What You Need to Know for May 22nd

Together with Pacaso

Welcome back!

The bond market is telling Congress and the Administration that they don’t like this spending whatsoever. Stocks shot lower and yields jumped higher after a poor auction of 20-year bonds. Treasury yields are now above 5% - a level not seen since 2023. Debt investors are concerned over the “One Big Beautiful Bill”, which would increase the deficit by $3.8 Trillion over the next 10 years. Bitcoin has also shot higher on U.S. credit risk. While Speaker Johnson is pushing for a vote by Memorial Day, there’s opposition from fiscal conservatives like Representative Thomas Massie (who seems to be holding a firm line). Despite $1.7T of contemplated spending cuts in Medicaid, SNAP, and student loan forgiveness, maintaining 2017 individual tax cuts and corporate tax rates at 21%, as well as increasing the SALT cap to $40k are key drivers in increasing our Debt to GDP to around 8%. Things once again are looking bad for $TLT ( ▼ 1.71% ) bros 😢 

Earnings Corner 📜 

Trending Down 📉 

Despite some decent earnings, a lot names were hit by the broader market going down yesterday.

Home Depot $HD ( ▼ 1.65% ) Home Depot beat revenue estimates ($39.31B) by 1.4%, despite a slight EPS miss of $3.56 vs. $3.60 expected. Sales benefited from improving trends in smaller, seasonal projects like gardening and painting, though large home renovations remained sluggish due to higher interest rates. Management affirmed the company will not raise prices despite tariff pressures, highlighting diversified sourcing. The company also reaffirmed its full-year outlook, expecting moderate growth supported by ongoing market resilience.

Lowe’s $LOW ( ▼ 1.68% ) Lows revenue slightly missed coming in at $20.93B vs. $20.94B expected. Yet diluted EPS of $2.92 beat estimates by 1.39%. Sales declined 1.7% y/y due to weak DIY demand and unfavorable weather, but strength from home professionals partially offset the softness. Lowe’s maintained its full-year targets, projecting around $84 billion in sales and stable to modest comparable sales growth.

Palo Alto Networks $PANW ( ▼ 6.8% ) The cybersecurity powerhouse beat revenue and EPS expectations, delivering strong 15% sales growth. Despite a softer gross margin, management emphasized disciplined spending with reduced capital expenditures and raised 4Q EPS guidance above consensus.

Viking Holdings $VIK ( ▼ 3.69% ) The premium cruise line beat revenue expectations, with sales surging 24.9% y/y to $897.1M, driven by higher capacity and strong demand, with 92% of 2025 bookings already secured. Adjusted EBITDA also beat, rising sharply on solid yield growth, while net leverage improved to 2.0x from 2.4x.

Toll Brothers $TOL ( ▼ 0.48% )  Toll Brothers revenue rose 2%, beating guidance despite softer demand. EPS of $3.50 beat expectations but dipped y/y excluding a land sale gain. Home deliveries grew 10%, while contracts and backlog fell. Margins held steady and full-year guidance was reaffirmed with $177mm share repurchase.

TJX Companies $TJX ( ▼ 2.89% )  TJX beat revenue estimates by about 1%, with EPS also edging past expectations as shoppers continued seeking value amongst economic uncertainty. Despite strong sales, the company flagged tariff risks and issued cautious 2Q guidance below expectations, prompting investor caution.

He’s already IPO’d once – this time’s different

Spencer Rascoff co-founded Zillow, scaling it into a $16B real estate giant. But everyday investors couldn’t invest until after the IPO, missing early gains.

"I wish we had done a round accessible to retail investors prior to Zillow's IPO," Spencer later said.

Now he’s doing just that. Spencer teamed up with fellow Zillow exec Austin Allison to launch Pacaso. Pacaso’s co-ownership marketplace is disrupting the $1.3T vacation home market. They’ve already surpassed $110M in gross profit and $1B in transactions.

Unlike Zillow, you can invest in Pacaso as a private company. Pacaso’s already reserved their Nasdaq ticker PCSO. But you don’t have to wait for a public listing to invest. 

Invest in Pacaso at $2.80/share before 5/29.

_{This is a paid advertisement for Pacaso’s Regulation A offering. Please read the offering circular at invest.pacaso.com. Reserving a ticker symbol is not a guarantee that the company will go public. Listing on the NASDAQ is subject to approvals. Under Regulation A+, a company has the ability to change its share price by up to 20%, without requalifying the offering with the SEC.}

Today’s Headlines 🍿 

• Trump weighs taking Fannie and Freddie Mae Public: The President said that he would consult Bessent and Lutnick on the decision to bring the mortgage giants to market after a decade of being under government oversight. Trump said on Truth Social, “Fannie Mae and Freddie Mac are doing very well, throwing off a lot of CASH, and the time would seem to be right”

  • Bill Ackman would be a big winner - as he initiated a large position in December 2024 and has been making the case for privatization since then

• Google launched Veo 3: Users are impressed so far with , the tool, an AI video generator that incorporates audio, that competes with OpenAI’s Sora and is included in a $249/month Ultra subscription plan for AI super-users

• No taxes on tips! In a surprise 100-0 decision, the senate passed a provision where tips, up to $25k, aren’t subject to taxation. Previously, federal tax code required that every tip be reported as income. Service charges, added by businesses, do not count as tips

• Blackstone and CVC are out at halftime: The two private equity firms are dropping out of an NFL investment group that also includes Dynasty Equity and Carlyle. These investors are among one of only four consortiums that is allowed to buy 10% stakes in teams. BX and CVC are still interested in minority stakes in franchises and might rejoin their former partners

• HPS leads $3.4B Dividend Recap: The Credit Manager led a group that provided $3.4B in private debt financing to Consumer Cellular, a mobile plan provider for Seniors. This refinanced a $2.8B broadly syndicated loan market deal, and gave sponsor GTCR a nice dividend.

• Sixth Street sees complacency in Private Credit: Sixth Street’s Co-CEO warned that private credit is getting too complacent with credit spread risk and interest rate risk. Sixth Street is generally more focused on rescue financing at the moment, vs. plain vanilla sponsor financing

• S&P just downgraded Warner Bros. Discovery to high-yield, due to cash flow declines in the broadcaster’s linear TV business

• Hinge Health goes public: The AI-powered physical therapy startup raised $437M in its IPO, pricing at the top of its range. Now trading as HNGE, it’s valued at nearly $2.9B fully diluted — less than half its 2021 private valuation

• CoreWeave cashes in on hype: The AI data center operator raised $2B in a high-yield bond sale, exceeding investor expectations thus far after a shaky IPO

• Victoria’s Secret swallows a poison pill: After Australian investment firm BBRC International launched an activist campaign, the lingerie maker is adopting the plan to “guard against tactics to gain control of the company without paying shareholders an appropriate premium for that control”

• Taiwan’s secret quant king: Ex-JPMorgan analyst Andre Liu built UC Capital into a high-frequency trading powerhouse with 51% annual returns — and drew global attention after dropping $4.39M on Shohei Ohtani’s 50/50 baseball

• Chamath is that you? The SPAC Bubble is back. ProCap Acquisition, led by crypto-influencer Anthony Pompliano, aka “Pomp” raised $220mm in an upsized IPO

• Qatar gives Trump a jet: The President accepted a $400mm Boeing 747 from Qatar to serve as a temporary Air Force One. Critics from both parties say it’s a national security risk and accuse Trump of skirting ethics laws

• Regeneron wants your genes: Once valued at $6B, genetic testing company 23andMe sold at bankruptcy auction for $256mm to Regeneron. The biotech behemoth will now have access to millions of users’ genetic data

• Canada bets on the US: Nearly 50% of the Canada Pension Plan’s $516B portfolio is now invested in the US, up from 36% in 2023, despite political pressure to keep capital at home

• Hawk Tuah Tells All: Haliey Welch (Yes that’s how her name is spelled) revealed the crypto investigation into her went nowhere and that was she manipulated by some crypto bad actors. Apparently, the FBI knocked on her grandma’s door during the investigation

M&A Transactions💭 

OpenAI buys Ive’s vision: Jony Ive’s hardware startup io sold to OpenAI for $6.4B in stock. The former Apple design chief will help the ChatGPT maker build AI-powered devices that could replace the smartphone.

Discover Financial Services (STU: DC7), a bank operating in two distinct segments, direct banking and payment services, was acquired for $56.631B by Capital One Financial (NYS: COF). EV/Net Income was 12.04x and EV/Revenue was 3.15x. Brunswick Group and Centerview Partners advised on the sale.

Sanmina (NAS: SANM) reached a definitive agreement to acquire The Data Center Infrastructure Manufacturing business of ZT Systems for $3.0B. Morgan Stanley advised on the sale.

TXNM Energy (NYS: TXNM), a holding company, has reached a definitive agreement to be acquired for $5.7B by Blackstone. EV/EBITDA was 6.3x and EV/Revenue was 2.83x. Citigroup and Wells Fargo advised on the sale.

Servotronics (ASE: SVT), a U.S. based company that designs, manufactures, and markets servo valves, reached a definitive agreement to be acquired for $989.337M by TransDigm Group (NYS: TDG). EV/Revenue was 21.43x. Houlihan Lokey advised on the sale.

Poppi, producer of prebiotic soda, was acquired for $1.95B by Pepsico (NAS: PEP). EV/Revenue was 3.9x.

Grover Gaming, developer of gaming software, was acquired for $850.0M by LNW Gaming (NAS: LNW). EV/EBITDA was 7.66x and EV/Revenue was 6.3x. Goldman Sachs advised on the sale.

Apaz Partners reached a definitive agreement to acquire The Treasury and Capital Market Business Unit of Finastra for $2.0B. Evercore Group and Perella Weinberg Partners advised on the sale.

Estacionomientos y Servicios, developer of on-street car parking, has entered into a definitive agreement to be acquired for EUR 600.0M by Tikehau Capital.

23andMe (PINX: MEHCQ), a consumer facing healthcare technology company, reached a definitive agreement to be acquired for $316.5M by Regeneron Pharmaceuticals (NAS: REGN). EV/Revenue was 1.52x.

Vacco Industries, manufacturer of specialty metals, has reached a definitive agreement to be acquired for $310.0M by ESCO Technologies (NYS: ESE). EV/Revenue was 2.63x.

The Vitamin Shoppe, manufacturer and retailer of nutritional products, was acquired for $193.5M by Kingswood Capital Management and Performance Investment Partners. Ducera Partners advised on the sale.

Nordstrom, a fashion retailer, was acquired for $6.25B by Mr. Erik Nordstrom, Mr. Pete Nordstrom, Mr. Jamie Nordstrom, and Other Members of the Nordstrom Family, and El Puerto de Liverpool (MEX: LIVEPOL1). EV/EBITDA was 4.86x and EV/Revenue was 0.42x. Centerview Partners, Moelis & Company, and Morgan Stanley advised on the sale.

Kinectrics, provider of life cycle management services, was acquired for $525.0M by BWX Technologies (NYS: BWXT). EV/Revenue was 1.75x.

EsoBiotec, developer of immunotherapies, was acquired for $1.0B by AstraZeneca for $1.0B. Centerview Partners advised on the sale.

Dockers, operator of an online retail store, has entered into a definitive agreement to be acquired for $311.0M by Authentic Brands Group. EV/Revenue was 0.96x. Bank of America advised on the sale.

Biolife Delaware, manufacturer of medical devices, was acquired for $120.0M by Merit Medical Systems (NAS: MMSI).

New World Resources (ASX: NWC), an Australia company focused on the exploration and development of mineral resources, has reached a definitive agreement to be acquired for $185.0M Central Asia Metal (LON: CAML). EV/Cash Flow 13.89x.

Lumen Technologies (NYS: LUMN), one of the United States largest telecommunications carriers, has reached a definitive agreement to sell their mass market fiber unit for $5.75B to AT&T (NYS: T).

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Private Placement Transactions💭 

Yeebet Gaming, operator of an online gaming company, raised $120.0M of venture funding from Askmebet, X2 Dynamic, and 0MS Group.

Rebhu Computing, developer of a semiconductor system, received $333.0M of grant funding from Startup India Seed Fund.

Cyera, developer of a holistic data storing and security platform, raised $500.0M of venture funding led by Lightspeed Venture Partners, Greenoaks Capital Partners and Georgian at a pre-money valuation of $5.5B.

CellCentric, operator of a clinical-stage therapy, raised $120.0M of Series C venture funding led by RA Capital Management and Fobion.

Awardco, developer of an employee recognition platform, raised $165.0M of Series B venture funding from Sixth Street Partners, Spectrum Equity, and General Catalyst at a pre-money valuation of $835.0M.

Airwallex, operator of a global payments, raised $300.0M of Series F venture funding from Saleforce Ventures, Visa Ventures, and Saniel Ventures. EV/Revenue 10.33x.

Odds of the Day 🍒 

When will GTA actually happen? Kalshi traders are pricing in a 91% chance of GTA finally happening in 2026.

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Noteworthy Chart 🧭

The Median age of homebuyers in the U.S. has dramatically spiked.

Meme Cleanser 😆 

Until next time!

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