reversed after an initial drop as order momentum remained intact.

$CVNA ( ▲ 3.02% ) Beat on revenue at $5.6B vs. $5.27B as retail units jumped 58%, adjusted EBITDA missed $511M vs. $536M as higher reconditioning costs, lower shipping fee revenue, and elevated non-vehicle expenses pressured margins. Gross profit per unit declined and 1Q guidance lacked specifics while flagging continued cost pressure. Shares dropped over 20% hours on the profitability miss and a vague outlook that didn’t quantify anything.

$MCO ( ▲ 6.51% ) Beat on revenue and EPS as bond issuance accelerated, driving a 17% jump in its core ratings business. Corporate and AI related borrowing lifted demand for credit assessments, while analytics also grew steadily, supporting margins. Guidance came in above expectations, signaling continued strength in debt markets.

On The Move 📈 📉

• Norwegian $NCLH ( ▲ 1.04% ) popped after Elliott disclosed a 10% stake and laid out their criticisms of the company.

• Trip Advisor $TRIP ( ▼ 0.76% ) sunk as Starboard Value got more aggressive with their activism.

• New York Times $NYT ( ▲ 1.99% ) rose after reporting strong digital growth; Buffett also bought 5.1 million shares during his final quarter at Berkshire.

• Fiverr $FVRR ( ▼ 5.73% ) fell hard as AI is eliminating the need to outsource low-value professional tasks.

• Madison Square Garden Sports $MSGS ( ▲ 16.33% ) jumped after the board approved a plan to explore separating the Knicks from the Rangers.

We took a look at some of these activist campaigns, plus other key 13-F takeaways in our latest WSR IC piece. For deeper research upgrade to the WSR Investing Club

IPO Roundup 📍 

• Robinhood is looking to raise $1B in an IPO of a closed-end fund designed to give retail investors access to private companies, namely big pre-IPO companies like SpaceX and OpenAI.

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Today’s Headlines 📖🍿 

• Private software firms rush to reassure lenders: McAfee, an Advent and Permira-backed name, Rocket Software, a Bain-backed name, and other PE-backed tech firms released early earnings to calm debt investors amid AI-driven “SaaSpocalypse” fears. McAfee posted preliminary Q4 revenue of $626M, while Rocket reported 2025 revenue up 5.2% to ~$1.4B, as distressed software loans have swelled and sector debt prices remain volatile.

• CLO managers scoop up discounted loans: Carlyle, BlackRock, Benefit Street, and Oak Hill Advisors are among the firms buying heavily discounted software names to ramp up new CLOs, taking advantage of AI-driven selling that has pushed US software loans ~4 points lower since January.

• LBO debt makes a comeback: Banks are working on ~$100B of leveraged buyout financing, with roughly 75% underwritten in recent months as M&A rebounds toward 2021 levels. This includes a €4B package for Carlyle’s BASF unit deal and $3.75B for Stonepeak’s Castrol acquisition, with bankers racing to syndicate risk amid tight loan spreads and growing deal pipelines.

• K&E’s David Nemecek has joined Simpson Thacher & Bartlett: He will lead a newly created Capital Structure Solutions practice. There’s been reported client pushback over aggressive LME tactics, with speculation that he was on the way out.

• TPG’s AI Strategy: TPG has established a taskforce to evaluate AI and the investment opportunities that it will create. The team was created at the end of last year, but the firm was still jolted by the recent software selloff, which CEO Jon Winkelried called a “big curveball.” TPG had trimmed some off its software exposure, at about 18% of its PE AUM, and has zero exposure on the credit side.

• Blue Owl permanently halts redemptions at private credit fund aimed at retail investors: private credit group Blue Owl will permanently restrict investor from withdrawing their cash from its inaugural private retail debt fund, backtracking from an earlier plan to reopen to redemptions this quarter. The company would instead return investors’ capital in episodic payments as it sells down assets in coming quarters and years.

• HPS led $700mm in financing for Elara Caring, a home health-care provider. Sixth Street also participated, with additional investment from Ares and DaVita.

• KKR warns the credit cycle is turning: KKR said credit markets are becoming “less forgiving,” cautioning that mistakes will be punished more severely in 2026 as spreads sit near multi-decade lows and assets look “priced to perfection.” The firm is urging investors to rotate toward higher-quality names and refocus on fundamentals.

• Bank of Ireland is pulling back from US Leveraged Finance: Bank of Ireland is winding down its €1.2B US leveraged acquisition loan book over the next three years, citing mounting competition from private credit.

• AMC taps debt markets for refinancing: AMC is marketing a ~$2.5B refinancing, including a $750M term loan B priced at SOFR +600, to refinance a $2B loan due 2029 and $400M of 12.75% notes maturing next year.

• Banks await BASF buyout debt sale: Banks, including BofA and Goldman Sachs, are preparing to syndicate ~€4B in loans and senior secured notes to fund Carlyle and QIA’s €7.7B acquisition of BASF’s coatings unit.

• Thrive closes $10B mega-fund: Josh Kushner’s Thrive Capital raised over $10B for its 10th flagship fund, double its previous $5B vehicle, positioning it for a potential IPO windfall from bets like SpaceX and OpenAI.

• Battery Ventures doubles down on software: Battery Ventures closed a $3.25B fund to back software, AI infrastructure, and industrial tech, arguing the recent AI-driven software selloff is overdone.

• The CFTC and state governments are clashing over predictions markets, with many states alleging the exchanges should be subject to state laws.

• Zohran will increase property taxes by 10% if there’s no tax on the wealthy to help fund his $127B spending plan.

• Palantir heads to Miami: Palantir $PLTR ( ▲ 1.77% ) is relocating its headquarters from Denver to Miami, joining a wave of tech and finance firms moving to Florida amid a more favorable tax environment.

M&A Transactions💭 

Mister Car Wash (NAS: MCW), a car wash brand, has entered into a definitive agreement to be acquired by Leonard Green & Partners for $7.00 per share in cash, which implies a total enterprise value of the company at $3.1B.

PathFormance, developer of digital campaign measurement platform, was acquired for $330.0M by Komerz.

Manulife Investment Management Holdings and Portland General Electric have entered into a definitive agreement to acquire The Washington Utility Business of PacifiCorp for $1.9B. As a result of the transaction, Manulife Investment Management Holdings will hold a 49% stake and Portland General Electric ill hold a 51% stake in the business.

MWI Animal Health, supplier of animal health products, entered into a definitive agreement to be acquired for $3.5B by Covetrus. EV/Revenue was 0.7x. Guggenheim Partners and Morgan Stanley advised on the sale.

MidWestOne Financial Group, a bank holding company, was acquired for $853.557M by Nicolet Bankshares (NYS: NIC). EV/Net Income was 14.6x and EV/Revenue was 3.57x. Piper Sandler advised on the sale.

Micro Bird, manufacturer of purpose-built school and commercial buses, has reached a definitive agreement to be acquired for $200.0M by Blue Bird (NAS: BLBD).

Masimo (NAS: MASI), a technology company, has reached a definitive agreement to be acquired for $10.486B by Danaher (NYS: DHR). EV/Revenue was 4.81x. Centerview Partners and Morgan Stanley advised on the sale.

KOI, developer of a suspicious IDE extension analysis platform, has reached a definitive agreement to be acquired for $400.0M by Palo Alto Networks (NAS: PANW).

Kennedy Wilson, developer of an international real estate investment and service firm, has reached a definitive agreement to be acquired for $1.5B by Fairfax Financial Holdings (TSE: FFH) and Mr. William McMorrow. Bank of America, J.P. Morgan, and Moelis & Company advised on the sale.

IHS Holding (NYS: IHS), an independent owner, operator, and developer of shared telecommunications infrastructure, has reached a definitive agreement to be acquired for $5.04B by MTN Group (JSE: MTN). EV/EBITDA was 5.09x and EV/Revenue was 3.82x. J.P. Morgan advised on the sale.

HotDoc, developer of a patient engagement platform, was acquired for AUD 275.0M by Potentia Capital, Acclivis Group, and Airtree Ventures.

Air Industries Group (ASE: AIRI), an aerospace and defense company, has reached a definitive agreement to be acquired for $300.0M by Tenax Aerospace. EV/EBITDA was 103.24x and EV/Revenue was 6.31x.

VodafoneZiggo Group Holding, provider of integrated communication and entertainment services, has reached a definitive agreement to be acquired for EUR 1.0B Liberty Global (NAS: LBTYA).

Sanity Group, operator of a health and life science company, has reached a definitive agreement to be acquired for EUR 130.0M by Organigram Global (TSE: OGI).

Netomnia, provider of fiber-to-premises broadband services, was acquired for GBP 2.0B by Nexfibre. TD Securities advised on the sale.

Aseem Infrastructure Finance, operator of an infrastructure finance company, has entered into a definitive agreement to be acquired for $1.0B by TPG.

Private Placement Transactions💭 

IPUT, operator of a property investment company, received EUR 175.0M of financing from CBRE Investment Management.

Utility Global, developer of clean energy generation systems, raised $100.0M of venture funding in a deal eld by Ara Partners and APG Group.

Temporal, developer of an open-source microservices orchestration platform, raised $300.0M of Series D venture funding led by Andreessen Horowitz at a pre-money valuation of $4.7B.

Render, developer of a cloud infrastructure platform, raised $100.0M of Series C venture funding led by Georgian at a pre-money valuation of $1.4B.

Kavak, operator of a car trading platform, raised $300.0M of Series F venture funding led by Andreessen Horowitz and WCM Investment Management.

inKind, developer of a funding platform, raised $450.0M of venture funding through a combination of debt and equity in a deal led by Magnetar Capital.

Vestwell, provider of workplace savings and retirement plan administration services, raised $385.0M of Series E venture funding led by Sixth Street Partners and Blue Owl Capital.

Heron Power, developer of industrial power electronics, raised $140.0M of Series B venture funding led by Andreessen Horowitz and Breakthrough Energy.

Odds of the Day 🍒 

Polymarket traders are expecting the Fed to do nothing in April.

Noteworthy Chart 🧭

Meme Cleanser 😆 

Until next time!

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