Ideas from our Weekly Inspiration newsletter

We highlight a few stock write-ups from the latest Weekly Inspiration:

NVIDIA (NVDA) doubled July-quarter revenue to $96.2 billion and guided fiscal 2028 growth to roughly 70% against consensus near 45%, and management described even that as a supply-constrained outlook. Customer forecasts showed demand doubling; the company can only grow 70% because there are not enough components. Tae Kim’s point is that this is the third consecutive year the peak-year thesis has been wrong. Supplier commitments rose from $119 billion to $279 billion, mostly memory, and the guidance assumes no data-center revenue from China at all. Rising content per gigawatt, the Vera Rubin ramp and record capital returns carry the rest of the case. At ~33x trailing earnings the multiple compresses quickly if the guidance holds; gross-margin pressure into the low 70s from memory procurement is the near-term watch item.

Intuit (INTU) has retreated from an unrealistic 20% growth aspiration, will now include stock-based compensation in its non-GAAP figures, and has begun disclosing Mailchimp’s results properly. Dede Eyesan reads all three as management becoming accountable for past capital allocation rather than as bad news. FY26 beat his cost estimates despite restructuring, mid-market growth ran 28%, and QuickBooks pricing supports a path near a 12% revenue CAGR that gets to a 20% IRR without needing 20% growth. The live risk is TurboTax’s do-it-yourself tier, which faces intensifying price competition. At ~22x trailing earnings and a 7.9% free cash flow yield, the valuation looks undemanding for the franchise.

Cal-Maine Foods (CALM) is the largest egg producer in the United States, with roughly twice the laying hens of its nearest competitor and net cash equal to ~20% of market capitalization. The stock is down ~27% over the past year, coming off the previous cycle peak, and the case is mean reversion rather than growth. Value Don’t Lie notes the shares have consistently traded near 2.1x book value over twenty years and sit well below that median today, at the low end of the historic range while the industry approaches a cycle bottom. Egg demand is stable across decades; the violence is all on the supply side, where avian flu and producer behavior swing prices. The balance sheet funds buybacks, a variable dividend and a push into prepared foods, and an 8.7% free cash flow yield pays for the wait.

Power Solutions International (PSIX) has replaced the CEO whose conduct kept many investors away, hiring Richard Hu, most recently head of BorgWarner’s Americas business. “Guasty Winds” has followed the company for years, owned it on the pink sheets and visited both Wisconsin plants, and argues its problems were never about demand. They were operational, which is what a Tier 1 automotive supply executive is trained to fix, in a business where operating efficiency and quality control decide survival. Q2 gross margin of 27% revealed the latent earnings power, the balance sheet is approaching net cash, and the shares trade at ~12x trailing earnings and under 10x EV/EBITDA. Investor communication remains poor and fixing it is the open question; with better disclosure and a 2027 reacceleration, FCF above $100 million looks attainable.

EVT Limited (Australia: EVT) owns Australia’s largest cinema chain, its second-largest hotel group and its largest ski fields, and management has now committed to divesting A$800 million of non-core property. The prize is the corner of George and Market Streets in Sydney, which carries development approvals along with the State Theatre and the QT Hotel structure, and which Andrew Brown of East 72 thinks could exceed A$320 million on its own. Rothschild has been engaged to assess the group structure, and CEO Jane Hastings says there are no sacred cows. He values the group at A$16.50 to A$22.25 per share against A$15.09, with A$1.04 per share of franking credits available to fund special dividends. Cinema EBITDA rose 46% on 48 fewer average screens, which is the segment the market had written off. He owns the shares.

As always, the above theses reflect the linked authors’ views (available here), not Latticework recommendations.

From last week’s member call

Our fourth bi-monthly member call drew participants from Uruguay to Singapore, and one question ran through most of the contributions: the AI capital-expenditure wave is real, but it lands in reported numbers in a way that flatters the sellers today and may flatter no one later. Members offered ways to align with the trend without overpaying, alongside ideas well away from the AI trade.

The full recap is in Sartorius, Copper, and the S&P 500 Margin Mirage.

Articles worth your time

If this is true, the hyperscalers are toast, by Joachim Klement, takes Stanford research on small language models and follows it to an uncomfortable conclusion for data-center capital spending. The research finds small models running on local hardware tie or beat cloud LLMs in 98.6% of chat requests and 62.5% of reasoning tasks, while consuming 50% to 85% less energy, with inference per watt running roughly seven times higher. If most of what people actually ask a model can be answered on a laptop, the demand curve underwriting hyperscaler capex and Nvidia’s margins looks different. Klement is careful about where the argument stops: LLMs keep their advantage in agentic work and the hardest reasoning, where small models succeeded 51.5% of the time at the top difficulty level. Read it against this week’s NVIDIA write-up, which reaches the opposite conclusion from the demand side.

Paying for Information (In Reverse), by Harvey Sawikin of Firebird Management, offers a small mechanical fix for the anchoring that stops investors buying a stock which has already run. The maxim comes from his late co-founder Brom Keifetz, a poker player: you have to get comfortable with paying for information. In investing it applies in reverse, because the information you wanted arrives only after the price has moved. His remedy is a starter position of 0.10%, small enough to cost nothing, which reframes every later purchase as adding to a winner rather than chasing one. The same trick eases exits, since trimming first makes it psychologically easier to sell a deteriorating former winner in full. Stanley Druckenmiller’s Soros-derived rule, invest and then investigate, achieves the same effect at a far larger initial size.

Winds of Thematic Change, by Moses Sternstein, shows the data-center build arriving in places and at prices that do not look like a technology story at all. Data centers account for ~60% of private non-residential construction in New Mexico and Wyoming, and 30% in Pennsylvania. The Dallas Fed reports data-center projects paying concrete workers $45 an hour against a $28 to $32 prevailing wage, a 50% premium that lands in every other local builder’s cost base. On the flows side, thematic ETF money has rotated out of clean energy and into AI, nuclear and defense. He also notes that Uber’s average and median fares have risen ~20% since 2024 on platform fees, with Lyft running 24% cheaper. Three of his charts are reproduced in this week’s deck.

New in this week’s deck

This week’s deck adds charts on flows, ownership and the arithmetic sitting behind some familiar headline numbers.

• ETF flows brings three charts on the exchange-traded fund bid: net inflows running ~$600 billion ahead of 2025’s record pace, July’s all-time monthly record of $346 billion, and the rotation of thematic money out of clean energy and into AI, defense and nuclear.

• Top 10 weight in the S&P 500 sets the largest ten constituents’ share of index market value against their share of trailing earnings, so the concentration debate has a denominator.

• Who owns the US stock market splits Fed Financial Accounts data into households, funds and foreign investors, and shows that every point the fund complex has added in thirty years is ETFs.

• Where the federal dollar comes from, and where it goes lays out receipts by source against outlays by function for the fiscal year to date, with the borrowing gap and net interest called out.

• Share of world GDP versus share of world equity market value puts each country’s slice of global output beside its slice of global market capitalization.

The deck

The 125-page Monday Morning Briefing is available to members. It spans our weekly scoreboard, idea-generation screens, market valuation and positioning, macro and fixed income, and equity valuation screens across international markets (Canada, the UK, Germany, Australia, Japan, Korea, India and Sweden, alongside a cross-country P/E table and European REIT discounts to net tangible assets). We welcome your feedback.

Feedback on the Briefing

“Most of what I monitor, all in one place. Great value add.” —Brad Lummis

“Loving these Monday briefings!” —Jon Bartel

“Tightly presented and easy to digest. I just spent 20 minutes going through it, and it’s helped to level set me for the week ahead.” —Michael Loftis

“A great piece and thoughtfully assembled.” —Brian Wolf

“I have never seen more valuable content in one place.” —Bill Coleman

“Worth its weight in gold.” —Shree Viswanathan

Subscribe now

Featured Events

• Latticework 2026, Chicago, Illinois (Nov. 10-11, 2026)

• Ideaweek 2027 (FULLY BOOKED), St. Moritz (Feb. 1-4, 2027)

• The Zurich Project 2027 (COMING SOON) (Jun. 1-3, 2027)

Ideas from our Weekly Inspiration newsletter

We highlight a few stock write-ups from the latest Weekly Inspiration:

Boston Scientific (BSX) derated after its two growth engines, Farapulse and Watchman, together roughly a quarter of revenue, stalled on competition and physician hesitancy. Aurelion Research reads the company’s 2027 guidance as embedding something close to a worst case, which sets a low bar rather than a high one. Three things argue against the pessimism: the CEO bought $9 million of stock in the open market, the board authorized a $2 billion buyback, its first since 2020, and a launch cadence runs through 2027 and 2028. At ~15x EV/EBITDA and a 4.9% free cash flow yield, the risk and reward on a durable 7-8% organic grower look asymmetric.

LENSAR (LNSR) kept compounding after FTC opposition scuttled Alcon’s $430 million takeover, lifting US procedure share on its ALLY robotic systems from 14% to 23.4% with recurring revenue annualizing near $55 million. Christian Schmidt is candid that the headline 4.8x trailing P/E overstates how cheap this is, because warrant dilution is heavy; on a fully diluted basis the shares trade near 2.9x EV/revenue, still well below the 8x Alcon had agreed to pay for the business. The two risks he names are concrete rather than rhetorical: international placements stalled when the deal broke and distributors have to be re-engaged, and North Run holds concentrated voting control.

JW Lifescience (Korea: 234080) makes the intravenous fluids and parenteral nutrition South Korean hospitals cannot operate without, holding close to half the domestic market behind regulatory and logistical barriers that are genuinely hard to cross. It trades near 4.8x EV/EBITDA and 0.8x book despite compounding net income at ~22% a year over five years. Tangible Bruce argues that the three overhangs which compressed the multiple, the absorption of JW Bioscience, the doctors’ strikes and a frozen dividend, have now all resolved. Exports through the Baxter partnership are compounding above 20%, margins are inflecting, and deleveraging is taking the balance sheet toward net cash. A formal commitment to pay out at least 25% of earnings and normalizing surgical volumes carry the re-rating case.

MegaChips (Japan: 6875) owns a ~10% stake in SiTime whose after-tax value, added to net current assets, comes to roughly ¥19,842 per share against a ¥11,100 share price. That arithmetic ascribes nothing to the fabless ASIC business, which has supplied Nintendo since 1994. Altay Capital notes that management is selling SiTime shares to fund buybacks, cutting the share count from 17 million to 14 million since May 2025, and yet the stock sits at 0.9x book. The risk is the other side of the trade: SiTime’s own valuation is rich, so the gap can close from the wrong end.

As always, the above theses reflect the linked authors’ views (available here), not Latticework recommendations.

Articles worth your time

Nvidia’s Risky Business, by Ben Thompson, sets the AI buildout’s turn toward debt against Jay Cooke’s railroad bonds and the Panic of 1873. Oracle, Meta, Alphabet and Amazon raised $194 billion by early July this year after raising $108 billion in all of 2025; 86% of this year’s issuance already trades above its issue yield, and cover on recent deals has fallen from 5x in February to under 2x. Microsoft is the outlier, still generating $19.6 billion of quarterly FCF without debt-funded capex, while Google has moved on to equity, raising $85 billion, including $10 billion from Berkshire. A critical point concerns Nvidia’s new financing platforms with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR, intended to mobilize over $500 billion of third-party capital, with Nvidia backstopping up to 25% of residual value. Equity dilutes the upside without adding company risk; this structure instead creates risk for pension and insurance capital.

AI’s Bar Mitzvah Moment? From Hope & Hype to Hard Business Questions!, by Aswath Damodaran of NYU Stern, insists that AI now be judged as a business rather than as a phenomenon. The Mag Seven accounted for 45% of the increase in market capitalization across all US stocks between 2022 and 2025 and carry an aggregate value of $23.7 trillion, while AI investment contributed roughly 1% of the 2.5% real GDP growth in 2024 and 2025. His complaint is that both camps cherry-pick the evidence: optimists cite usage statistics, skeptics cite capital spending and the absence of profits, and neither side asks whether these businesses can build moats. Large addressable markets, he points out, do not reliably become large businesses, and heavy capital spending does not by itself condemn a company to destroying value. The questions that decide it are the prosaic ones about products, unit costs and barriers to entry.

S&P500 Net Margins Soar (16.9%); Or Do They?, by James Emanuel, argues that the index’s record profit margin is an accounting artifact of the AI capital-spending cycle rather than a durable improvement in economics. S&P 500 net margins averaged 5.6% in the 1990s, 6.3% in the 2000s and 8.8% in the 2010s; FactSet now shows 16.9%, a 370 basis point jump in a single quarter from an already elevated base. His explanation is a timing mismatch. The ~$800 billion the hyperscalers will spend this year is recognized immediately as revenue by Nvidia, Micron and hundreds of other suppliers, while the buyers capitalize the same spending and depreciate it over many years. Free cash flow yields, which oscillated near 5% for years, began falling sharply in 2023 as capex accelerated, telling the opposite story. The mechanism runs in reverse when the buildout slows, because revenue drops while the depreciation keeps flowing through, and he thinks the average margin over the next five or six years may well print a single digit.

The Radio, the Submarine and the Tariffs, by Ed Conway, corrects the standard telling of the 1987 Toshiba boombox smashing and draws a lesson for anyone underwriting a policy-driven thesis. Congressmen took a sledgehammer to that radio the day after the Senate voted to sanction Toshiba, and the reason was not Japanese consumer electronics. Toshiba had sold a nine-axis milling machine to the Soviets when the export rules permitted three, letting them grind quieter submarine propellers. The false customs declarations went undetected for years and surfaced only because a disaffected colleague reported them. Conway sets this beside the White House’s recent transshipment paper, which concedes that Chinese goods still reach America by way of third countries, and reads the paper as an admission that nobody, including the government imposing the barriers, can reliably say where a product was made. Barriers rarely stop trade; they lengthen and obscure the route it takes.

The deck

The 116-page Monday Morning Briefing is available to members. It spans our weekly scoreboard, idea-generation screens, market valuation and positioning, macro and fixed income, and equity valuation screens across international markets (Canada, the UK, Germany, Australia, Japan, Korea, India and Sweden, alongside a cross-country P/E table and European REIT discounts to net tangible assets). We welcome your feedback.

Feedback on the Briefing

“Most of what I monitor, all in one place. Great value add.” —Brad Lummis

“Loving these Monday briefings!” —Jon Bartel

“Tightly presented and easy to digest. I just spent 20 minutes going through it, and it’s helped to level set me for the week ahead.” —Michael Loftis

“A great piece and thoughtfully assembled.” —Brian Wolf

“I have never seen more valuable content in one place.” —Bill Coleman

“Worth its weight in gold.” —Shree Viswanathan

Subscribe now

A few words on the format

The Briefing is designed to answer a deceptively simple question. If you were sitting down before the weekly market open, as an investor rather than a trader, what would you want in front of you?

Each week, the Briefing walks through five parts.

• Weekly Review & Outlook covers equity performance, sector moves, the earnings just reported, and the earnings coming up, alongside curated editorial highlights from our Weekly Inspiration newsletter.

• Idea Generation surfaces candidates from screens we run: biggest decliners, names near 52-week lows, low multiples, high FCF yields, spinoffs, activist situations, buybacks, short interest, and more.

• Market Valuation & Positioning steps back to the index level: the Buffett Indicator, aggregate multiples versus history, S&P 500 concentration, equal-weight versus cap-weight, and long-run factor returns.

• Macro & Fixed Income rounds out the picture with rates, credit spreads, the Fed balance sheet, the dollar, labor, regional PMIs, and housing.

• International Markets closes with equity valuation screens country by country, alongside cross-country valuation comparisons.

Table of contents

Note: Slides showing data that is updated on a monthly or quarterly basis may not be included in every issue of the Monday Morning Briefing.

Part 1 — Weekly Review & Outlook

• Global equity index performance across regions

• GICS sector total returns

• Weekly commodity price changes

• Quarterly earnings: biggest beats and misses, market cap above $500M

• Selected insights from the week’s notable earnings calls

• Top reporters by market cap, week ahead

• Takeaways from featured Weekly Inspiration articles

• What’s new in AI for investment managers

• Curated video and audio from Weekly Inspiration

• Key takeaways from each featured video and podcast

Part 2 — Idea Generation

• S&P 500 stocks with the largest weekly declines

• Largest weekly declines among US stocks

• Cheapest stocks trading within 10% of their 52-week low

• Key takeaways from curated analytical articles

• Notable activist campaigns and acquisition proposals

• Featured spin-off opportunities

• Holdings two or more tracked value managers added last quarter, now below their quarter-end price

• Open-market purchases by officers, directors, 10+% owners

• US-listed equities $300M+ market cap, insiders own 20% or more, lowest EV/EBIT

• S&P 500 share repurchase activity, trailing twelve months

• S&P 500, largest quarter-over-quarter decline in shares outstanding, buyback-verified (new this week)

• Largest quarter-over-quarter decline in shares outstanding for US stocks $300+mn ex-S&P 500, buyback-verified (new this week)

• FINRA consolidated short interest

• Ranked by short interest as a percent of float

• S&P 500 highest FCF yield (ex-financials)

• S&P 500 ex-financials and ex-REITs: stock-based compensation vs. reported free cash flow

• Three-year ann. FCF yield for US stocks $300+mn (ex-fin.)

• S&P 500 highest trailing earnings yield (all sectors)

• Three-year ann. earnings yield for US stocks $300+mn

• S&P 500 cheapest by EV/EBITDA (ex-financials)

• EV / three-year ann. EBITDA for US stocks $300+mn

• S&P 500 cheapest by price / tangible book value

• Cheapest by price / tangible book for stocks $300+mn

• Enterprise value per dollar of real estate at original cost, before depreciation

• S&P 500 highest 5-year average ROIC

• Highest 5-year ROIC for stocks ex-S&P 500

• Valuation in historical context for selected companies

• Indicated dividend yield for US stocks $300+mn, net debt at or below 25% of market cap

• US micro-caps, P/S < 1.0, ranked by 52-week price change

Part 3 — Market Valuation & Positioning

• Equity market value / GDP

• S&P 500 deflated by M2 money supply

• After-tax corporate profits / GDP

• S&P 500 trailing P/E

• S&P 500 earnings yield vs. 10-year Treasury

• Trailing P/E by GICS sector

• Top 10 holdings by index weight

• RSP / SPY relative performance, trailing one year

• Russell 2000 / S&P 500 relative performance, five years

• S&P 500 breadth indicators

• Money market fund assets and ETF category returns

• CBOE VIX implied volatility term structure

• FINRA net margin debt — customer securities margin accounts

• S&P 500 calendar-year price returns and largest intra-year drawdowns

• Fama/French factor returns, annualized and compounded

• Fama/French value spread — book-to-market gap between cheap and expensive stocks

• Fama/French HML factor — cumulative return spread by decade

• Growth of $1 invested in Fama/French size-value style portfolios since 1926

Part 4 — Macro & Fixed Income

• U.S. Treasury yield curve

• 10-year Treasury yield minus year-over-year CPI

• U.S. high yield credit spreads

• Federal Reserve total assets and composition

• M2 money stock, year-over-year change

• Total public debt as a percent of GDP

• Trade-weighted U.S. dollar index

• Unemployment rate and initial jobless claims

• Regional Fed manufacturing diffusion indices

• 30-year mortgage rate and housing starts, trailing ten years

Part 5 — International Markets

• World equity market cap / world GDP

• Ranked by discount to each market’s own 10-year average P/E

• Ranked by discount of share price to the company’s own disclosed EPRA NTA per share

• Canada equity valuation screens

• UK equity valuation screens

• Germany equity valuation screens

• Australia equity valuation screens

• Japan equity valuation screens

• Korea equity valuation screens

• India equity valuation screens

• Sweden equity valuation screens

Featured Events

• Latticework 2026, Chicago, Illinois (Nov. 10-11, 2026)

• Ideaweek 2027 (FULLY BOOKED), St. Moritz (Feb. 1-4, 2027)

• The Zurich Project 2027 (COMING SOON) (Jun. 1-3, 2027)

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The new Briefing is embedded in full below for members. As always, it runs from a weekly scoreboard through our idea-generation screens, market valuation and positioning, and a macro and fixed-income section. Before the deck, a short orientation: what last week told us, what we are watching in the days ahead, and a few things worth reading.

Last week, and the week ahead

The headline number flattered to deceive. The S&P 500 closed at 7,354, down 2.0% on the week, and the Nasdaq fell 4.6%, yet beneath the cap-weighted indices the move was a rotation rather than a retreat. Small caps led: the Russell 2000 rose 1.0% and the S&P 600 added 3.0%. The selling concentrated in the names that have carried the market. Technology dropped 6.1% while health care jumped 7.4%, its best week in some time, and the rate-sensitive and defensive corners followed health care higher, with utilities up 3.9%, real estate up 3.6%, and consumer staples up 2.5%. The ten-year Treasury yield eased eight basis points to 4.37%, and the VIX rose two points to 18.4.

The weakness was sharpest abroad and in commodities. Asian equities slumped, with the KOSPI off 7.1%, the Hang Seng down 5.2%, and the Nikkei 225 down 2.7%. Commodities sold off almost across the board: eight of the ten tracked contracts fell, led by WTI crude down 9.6% to $69.23 and silver down 9.7%. Gold slipped 2.5% to $4,096 and copper fell 3.5%. Earnings were a quiet, with BlackBerry, MillerKnoll, and Winnebago all printing below consensus even as several of the stocks rallied on the news.

The week ahead is holiday-shortened, with US markets closed Friday, July 3 for Independence Day. The reporting calendar is led by Nike and Constellation Brands on Tuesday, General Mills and FactSet on Wednesday, and Holcim on Friday, with Prosus, Naspers, and AeroVironment opening the week. The June employment report also lands in the first week of the month. The question for the days ahead is whether last week’s rotation, out of megacap tech and into small caps, health care, and defensives, marks a durable change in leadership or merely a pause, and whether the slide in crude and the broader commodity complex continues.

Takeaways from last Thursday’s member call

We held our third bi-monthly member call last Thursday, featuring elevator-pitch versions of ideas that instructors had presented at the just-completed Wide-Moat Investing Summit. One theme tied most of the pitches together: high-quality businesses the market has marked down on an artificial-intelligence story the presenters consider either overblown or beside the point. Our full write-up is here: UnitedHealth, Salesforce, and the AI Value-Chain Debate.

UnitedHealth drew two presenters. Dave Sather of Sather Financial Group argued the market wrongly lumps it with hospital and managed-care peers and sold it on Medicare-reimbursement fears, when health insurance is short-tail risk repriced every twelve months and the real prize is Optum, which he called “a technology company with a healthcare wrapper” sitting on some 330 million identified data points. Jonathon Fite of KMF Investments reinforced the case on the economics of vertical integration and a post-COVID housecleaning, arriving at a multi-year fair value north of $600.

Amit Nath of Montaka Investments relayed Andy Macken’s Salesforce thesis: the “SaaS-pocalypse” fear has priced the stock for roughly 1% revenue growth against guidance for 10%, while the durable moat is distribution and 250 petabytes of proprietary data, not the increasingly substitutable model layer. Lowell Capital’s Jim and Abby Zimmerman pitched 4imprint, a London-listed but largely North American marketing engine they think can at least double. Chris Crawford of Crawford Fund Management made the case for Toast, founder-led and debt-free with $1.7 billion of cash against a $13 billion market cap, where his valuation methods converge near $48, about 80% above the current price. And Rodrigo Lopez Buenrostro of KuE Capital pitched Midea, a compounder at 15 times earnings with a 7% free-cash-flow yield against Western peers near 25 to 30 times, for roughly 45 to 50% upside.

The call closed with a candid roundtable on who in the AI value chain is left holding the “hot potato” as intelligence commoditizes. Bryan Lawrence of Oakcliff Capital, a longtime Alphabet holder, called Google’s most recent quarter one of the most remarkable he has seen, with backlog doubling to roughly $460 billion and incremental cloud margins above 65%. James Emanuel posed the central question: if cheap open-source and Chinese models are good enough for most enterprise work, who absorbs the cost as it moves down the funnel from hyperscaler to software vendor to customer? Amit Nath’s answer was that intelligence is becoming the most substitutable layer in the stack, noting that Microsoft is preparing to run DeepSeek inside Copilot, ring-fenced within Azure. Bryan’s counterpoint was memorable: the model running Pizza Hut’s call center need not be the frontier, so the deflationary force in that middle layer is enormous, while in drug discovery the highest-order intelligence is worth almost any price.

Three essays worth your time

SpaceX $SPCX: The New Index Fund, by Alejandro Yela, dissects the mechanics behind the largest IPO in history, which raised roughly $85 billion. His argument is that SpaceX exploited a NASDAQ rule change, effective May 1, that compressed the post-IPO seasoning period from three months to 15 trading days, fast-tracking the stock into the NASDAQ 100 and conscripting every index tracker, including the roughly $600 billion QQQ, as a forced buyer. The 30% retail allocation, against a typical sub-5%, reads to him less as democratization than as a tell of weak institutional conviction. With the company burning cash and much of its valuation resting on an orbital-data-center dream that collides with the thermodynamics of cooling in a vacuum, Yela frames the listing as “the institutionalization of a meme stock.”

Weekend Thoughts: Malone’s Born to Be Wired; Thoughts on Cable; Is CHTR Cheap?, by John Huber, works through why cable has confounded value investors, with Charter down 42% over the decade. Prompted by John Malone’s new book, Huber leans on Malone’s own discount-airline analogy: a few players with high fixed and low variable costs, fighting to fill the last seat, which makes raising prices, and even holding customers, increasingly hard as fiber, fixed-wireless, and Starlink encroach. Charter looks statistically cheap at about four times FCF, but Huber treats that as a call option on revenue stability and, applying his ten-year test, prefers to watch from the sidelines.

Executive Compensation: The Cobra Effect, by James Emanuel, uses Goodhart’s and Campbell’s laws to explain why metric-driven pay so often backfires: EPS targets can be hit with buybacks, cost deferrals, accounting choices, or underinvestment, and share-price targets reward factors outside a manager’s control. Inverting the problem, Emanuel asks not what it costs to produce elite performance but what it would cost to make a Jobs, a Bezos, or a Buffett stop, and concludes that financial incentives are closer to a contrarian indicator. His prescription favors longer vesting, clawbacks, peer-group calibration, and ownership over engineered bonuses, with Buffett’s $100,000 salary as the model.

The deck

The full 78-page Monday Morning Briefing is embedded below for members: seventy-eight pages spanning the weekly scoreboard, our idea-generation screens, market valuation and positioning, and the macro and fixed-income picture. Every chart and table carries its source and as-of date. We welcome your feedback as the format continues to evolve.

Feedback on the Briefing

“Most of what I monitor, all in one place. Great value add.” —Brad Lummis

“Loving these Monday briefings!” —Jon Bartel

“Tightly presented and easy to digest. I just spent 20 minutes going through it, and it’s helped to level set me for the week ahead.” —Michael Loftis

“A great piece and thoughtfully assembled.” —Brian Wolf

“I don’t think I have ever seen more valuable content in one place.” —Bill Coleman

“Worth its weight in gold.” —Shree Viswanathan

The new issue follows.

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SpaceX last closed at $185 on June 18, up roughly 37 percent from its $135 IPO price and now “worth” about $2.4 trillion. We are skeptical of the market quotation, and our reasons are set out in our note from the listing here.

Below, we highlight the three pieces that deserve your time this week.

Aswath Damodaran asks whether SpaceX, OpenAI, and Anthropic belong in the S&P 500, and whether it even matters. Skeptical of the loudest voices on both sides, he lands on an interesting point: the old price bump from index inclusion has largely vanished, and newly added names now tend to underperform in the year after they join. Tesla is the clean example, lagging both the index and the company it replaced after its late 2020 addition. For a long-term investor the message is that inclusion does not move intrinsic value, so it is not a catalyst worth paying for.

Chris Satterthwaite of Verdad shows that the factor driving this rally is not the one the headlines name. The biggest winner has not been AI or chips but high-volatility stocks, the lottery tickets that normally lag, and Verdad’s low-volatility factor is down about 13 percent since late March, a two-month drawdown at the 0.5th percentile of everything since 1996. Episodes this extreme split into two opposite outcomes, rebounds off a bottom and junk rallies near a top, and Verdad sets the analogues side by side without telling you which one applies.

Phil Bak turns a family road trip into the most unusual piece of the three. Talked out of a motel by his son’s logic that a night of camping at least leaves you with a tent to show for the money, he widens into a market priced for perfection, a Buffett Indicator near 230 percent, a CAPE at dot-com levels, and the fraying society around it. His point is that being honest about stretched valuations and a widening wealth gap is not bearishness but a refusal of the comforting lie. It is the most enjoyable thing I read this week, and the one most worth your time.

This week’s 71-page presentation is available for download below.

A bit of feedback…

“Most of what I monitor, all in one place. Great value add.” —Brad Lummis

“Loving these Monday briefings!” —Jon Bartel

“Tightly presented and easy to digest. I just spent 20 minutes going through it, and it’s helped to level set me for the week ahead.” —Michael Loftis

“A great piece and thoughtfully assembled.” —Brian Wolf

“I don’t think I have ever seen more valuable content in one place.” —Bill Coleman

“Worth its weight in gold.” —Shree Viswanathan

The new issue follows.

Read more

On Friday evening Washington reached directly into a frontier AI model and switched it off. A few hours earlier the same market that is supposed to be pricing AI risk handed a rocket-wrapped compute business the largest IPO valuation in history. Underneath both news items sits a single key question: Is the AI build-out a super cycle that compounds, or a capital cycle that mean-reverts? Chris Bloomstran of Semper Augustus and Luke Bridgeman of Hosking Partners tackle the question from different angles. They both arrive at roughly the same place.

Washington pulled Anthropic’s most powerful models off the market on Friday night. At 5:21pm Eastern on June 12, the Commerce Department, in a letter from Secretary Howard Lutnick drafted with the Bureau of Industry and Security, issued an export-control directive ordering Anthropic to suspend access to Fable 5 and the non-public Mythos 5 for any foreign national, whether outside the US or inside it, and explicitly including Anthropic’s own non-citizen employees. Because the company cannot verify citizenship at the model layer, it had no practical option but to disable both models for every customer. Its other models, including Claude Opus 4.8, are unaffected. This is the first time the US has applied export controls to an AI model itself rather than to the chips that train it. The trigger, reportedly surfaced by Amazon, was a single narrow jailbreak. Anthropic says it is narrow rather than universal, confers no meaningful incremental capability, and can be reproduced on rival models such as OpenAI’s GPT-5.5 that face no comparable order.

We share the view, argued at length by Zvi Mowshowitz, that whatever the merits of the underlying concern, the implementation was clumsy and reveals either real animus toward Anthropic or a basic misunderstanding of how jailbreaks and defense in depth actually work. The incoherence is hard to miss. The administration is simultaneously relaxing controls on selling advanced chips to China while barring, say, a British employee of a New York bank from touching the best American model. If the standard applied to Fable were applied across the industry, it would halt essentially every frontier deployment, which is why the more honest framing is not “Anthropic broke a rule” but “who is next?” The own-goal risk is the one worth holding in mind: a large share of the technical staff at every American lab are foreign nationals, and a policy that locks them out of their own tools is the rare measure that could slow the US and speed its competitors at the same time. It is, as Zvi puts it, close to the opposite of coordinating for safety. His full piece is here.

The case is not closed, and that is the point. Axios reports the pause may last only weeks, and David Sacks, speaking for the administration, frames it as a contained request: fix the specific jailbreak and the control lifts. If that is all it is, the episode resolves quickly and cheaply. If instead the demand is to guarantee that no jailbreak at this level ever recurs, that is not a thing any model provider can deliver, and the standoff hardens. What the action proves matters to anyone underwriting AI cash flows. The state has now demonstrated, with no warning and on a Friday night, that it may reach into a deployed model and turn it off. That is a new and non-trivial input to the discount rate for the entire AI complex, and it lands while three of the largest equity offerings in history are lining up to sell that complex to the public.

The first of those offerings priced and traded on Friday. SpaceX listed on the Nasdaq under the ticker SPCX, pricing more than 555 million shares at $135 and raising roughly $75 billion, the largest IPO ever completed. The stock opened at $150, traded up more than 30 percent at the intraday high (briefly worth more than $2.25 trillion), and closed at $161, up 19 percent on the day, for a first-session market capitalization above $2.1 trillion. Up to 30 percent of the deal went to retail, volume exceeded 500 million shares, and Elon Musk became, on paper, the world’s first trillionaire.

A week ago we flagged what was actually being sold, “a narrative priced as though the option has already paid off.” On Friday the market did not discount that narrative. It underwrote it in full, and at a $2.1 trillion close the implied multiple on trailing sales is richer still than the figure that already looked heroic seven days ago. We are not being offered cash flows but the assumption that the optionality has already been exercised. Last week’s note, with the full reframe, is here.

Our first featured piece this week is the full recap, audio, and 54-page deck from Chris Bloomstran’s session at The Zurich Project, held June 2 to 4. Chris is President and Chief Investment Officer of Semper Augustus and the author of what many regard as the most rigorous outside analysis of Berkshire Hathaway anywhere. His title was self-deprecating. Having called a secular peak in his 2021 letter, only to watch the recovery carry valuations above those highs, he now borrows Irving Fisher’s “permanently high plateau” and calls it a secular plateau. The numbers are the spine of the argument. The S&P 500 ended 2025 at 26 times operating earnings, matching 1929 and approaching the 29 times of early 2000, with a CAPE of 40, price to sales near 3.8, price to book of 6.2, and a dividend yield of roughly 1 percent, an all-time low. His verdict is that there is no moment in the history of the American cap-weighted market when valuations have been higher than today. Offered the choice between that index and a Treasury bill, he would own the bill, though he is careful to add that cash has a clock: his opportunity-cost table shows the market must fall about 28 percent within five years, or 48 percent within ten, merely to justify holding cash against equities compounding at 10 percent.

The analytical core is his five-factor decomposition of total return into dollar sales growth, margin change, multiple change, share-count change, and dividend yield. He illustrates it with Coca-Cola, a great business that nonetheless compounded at just 4.6 percent over the 27 years since mid-1998, when it traded at 58 times earnings and was half the Berkshire portfolio, as that multiple unwound by 60 percent to roughly 23. Apple, bought cheap at 13.9 times earnings (10 times net of cash) and compounded near 30 percent, now sits at 34.5 times, and on his three scenarios is priced to deliver somewhere between zero and 7.5 percent, which is why Berkshire has been a seller. Run the same arithmetic on the index and the Ibbotson 10.5 percent looks implausible: to earn it over the next decade, net margins must reach about 20.7 percent at a constant 26 multiple, or the multiple must reach 43 times at constant margins. He expects neither, and expects the index to trade substantially below current levels at some point within ten years.

The sharpest section applies capital-cycle history, the canals, railroads, autos, electrification, and fiber, to the AI build-out. Hyperscaler capex ran near $400 billion last year and is headed toward $750 billion or more, with cumulative 2023 to 2030 estimates now as high as $7 trillion. The depreciation math is unforgiving: $400 billion of capex on a ten-year straight line creates $40 billion of first-year depreciation against AI revenues of $40 to $50 billion, and a 20 percent return on $4 trillion of cumulative capex would require $800 billion of profit, nearly a third of all S&P 500 earnings. He layers on roughly $650 billion of off-balance-sheet financing, points to structures such as Meta’s five-gigawatt Hyperion data center carried through a Blue Owl joint venture on just $500 million of Meta equity and a Meta debt guarantee, and hears echoes of Enron and Lucent. Berkshire is his discipline case study throughout: running hard away from softening reinsurance, sitting on roughly $120 billion of holding-company cash, and making the surprising $10 billion Google purchase at 10 times sales that he reads as a signpost on Greg Abel’s capital allocation. The full session, with his data and the deck, is worth your time and is available here.

Our second featured piece, from Luke Bridgeman of Hosking Partners, asks the capital-cycle question from the supply side of the same trade: memory. The three companies that dominate global DRAM, Micron in the US and SK Hynix and Samsung in South Korea, have run up between five and eight times over twelve months and have each breached a trillion dollars of market value. Hosking has owned all three since inception, and the essay is an honest interrogation of its own thesis: did the position work for the reason they bought it? The original case was pure capital-cycle theory. As Moore’s law broke down around 2014 and transistor shrinkage stalled near 10 nanometres, capex slowed, a field of more than thirty DRAM makers consolidated to three holding 97 percent of the market, and returns recovered into higher lows and higher highs that rewarded counter-cyclical trimming and adding around 1 times book value. What has happened since ChatGPT, Hosking argues, is different in kind: a demand-led super cycle, driven by high-bandwidth memory for AI that consumes four times the wafer capacity of conventional DRAM, squeezing the conventional product and lifting valuations far above their historical anchor at book.

Their caution is the value investor’s caution, and it rhymes exactly with Bloomstran’s. They are wary of the fallacy of composition: many enterprises can pay full price for AI tokens at high returns, but not all use cases will clear that bar, so the true addressable market may be smaller than it looks. High prices always call forth new supply, and China’s CXMT is likely to IPO this year to fund exactly that, even with its technology still lagging. The survivors now demand binding long-term volume commitments and up-front payment precisely because they remember what the cycle does to them. So Hosking has been taking profits into strength. Set against the heroic assumptions embedded in the coming AI-lab listings of OpenAI, Anthropic, and SpaceX, the firm notes that DRAM still trades on 6 to 10 times forward earnings, which is the market’s way of saying it does not believe this time is different. Their closing line is the one to keep: “chips are currently not ‘cheap as chips.’” The full note is here.

In summary, the market is pricing AI optionality as already won, the government has proved it can withdraw the underlying tech overnight, and two disciplined voices are independently warning that the arithmetic does not close. Super profits invite supply. Capex demands a return. The fallacy of composition caps the addressable market. None of that says the ride ends this year, and Bloomstran is explicit that it may not. It says only what it has always said. Do not buy high.

Feedback on the Monday Morning Briefing

“Most of what I monitor, all in one place. Great value add.” —Brad Lummis

“Loving these Monday briefings!” —Jon Bartel

“Tightly presented and easy to digest. I just spent 20 minutes going through it, and it’s helped to level set me for the week ahead.” —Michael Loftis

“A great piece and thoughtfully assembled.” —Brian Wolf

“I don’t think I have ever seen more valuable content in one place.” —Bill Coleman

“Worth its weight in gold.” —Shree Viswanathan

The new issue follows.

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SpaceX has now priced, and the largest IPO in history is no longer hypothetical. The offering has been set, unusually early, at $135 per share, which values the equity at roughly $1.8 trillion, with a final price expected Thursday and the listing scheduled for Friday, June 12. One thing should be clear at the outset: I have the highest respect for Elon Musk as an entrepreneur; on numerous occasions he has achieved the seemingly impossible. His companies have propelled humanity forward and promise to do so in the future.

I want to be careful about what I am and am not saying. I have no quarrel with what SpaceX might be worth a decade from now; for all I know the answer is enormous. The question that matters for anyone buying on the first day is what the company is worth today, on the strength of its actual financials, its actual markets, and what it actually does. Measured that way, $1.8 trillion reads less like a valuation than like a number the offering has manufactured, and a great deal of machinery has been assembled to bring retail investors into it at the open. Three pieces we are featuring in this week’s deck sharpened how I am thinking about the week ahead, and none of them requires a view on Mars or artificial general intelligence to be useful.

The first piece, a thought exercise entitled The Stock Market Crash of 2027 by James Emanuel, Mauricio Heck, and Hugo Navarro, presents a structural argument rather than a forecast. Three mega-IPOs, SpaceX, OpenAI, and Anthropic, are arriving inside roughly six months and together reaching toward $4 trillion or more, with Anthropic’s recent private round alone near $1 trillion. The dollars to absorb that supply have to come from somewhere, and the likeliest source is investors trimming the mega-cap technology positions they already hold, since these listings sit in the same bucket. In a market this concentrated in a handful of technology names, that rotation could pull the broad indices down on its own.

Two design features make the setup more fragile still. SpaceX is bringing only a small fraction of its implied value to market at the start, reportedly 3% to 5% of the equity, which manufactures the scarcity needed to support a price like this in the first place. And the lock-up is not a single 180-day cliff but a staggered series of releases, so across the back half of the year the float swells in tranches and the early scarcity reverses into a flood. The historical rhymes are not comforting. Facebook fell by roughly half after its 2012 lock-up rolled off, and the dot-com unwind was a rolling sequence of expirations rather than a single break. The investors most exposed to that sequence are the ones buying at the open, who pay the engineered price and then inherit the unlock calendar.

The second piece I include with real respect, and with a disagreement I want to state carefully. Aswath Damodaran revisited his SpaceX valuation once the prospectus was public and arrived at an equity value of about $1.3 trillion, roughly $500 billion, or close to 30%, below the $135 offering. Damodaran is the dean of valuation, and his practice of publishing his full work, spreadsheet included, for anyone to inspect and challenge is a genuine service to the investing community. On the headline point he and I do not actually disagree: even his estimate, which already leans on generous assumptions about the next decade, still lands well below the offering price, which is another way of saying there is no margin of safety for an IPO buyer.

Where I hesitate to follow is on the prior question, whether a business like this can be valued today with that degree of precision at all. The model is anchored on revenue figures for 2036 and on operating margins assumed for businesses, the AI line above all, that have very little public track record in the very markets said to make up most of the company’s opportunity. Damodaran himself flags the prospectus’s claim of a $28 trillion total addressable market, $26 trillion of it in AI, as closer to fantasy than forecast; he then doubles his own AI revenue target, to $160 billion, while trimming the assumed AI operating margin from 45% to 25%, and that single pair of choices moves the answer by a wide margin. When inputs this distant and this uncertain carry most of the result, my own instinct is that the honest output is a range too wide to anchor a decision rather than a single figure. None of this is a criticism of his rigor, which is beyond question; it is a difference about how much any method, however careful, can ask of facts this thin. SpaceX plainly contains valuable businesses. The question is the price today, and on that, his figure and my skepticism point in the same direction.

The third piece, from Phil Bak, turns to the index providers, and it is the one that genuinely encouraged me. Under heavy pressure to fast-track these mega-IPOs into their benchmarks from day one, several providers, including Nasdaq and FTSE Russell, moved to accommodate. S&P Dow Jones did not. It held to its twelve-month seasoning requirement and its GAAP profitability requirement and declined to make an exception for size, on the principle that financial viability, seasoning, and float standards should not be waived “solely based on market capitalization.” For a company that lost roughly $5 billion last year, that means S&P 500 funds will not be forced to buy SpaceX at any price for a long time. I do not think the stakes here are small.

Bending the rules to pull an unseasoned, loss-making company into the major indices at a nosebleed valuation would hand the bill to the passive investors least able to absorb it, retirees among them, who never chose the position. That is an abdication of the duty those benchmarks owe the people who entrust them with their savings. S&P is the adult in the room, and if it holds the line it is plainly acting in investors’ interest. One caveat, drawn from the first piece: the Nasdaq-100 has moved the other way, reweighting low-float names at three times their float and dropping the minimum-float rule that would have kept SpaceX out, so the relief is real for S&P 500 holders and only partial for those who own the Nasdaq-100.

None of this is a prediction that the week ends badly. It may be the start of real volatility, or it may not, and we will know more in a few days. What I do believe is that the moment calls for minding the downside with the same care most investors have lately reserved for the upside. The encouraging part is that this does not require sitting on the sidelines. There are still corners of the market that are reasonably priced, and a few that are outright cheap, so it remains possible to stay fully invested while stepping well clear of the excess on display in this offering. We will reconvene next Monday, when much of this should be clearer. This week’s deck follows.

Feedback on the Monday Morning Briefing

“Most of what I monitor, all in one place. Great value add.” —Brad Lummis

“Loving these Monday briefings!” —Jon Bartel

“Tightly presented and easy to digest. I just spent 20 minutes going through it, and it’s helped to level set me for the week ahead.” —Michael Loftis

“A great piece and thoughtfully assembled.” —Brian Wolf

“I don’t think I have ever seen more valuable content in one place.” —Bill Coleman

“Worth its weight in gold.” —Shree Viswanathan

A few words on the format

The Briefing is designed to answer a deceptively simple question. If you were sitting down before the weekly market open, as an investor rather than a trader, what would you want in front of you?

Each week, the Briefing walks through four parts.

• Weekly Review & Outlook covers equity performance, sector moves, the earnings just reported, and the earnings coming up, alongside curated editorial highlights from our Weekly Inspiration newsletter.

• Idea Generation surfaces candidates from screens we run: biggest decliners, names near 52-week lows, low multiples, high FCF yields, spinoffs, activist situations, buybacks, short interest, and more.

• Market Valuation & Positioning steps back to the index level: the Buffett Indicator, aggregate multiples versus history, S&P 500 concentration, equal-weight versus cap-weight, and long-run factor returns.

• Macro & Fixed Income rounds out the picture with rates, credit spreads, the Fed balance sheet, the dollar, labor, regional PMIs, and housing.

The new issue is attached below. We welcome your suggestions and ideas as we refine the format week to week.

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Over the next couple of weeks the discipline of value investing runs headlong into the loudest event the public markets have seen in a very long time, if ever. SpaceX has filed for the largest IPO in history, with a listing reportedly targeted for June 12. OpenAI is expected to follow in September, and Anthropic is eyeing October. Together the three are seeking something on the order of $3.5+ trillion in combined market value. Three pieces shaped my thinking on what a long-term investor should make of this, and each comes at it from a different altitude.

Trung Phan reframes the SpaceX S-1 as an AI infrastructure story wearing a rocket costume. His word count of the filing tells the tale: “compute,” “xAI,” and “connectivity” now crowd the document alongside “launch.” The pitch is no longer rockets and Starlink alone. It is a $26.5 trillion AI total addressable market sitting beside a $1.6 trillion connectivity number and a $370 billion space number, with SpaceX positioning to own the compute. Phan is candid about the absurdity, invoking Matt Levine’s “Elon Markets Hypothesis,” the notion that some assets are priced not on their cash flows but on their proximity to Elon Musk. At $18.7 billion of 2025 revenue, which he pegs at roughly 93 times sales, that hypothesis is carrying an enormous load. What a value investor should notice is the structure of what is being sold: a narrative priced as though the option has already paid off.

Aurelion Research does the arithmetic the narrative would prefer you skip. They give the reframe its sharpest name, the AI Trojan Horse, a compute business carried to market inside a rocket company. Their sum-of-the-parts is the most useful work I read this week. Strip away the story, and Starlink, the AI segment, and the launch business support a valuation near $700 billion (still generous, in my opinion). To bridge from there to $1.75 or $2 trillion, you have to assign close to a trillion dollars to space data centers that do not yet exist and to a Mars optionality that may never produce revenue. Their cross-IPO comparison is equally clarifying. Of the three, OpenAI carries the worst loss profile and the deepest dependence on someone else’s compute, while Anthropic shows the fastest revenue growth, the earliest path to break-even, and the cheapest forward multiple. Aurelion states plainly that they will own none of the three, and that their own book offers better risk and reward. That is the right instinct. Relative value is real, but the least expensive of three expensive things is a ranking, not a margin of safety.

Ben Thompson lands on the most philosophically honest framing. He says outright that the filing cannot be justified by any financial model, calls the numbers absurd, and notes that growth slowed even as the xAI acquisition tipped the company into a $4.9 billion loss on $5.1 billion of AI research expense, money spent building a model that sits in fifth place. And yet he argues that orbital data centers are plausible, that SpaceX could become the dominant supplier of the world’s marginal compute, and that this alone might be enough. The rumored IPO valuation embeds extraordinary risk.

The three pieces agree on the one fact that matters and disagree only on whether it should trouble you. Phan, Aurelion, and Thompson all conclude that current financials cannot support the proposed valuations, with SpaceX being the most egregious and Anthropic being the most palatable. Phan and Thompson lean on the Musk reality-distortion field, the Elon Markets Hypothesis, and the Tesla precedent, to argue the price may hold regardless. Aurelion does the work to show exactly how much hope is embedded in the number, and then declines to participate.

This is the capital cycle in its most public form, and the frames from last week apply here without modification. The AI buildout is cresting, the spending curve is steep, and the most celebrated names are being floated at the very top of it. Paying up at that moment, on margins and multiples that are stretched at the same time, is the error the historical record warns against most consistently. None of this makes the businesses bad. Starlink is one of the finest assets to reach the public markets in a decade, and SpaceX’s launch economics are a genuine moat. It means the edge for a long-term investor lies in the willingness to decline mispriced hope, to read this IPO wave as a sentiment marker rather than a shopping list, and to hunt instead in the corners where fear, not hope, is the thing being priced in.

A bit of feedback

“Most of what I monitor, all in one place. Great value add.” —Brad Lummis

“Loving these Monday briefings!” —Jon Bartel

“Tightly presented and easy to digest. I just spent 20 minutes going through it, and it’s helped to level set me for the week ahead.” —Michael Loftis

“A great piece and thoughtfully assembled.” —Brian Wolf

“I don’t think I have ever seen more valuable content in one place.” —Bill Coleman

“Worth its weight in gold.” —Shree Viswanathan

A few words on the format

The Briefing is designed to answer a deceptively simple question. If you were sitting down before the weekly market open, as an investor rather than a trader, what would you want in front of you?

Each week, the Briefing walks through four parts.

• Weekly Review & Outlook covers equity performance, sector moves, the earnings just reported, and the earnings coming up, alongside curated editorial highlights from our Weekly Inspiration newsletter.

• Idea Generation surfaces candidates from screens we run: biggest decliners, names near 52-week lows, low multiples, high FCF yields, spinoffs, activist situations, buybacks, short interest, and more.

• Market Valuation & Positioning steps back to the index level: the Buffett Indicator, aggregate multiples versus history, S&P 500 concentration, equal-weight versus cap-weight, and long-run factor returns.

• Macro & Fixed Income rounds out the picture with rates, credit spreads, the Fed balance sheet, the dollar, labor, regional PMIs, and housing.

The new issue is attached below. We welcome your suggestions for improvement as we refine the format week to week.

Read more

This week’s briefing wrestles with a question that refuses to be settled: are we in an AI bubble, are we priced for perfection, or has the narrative already quietly inverted? Three pieces shaped my thinking, and each takes the question from a different angle.

Cullen Roche argues there is a “bubble in bubble calls.” His claim is empirical, not rhetorical. Corporate profits as a share of GDP sit near record highs, the AI trade is the driver, and in his framing high valuations are warranted as long as that chart stays elevated. To his credit, he acknowledges that when expectations surge the margin for error thins and sequence risk rises. Where I part company is on the conditional itself. Mean reversion in profit margins is one of the most reliable patterns in financial history. Treating the current margin level as the sustainable baseline, and capitalizing it at premium multiples, is precisely the move that has historically marked the most punishing entry points. The time to pay up on multiples is when margins are depressed and earnings are understated, not when both are stretched.

Dan Rasmussen and Chris Satterthwaite sharpen that concern from a different angle. Invoking Mordecai Kurz’s “correlated beliefs” framework, they note that the semiconductor complex now trades at roughly 55x earnings, which implies 16.5% EPS growth for a full decade. About 75% of the present value of the global semi industry is derived from cash flows beyond year ten, in territory clouded by deep uncertainty. Microsoft itself disclosed on its Q1 2026 call that two-thirds of recent capex went to CPUs and GPUs with three to five year useful lives, so the hamster wheel is spinning fast. Shiller’s CAPE sits at 42x, within a whisker of the 44x peak in late 1999. The conclusion, that those who underwrite the first $5 to $10 trillion of AI capex may not capture the hoped-for returns, lines up with everything we know about prior capital cycles, and it is the right caution to hold in mind.

Logan Shearer offers what I found perhaps the most actionable frame. He calls it Bizarro World. Software names that were left for dead two or three years ago, with Adobe collapsing from 60x EV/EBIT to roughly 11x, now sit at depressed multiples with stable growth and stable margins, while the picks-and-shovels beneficiaries of the AI buildout have enjoyed simultaneous growth, margin expansion, and multiple expansion. Shearer’s instinct is classically value: buy mispriced fear, avoid mispriced hope. He warns against the capital cycle error of paying up at the top of the spending curve, and reminds us that tacit knowledge, the kind that separates a hobbyist from a professional, remains a moat the LLMs have not yet breached. That is exactly the orientation I would commend to long-term value investors today.

Rasmussen and Shearer point in compatible directions. Verdad sets the macro guardrail by quantifying just how much future growth is already in the price of the AI complex. Shearer turns that observation into a hunting ground by identifying corners of the market where fear has been mispriced and the capital cycle is working in the patient investor’s favor. Roche is correct that the AI trade has real fundamentals underneath it, and he is right to push back on lazy 1999 analogies, but the conditional at the heart of his argument, that today’s elevated margin level will persist, is precisely the assumption the historical record warns against.

The rest of this week’s briefing brings the data: activist 13D filings, fresh spin-offs, micro-cap Tiny Titans, names trading near 52-week lows, and the cheapest broad-universe stocks on P/TBV and three-year EV/EBITDA, alongside the highest three-year FCF and earnings yields. Read it with these three frames in mind.

A few words on the format

The Briefing is designed to answer a deceptively simple question. If you were sitting down before the weekly market open, as an investor rather than a trader, what would you want in front of you?

Each week, the Briefing walks through four parts.

• Weekly Review & Outlook covers equity performance, sector moves, the earnings just reported, and the earnings coming up, alongside curated editorial highlights from our Weekly Inspiration newsletter.

• Idea Generation surfaces candidates from screens we run: biggest decliners, names near 52-week lows, low multiples, high FCF yields, spinoffs, activist situations, buybacks, short interest, and more.

• Market Valuation & Positioning steps back to the index level: the Buffett Indicator, aggregate multiples versus history, S&P 500 concentration, equal-weight versus cap-weight, and long-run factor returns.

• Macro & Fixed Income rounds out the picture with rates, credit spreads, the Fed balance sheet, the dollar, labor, regional PMIs, and housing.

A bit of feedback

“Loving these Monday briefings!” —Jon Bartel

“Most of what I monitor, all in one place. Great value add.” —Brad Lummis

“A great piece and thoughtfully assembled.” —Brian Wolf

“Tightly presented and easy to digest. I just spent 20 minutes going through it, and it’s helped to level set me for the week ahead.” —Michael Loftis

“Worth its weight in gold.” —Shree Viswanathan

The new issue is attached below. We welcome your suggestions for improvement as we refine the format week to week.

Read more

Will Thomson’s Q1 Letter (Massif Capital)

Download the letter here.

The commodity world has shifted from a geology-first to a geography-first pricing regime, and most equity models have not caught up. The decisive question is no longer “can the molecule be pumped and the metal mined?” but “will the sovereign let it leave, and can the hull pass the strait?” Thomson argues the 1990 to 2015 era of single global prices, freely transiting tankers, and neutral jurisdictions was a 25-year holiday from a five-century norm of commodities priced by power and moved by sovereign favor. The Strait of Hormuz, China’s rare-earth refining monopoly, the DRC’s cobalt licensing, and dollar weaponization are not metaphorically similar chokepoints, they are structurally the same. The investor takeaway in four phrases: basis is the new beta, netback realization determines who survives, working-capital cycles have lengthened, and discount rates absorb geography before they absorb cash flow.

The Brent forward curve is steeply backwardated from roughly $105 at the front end to $66 by 2038, pricing the Iran war as a transient shock. Thomson thinks the curve is wrong. His probability-weighted real Brent over five years works out to roughly $83 against a strip implying $68 to $72, with half the probability mass at fragmentation-premium or better outcomes and only 15 percent at the structural bear. Upstream capex sits at $13.8 per BOE versus a $24 historical norm, tier-one shale inventory is down to 3.7 years, seven U.S. refineries have closed since 2020, and U.S. jet fuel days-of-supply is at its lowest since 1963. The IEA has cut its 2030 U.S. EV penetration estimate from 55 to 20 percent. Equinor is the only supermajor that has credibly committed to holding production flat through 2035, which is why the portfolio is overweight the Norwegian upstream cluster (Var Energi, Aker BP, Equinor) and Harbour Energy. These producers generate cash at $80 Brent and gush at $115.

The highest-asymmetry idea in the letter is Allied Critical Metals, a Portuguese tungsten developer where Massif was the first institutional money in 2024. Tungsten APT has gone from $380 per mtu at end-2024 to $3,150 on March 27, a 726 percent gain, against a marginal Western replacement cost of $300 to $500. China holds 52 percent of reserves and roughly 83 percent of mine production and added tungsten to its export-restriction list in February 2025. ACM’s Borralha asset is fully permitted as of January 2026, designated a strategic initiative of national importance by Portugal, fully funded through 2027, and sits in the second quartile of the global cost curve at $303 per mtu all-in sustaining. Probability-weighted intrinsic value of C$3.83 against a current C$2.12 quote (45 percent margin of safety), with the comparable producer Almonty trading at a C$8.2 billion market cap. The position has already contributed roughly 11.7 percent across Q1 and April combined on under 8 percent of NAV, with the warrant book doing the heavy lifting. This is the template Thomson wants to replicate: a sub-3 percent private entry, two tranches of warrants for convexity, and a thesis driven by geography rather than geology.

Mauboussin & Callahan, “Bayes and Base Rates 2.0”

Download the paper here.

OpenAI’s projected sales path implies a 9 to 10 standard deviation outcome versus 75 years of U.S. corporate history. Across roughly 19,300 firm-period observations from 1950 to 2025, no public company with comparable starting revenue has ever grown anywhere close to the 85 to 118 percent CAGR OpenAI is forecasting through 2030. The closest precedent, AOL at 103 percent, was achieved only by absorbing a company more than five times its size.

Narrowing the reference class to “tech” or “software” does not rescue the forecast, it actually makes the implied probability worse. The instinct to say “but AI is different” is the conjunction fallacy at work. The information technology sample shows a lower mean growth rate and higher variance, putting OpenAI’s number at a 7 standard deviation event, which is roughly a 1 in 780 billion outcome under a normal distribution.

Sales growth and value creation are not the same thing, and most of the historical top-25 sales compounders got there through M&A rather than organic growth. Investors should hold base rates as the prior, then update for unique evidence such as intangible intensity and unprecedented adoption speed, but they should not abandon the prior just because a story is compelling.

Christopher Tsai, “Value Investing and the Emerging 4.0” (Tsai Capital)

Download the paper here.

Tsai argues value investing has progressed through three distinct eras and is now entering a fourth, and most investors are still operating in 1.0 or 2.0 while the durable compounders live in 3.0 and 4.0. The framework forces you to ask which “operating system” you are actually running when you pick a stock, and whether a single forward P/E ratio can even capture what a platform business is worth.

Scale-economies-shared businesses come in two flavors, supply-side (Amazon, Tesla, Starlink lowering prices to feed a flywheel) and demand-side (YouTube, Instagram, Google Search competing on what Tsai calls “Engagement Value per Unit Time”). Both quietly accumulate latent pricing power that the market does not see on a current P/E basis. What looks expensive today often is not, precisely because management has refused to flex that pricing power.

Value Investing 4.0 reframes intelligence itself as the economic castle and digital labor as the product. True 4.0 businesses cannot yet exist as standalones because the foundational “edge” is too capital-intensive, so they are incubated inside profitable 3.0 parents (Tesla funding Dojo and Optimus, hyperscalers funding the frontier labs). Valuation here requires probabilistic, optionality-rich thinking rather than five-year DCF models.

Feedback on the Monday Morning Briefing

“Loving these Monday briefings!” —Jon Bartel

“Most of what I monitor, all in one place. Great value add.” —Brad Lummis

“A great piece and thoughtfully assembled.” —Brian Wolf

“Tightly presented and easy to digest. I just spent 20 minutes going through it, and it’s helped to level set me for the week ahead.” —Michael Loftis

“Worth its weight in gold.” —Shree Viswanathan

Enjoy this week’s Briefing.

Read more

A few words on the format

The Briefing is designed to answer a deceptively simple question. If you were sitting down before the weekly market open, as an investor rather than a trader, what would you want in front of you?

Each week, the Briefing walks through four parts.

• Weekly Review & Outlook covers equity performance, sector moves, the earnings just reported, and the earnings coming up, alongside curated editorial highlights from our Weekly Inspiration newsletter.

• Idea Generation surfaces candidates from screens we run: biggest decliners, names near 52-week lows, low multiples, high FCF yields, spinoffs, activist situations, buybacks, short interest, and more.

• Market Valuation & Positioning steps back to the index level: the Buffett Indicator, aggregate multiples versus history, S&P 500 concentration, equal-weight versus cap-weight, and long-run factor returns.

• Macro & Fixed Income rounds out the picture with rates, credit spreads, the Fed balance sheet, the dollar, labor, and housing.

The third issue is attached below. We welcome your suggestions for improvement as we refine the format week to week.

A bit of early feedback

“Loving these Monday briefings!” —Jon Bartel

“Most of what I monitor, all in one place. Great value add.” —Brad Lummis

“A great piece and thoughtfully assembled.” —Brian Wolf

“Tightly presented and easy to digest. I just spent 20 minutes going through it, and it’s helped to level set me for the week ahead.” —Michael Loftis

“Worth its weight in gold.” —Shree Viswanathan

Table of contents

Please note: Certain slides showing data that is updated on a monthly or quarterly basis are not included in every issue of the Monday Morning Briefing.

Part 1 — Weekly Review & Outlook (p. 3)

• Global equity index performance across regions

• GICS sector total returns

• Weekly commodity price changes

• Quarterly earnings: biggest beats and misses

• Top reporters by market cap, week ahead

• Takeaways from featured Weekly Inspiration articles

• Curated video and audio from Weekly Inspiration

Part 2 — Idea Generation (p. 13)

• S&P 500 stocks with the largest weekly declines

• Largest weekly declines among US stocks

• Stocks nearest their 52-week lows

• Key takeaways from curated analytical articles

• Featured spin-off opportunities

• Notable activist campaigns and acquisition proposals

• Open-market purchases by officers, directors, 10+% owners

• S&P 500 share repurchase activity, trailing twelve months

• FINRA consolidated short interest

• Ranked by short interest as a percent of float

• S&P 500 highest FCF yield (ex-financials)

• S&P 500 highest trailing earnings yield (all sectors)

• S&P 500 cheapest by EV/EBITDA (ex-financials)

• S&P 500 cheapest by price / tangible book value

• US micro-caps, P/S < 1.0, ranked by 52-week price change

Part 3 — Market Valuation & Positioning (p. 29)

• Equity market value / GDP

• After-tax corporate profits / GDP

• S&P 500 trailing P/E

• S&P 500 earnings yield vs. 10-year Treasury

• Trailing P/E by GICS sector

• Top 10 holdings by index weight

• RSP / SPY relative performance, trailing one year

• Russell 2000 / S&P 500 relative performance, five years

• S&P 500 breadth indicators

• Money market fund assets and ETF category returns

• CBOE VIX implied volatility term structure

• FINRA net margin debt — customer securities margin accounts

• S&P 500 calendar-year returns and largest intra-year drawdowns

• Fama/French value spread — gap between cheap and expensive

• Fama/French HML factor — cumulative return spread by decade

• Growth of $1 invested in Fama/French style portfolios since 1926

Part 4 — Macro & Fixed Income (p. 45)

• U.S. Treasury yield curve

• 10-year Treasury yield minus year-over-year CPI

• U.S. high yield credit spreads

• Federal Reserve total assets and composition

• M2 money stock, year-over-year change

• Total public debt as a percent of GDP

• Trade-weighted U.S. dollar index

• Unemployment rate and initial jobless claims

• 30-year mortgage rate and housing starts, trailing ten years

Enjoy this week’s Monday Morning Briefing.

Read more

A few words on the format

The Briefing is designed to answer a deceptively simple question. If you were sitting down before the weekly market open, as an investor rather than a trader, what would you want in front of you?

Each week, the Briefing walks through four parts.

• Weekly Review & Outlook covers equity performance, sector moves, the earnings just reported, and the earnings coming up, alongside curated editorial highlights from our Weekly Inspiration newsletter.

• Idea Generation surfaces candidates from screens we run: biggest decliners, names near 52-week lows, low multiples, high FCF yields, spinoffs, activist situations, buybacks, short interest, and more.

• Market Valuation & Positioning steps back to the index level: the Buffett Indicator, aggregate multiples versus history, S&P 500 concentration, equal-weight versus cap-weight, and long-run factor returns.

• Macro & Fixed Income rounds out the picture with rates, credit spreads, the Fed balance sheet, the dollar, labor, and housing.

The third issue is attached below. We welcome your feedback as we refine the format week to week.

Table of contents

Part 1 — Weekly Review & Outlook (p. 3)

• Global equity index performance across regions

• GICS sector total returns

• Weekly commodity price changes

• Quarterly earnings: biggest beats and misses

• Top reporters by market cap, week ahead

• Takeaways from featured Weekly Inspiration articles

• Curated video and audio from Weekly Inspiration

Part 2 — Idea Generation (p. 13)

• S&P 500 stocks with the largest weekly declines

• Largest weekly declines among US stocks

• Stocks nearest their 52-week lows

• Key takeaways from curated analytical articles

• Featured spin-off opportunities

• Notable activist campaigns and acquisition proposals

• Open-market purchases by officers, directors, 10+% owners

• S&P 500 share repurchase activity, trailing twelve months

• FINRA consolidated short interest

• Ranked by short interest as a percent of float

• S&P 500 highest FCF yield (ex-financials)

• S&P 500 highest trailing earnings yield (all sectors)

• S&P 500 cheapest by EV/EBITDA (ex-financials)

• S&P 500 cheapest by price / tangible book value

• US micro-caps, P/S < 1.0, ranked by 52-week price change

Part 3 — Market Valuation & Positioning (p. 29)

• Equity market value / GDP

• After-tax corporate profits / GDP

• S&P 500 trailing P/E

• S&P 500 earnings yield vs. 10-year Treasury

• Trailing P/E by GICS sector

• Top 10 holdings by index weight

• RSP / SPY relative performance, trailing one year

• Russell 2000 / S&P 500 relative performance, five years

• S&P 500 breadth indicators

• Money market fund assets and ETF category returns

• CBOE VIX implied volatility term structure

• FINRA net margin debt — customer securities margin accounts

• S&P 500 calendar-year returns and largest intra-year drawdowns

• Fama/French value spread — gap between cheap and expensive

• Fama/French HML factor — cumulative return spread by decade

• Growth of $1 invested in Fama/French style portfolios since 1926

Part 4 — Macro & Fixed Income (p. 45)

• U.S. Treasury yield curve

• 10-year Treasury yield minus year-over-year CPI

• U.S. high yield credit spreads

• Federal Reserve total assets and composition

• M2 money stock, year-over-year change

• Total public debt as a percent of GDP

• Trade-weighted U.S. dollar index

• Unemployment rate and initial jobless claims

• 30-year mortgage rate and housing starts, trailing ten years

Enjoy this week’s Monday Morning Briefing.

Read more

Before getting to the data, a few words on the format itself.

The Briefing is built as a slide deck rather than a narrative report. Every page is a single vi…

Read more

The Briefing is designed to answer a deceptively simple question. If you were sitting down before the weekly market open — as an investor rather than a trader — what would you want in front of you?

Each week, the Briefing walks through four…

Read more