Powerful convergence of corporate actions, improving fundamentals and regulatory tailwinds. Spins, sales and valuation signals all marching towards unlocking value. Undemanding valuation + improving fundamentals + value-unlocking catalysts is a winning formula. We see 40%+ upside potential.

First pass, exciting spin. Street loves it. $140 – $180 price targets across the board.
100% buys. Second pass, not so fast. There could be a trade if you are bullish AI, but
we have our reservations.

The Company stole our thunder, but there’s more to go. High FCF business turning its attention to debt through OMRs; bought back nearly 10% of $650m 3.875% sr. notes due 2029 in a single quarter and Company bid for bonds can drive further yield tightening. Flexible covenants provide refi optionality. An early par takeout is on the table. Forget 10% ytm, think of this as 14% yield-to-go-current, with real potential to pull forward returns. Sub-3yr duration attractive in current rate environment.

We see only modest (Fed lexicon) idiosyncratic downside (i.e. market risk aside) while gaining exposure to attractive idiosyncratic upside in the form of a strategic bid for SpinCo. Fallback plan is modest multiple expansion at SpinCo which seems like low hanging fruit. Either way there is 20% – 50%+ upside potential in this corporate action name. Market pullbacks present good entry points for a starter position.

Earnings super-cycle underway driven by recent policy changes and global supply disruptions. More lasting than transitory. Cash harvested to reduce debt, de-risk capital structure and warrant multiple expansion. Further momentum to come from 2027 monetization or valuation signal of renewable energy unrestricted subsidiary. Upside stock price >$75.00/shr. (+40%). However, many risks abound, up/down not meaningfully asymmetric, isolating the idiosyncrasy through hedging is difficult and this might just be an oil trade with near-term retracement a big risk.

Fallen angel reprioritizing capital allocation towards debt reduction. Motive + means = powerful combination, and aligning with management when they are focused on reducing debt is a proven winning formula. We see them following the FMC Corp. playbook and achieving similar results. Catalyst-rich investment horizon should drive yield tightening. 150bps tightening from here will provide mid-to-high teens returns.

Not a SPCX mispriced arb. Not a cheap proxy for SPCX. But an interesting pairs trade nonetheless. Neutralize the SPCX value within ECHO to play the other multiple shots on goal for meaningful upside.

Meaningfully de-risked and simplified situation as well as aligned incentives makes previously un-investible longer-dated bonds now attractive. Viable path forward with meaningful catalyst in the form of a BLCO share monetization. Worth a look if you’ve previously passed because of the unattractive profitability-to-brain-damage ratio.

PSKY to issue 10-year warrants to shareholders at close of WBD acquisition that we estimate could be worth $3.00 – $7.00+ per share vs. the current $10.86 share price. We do not think these warrants are priced into the stock. The warrants will be listed on the Nasdaq and traded separately from PSKY Class B Common Stock. Reasonable assumptions about pro forma EBITDA and fair multiple + value of warrants suggests 50%+ upside to PSKY stock as a result of this overlooked value.

PARA 6.375% Jr. Subordinated Notes due 2062 (“PARA Hybrids”) have a coupon reset to 5YR UST + 3.999% on March 30, 2027; at the current 5YR that’s an 8.5% coupon and at the current price of 81.25, that’s a 10.5% current yield and an 11.4% ytw. Yes, you’re sitting at the bottom of what will be an $85bn+ debt stack, but you’re also sitting on top of what will be a $55bn pro forma market cap and the market is mispricing the Ellison backstop for controlling this media asset. Risk of default is minimal. 100bps of tightening provides a 20% return in 1 year. Right tail the WBD deal is terminated and bonds go back to par for a 30% return.