The Latticework Monday Morning Briefing is our weekly “Guide to the Markets” for long term-oriented investors. It is sent on a separate mailing list (complimentary to members). If you do not wish to receive it, opt out here.
Ideas from our Weekly Inspiration newsletter
Several of this week’s curated ideas share a commonality: high-quality or cyclical businesses the market has marked down on AI-related fears.
The clearest example is Constellation Software (CSU), the Canadian serial acquirer of mission-critical vertical-market software, down ~50% on worries about AI disruption and founder Mark Leonard’s retirement. Eagle Point’s write-up argues the fear is misplaced: the moat is customer relationships and switching costs rather than code, 1,500-plus decentralized business units limit top-down risk, and free cash flow has compounded 26% a year since IPO with no share issuance, leaving a 6.3% FCF yield.
On the smaller end, Austco Healthcare (AHC), a debt-free Australian micro-cap supplying nurse-call systems to 4,500-plus hospitals, trades at 7.8x EV/EBITDA and an 18.6% free-cash-flow yield with net cash, and a June rollout across roughly 180 US hospitals could lift its software mix.
The value net stretches wider. Kerrisdale makes the case that Regal Rexnord (RRX), remade by the Rexnord PMC and Altra deals into a diversified industrial-powertrain platform, is masked by a debt overhang and a three-year industrial recession, and sees 100+% upside as margins inflect.
In Japan, Sanyo Engineering & Construction (1960) trades at 2.5x EV/EBITDA, 0.7x book, and 4.3% dividend yield. The takeover of a peer at 22x EV/EBITDA reframes the scarcity value of skilled electrical capacity.
Pitney Bowes (PBI) offers a 17% free-cash-flow yield after a 60% rally, though the easy leg of that story is done.
Somnigroup (SGI), the dominant mattress maker, cuts the other way: at 22x EV/EBITDA the author models only about 26% upside against 45% downside, a watchlist name below $60.
As always, the above theses reflect the linked authors’ views (available here), not Latticework recommendations.
Four essays worth your time
The Cartography of the Risk-Free Rate, by Will Thomson of Massif Capital, argues that sovereign long yields have shifted from an expectations-driven regime to a fragmentation-driven one, where the term premium carries a rising geopolitical charge. He points to an ACM 10-year term premium near 0.6%, which accounts for over half the recent rise in yields; to China’s Treasury holdings falling to $652.3 billion, the lowest since 2008, as central banks buy 1,000-plus tonnes of gold a year; and to a stock-bond correlation near +0.6 since 2022 that has stripped duration of its hedging power. His conclusion is “dispersion, not direction,” with only a one-third chance the shift proves cyclical.
A fundamental flaw of prediction markets, by Joachim Klement, takes aim at the idea that money-weighted betting produces better forecasts. Citing Berkeley research across 5,456 Kalshi and Polymarket markets, he shows that the large “whale” bettors carried a negative edge, systematically losing to smaller traders, and that conviction correlated with ideology rather than information. The implication is uncomfortable for anyone treating prediction-market odds as truth: weighting forecasts by wager size distorts the wisdom of crowds rather than sharpening it.
The $1 Million Bet That Could Have Become $90 Billion, by Anh Hoang, uses the Simplot and Micron story to make a point about omission errors. J.R. Simplot’s retained 40% stake in Micron, adjusted for decades of dilution, would be worth roughly $90 billion today, well short of the viral $500 billion figure but a fortune all the same, and Hoang’s argument is that selling great compounders too early creates invisible losses that dwarf the mistakes that actually show up in a track record. He also notes that commodity-industry operators tolerate volatility better than most investors, which made Micron’s patient Boise shareholder base structurally suited to back a capital-intensive, harvest-cycle business through the DRAM wars.
Kirkland Signature: Jim Sinegal and the Making of Costco’s $90B Private-Label Empire, by Trung Phan, is a case study in private-label economics. Kirkland now generates roughly one-third of Costco’s $275 billion in revenue, more than the standalone sales of Boeing, FedEx, or P&G, and Phan traces the idea to Jim Sinegal’s reading of a 1991 Forbes piece on national brands that would not cut prices as input costs fell. The competitive threat is concrete: Celsius shares fell 13% in a week after Costco launched a rival energy drink at 55% below Celsius pricing.
The deck
The full Monday Morning Briefing is available to members. It spans our weekly scoreboard, idea-generation screens (this week including quality names near their 52-week lows, micro-cap “tiny titans,” recent spin-offs, activist campaigns, and value screens across the US, Canada, the UK, Australia, and newly added Japan), market valuation and positioning, and the macro and fixed-income picture. We welcome your feedback as the format continues to evolve.
Feedback on the Briefing
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“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.
Table of contents
Note: Slides showing data that is updated on a monthly or quarterly basis may not 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
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
Part 2 — Idea Generation
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)
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
US micro-caps, P/S < 1.0, ranked by 52-week price change
Canada equity valuation screens
UK equity valuation screens
Australia equity valuation screens
Japan equity valuation screens
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 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
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
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