VIDEO: What’s Behind the Surge in Our Public Safety Name?

With a busy week of economic activity in an abbreviated trading week, Chris Versace explains why the Portfolio continues to assess key technical levels for the S&P 500 and the Nasdaq Composite. He also reviewed the upcoming reconstitution process for the EPS All-Stars basket that will begin on Tuesday and conclude on Wednesday morning.

Sticking with the Portfolio’s holdings, Chris explains the driver behind Monday’s pop in Axon (AXON) shares and why the day’s rash of M&A deals keep us bullish on the shares of Morgan Stanley (MS) and Bank of America (BAC). As part of that, Versace shares his view on Comcast’s (CMSA) spin out news, and why the Portfolio sees challenging times ahead for it and others in the broadband/wireless space.

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At the time of publication, TheStreet Pro Portfolio was long AXON, BAC and MS.

Transcript

Hey everyone, Chris Versace, Monday, June 29th. And boy, do we have a busy week of economic data in a shortened trading week. You know why, right? US equity markets, they are closed on Friday for the July 4th holiday weekend, or as I prefer to think about it, Independence Day. Now, we are beginning this week kind of like we did last week, and by that I mean we here at the portfolio are continuing to keep a very close eye on the technical setup.

Of both the SP 500 and the Nasdaq composite. Looking at the SP 500, Friday it closed just below its 50 day moving average, but today it has bounced back above it. We will want to see it hold that line today. With the Nasdaq composite, it also closed last week below its 50 day moving average. But we are encouraged not only by the news flow that we discussed in our opening comments this morning with you.

I’m referring specifically to news items coming out of South Korea about the billions upon billions of investment they’ll be making in chip capacity and AI and data center, but also the comment about Google and Meta and what that means not only for AI and data center capacity, but also the prospects for hyperscaler capital spending. Remember that when we think about hyperscaler spending, we want

Particularly to be investing in on where the spending is going. That means the digital infrastructure plays that we have in the portfolio. And by that I really refer to the chip companies, the networking companies, and of course, the power companies. You know them much better as NVIDIA, Broadcom, Marvell, Arista Networks, and Eaton. But the other thing that I wanted to point out with the Nasdaq composite is we are closely following the MACD indicator.

it does look like it could be getting ready to turn up. This is something we will want to follow in the coming days for confirmation. Cautiously optimistic. now let’s talk about some things that are going on with the portfolio. you probably saw that earlier today we picked up some additional shares, excuse me, of Suro Capital. And the whys behind that is really spelled out in the alert. So if you haven’t read that alert, I suggest that you do.

You’ll see that it’s going to be a busy next two weeks for the shares of Suro Capital, soon to be known as NeoStellar. That move that we made this morning really follows the moves that we made last week. Remember, we picked up some additional shares of Palantir. We also added to Microsoft on Friday. But if you’ve been reading our alerts and especially Friday’s weekly roundup, then you know that we’re not done yet. We do have some more work to do at a minimum.

Tomorrow begins the reconstitution process for the EPS All-Stars basket. Part one, as I said, that is where we will be exiting positions inside the basket that did not make the cut for the third quarter of the year. That begins, as you know, July 1st. We will also be doing any trueing up for the remaining positions. Remember that effective July 1, we are increasing.

The portfolio’s exposure to the EPS All-Stars basket to 0.75% position sizes for each of the eight. That means that in total, the EPS All-Stars basket will account for 6% when we start the quarter on Wednesday. The second part for the reconstitution process means we will be adding any new names that have to come into the basket.

The first part Tuesday, second part Wednesday. We have a lot to do. We’ll have very detailed alerts, explaining what we’re doing, why we’re doing, and reminding you, as we like to say, about the rules, the regs when it comes to the EPS All-Star Strategy and the basket. I also have a few other things that I want to talk about with you. first and foremost, Axon. You have probably seen the pop in the stock today. I would love to tell you.

That it was being tied to some fundamental news or any one of the signals that we like to share with you over the weekend, or someone else who follows the stock, upgraded the stock, you know, had a huge price target increase. But the reality, folks, is that what’s driving the shares is reports that Donald Trump purchased somewhere between one and five million shares of Axon earlier this year, potentially ahead of a $220 million ICE contract that was expected to be awarded to Axon. Now, are you thinking, geez, this makes Trump a little more like the new Nancy Pelosi? I would have to agree with you. you know, and when we see stocks pop like this, we kind of have to, you know, keep our discipline.

Axon shares are not popping so much that they become an outsized position for the portfolio, though we will, keep our eyes on that. Should the shares move higher in such a quick fashion, maybe becoming overbought, prudent portfolio management may be called for. So again, we’ll have to still follow and see what happens. But that gives you a reason to continue to follow what we have to say here at the portfolio.

I will say this: that federal procurement records show that no contract of that size by ICE has been awarded to Axon so far. So far being the key words. Remember that we’ve had some turn turnover at the Department of Homeland Security. And that may be gumming up the works on the the awarding of that contract. More reason for us to stay tuned.

Also I want to talk a little bit about investment banking. You know that last week OpenAI reportedly was considering shifting its IPO into 2027 and that put a little bit of a sour taste in the market’s mouth for the IPO market, for and some of the investment banking companies, as well as raise some questions about AI and data center. But I think some of the comments that we shared with you earlier about South Korea, Google Meta, and the like have kind of you know responded, or I should say, retorted to some of that.

But when it comes to investment banking activity, there is no question that MA activity and advisory work continues to hum. Let’s talk a little bit about that. Comcast spinning out NBC Universal and Sky, leaving Comcast with broadband and wireless. You know, my my view on this is this is kind of an interesting split. I’m not really sure that there’s a positive to be had. NBC Universal and Sky being spun out, it’s gonna be in a very competitive landscape.

Netflix, Apple TV, Amazon and Prime, and other streaming services. I I just see it as a very difficult road for NBC Universal. but when we think about Comcast and it just being a broadband and wireless company, you know, cord cutting continues. People are downsizing their packages to internet only. not a new phenomenon, but it is continuing.

And on the wireless front, it is getting increasingly competitive. You know, Verizon notably having a $30 simply plan. They also have their visible, very bare bones online only plan as well. But remember, too, we talked about this last week, rumblings that SpaceX might be contemplating through Starlink offering mobile phone service. So I think that landscape against the remaining Comcast is to be very challenging as well.

But there are other deals that were announced. Silver Cape Investments announced that it has revised its proposal to acquire the outstanding shares of PetMed Express and Martin Marietta Materials, a competitor of former portfolio holding Vulcan Materials, announced an agreement to combine with Loast North America in a deal valued around $13.5 billion. And of course, Rocket Labs announced that it was acquiring Iridium.

Which is not only a sizable deal, but it’s another shot in the arm for the current space race. Remember, GlobalStar agreed to be taken over by Amazon, SpaceX agreed to purchase the Spectrum from EchoStar, and a Luxembourg satellite company SES last year completed its acquisition of IntelliSat. Now, obviously good for investment banking fees, but when we think about Iridium,

Making sorry, Iridium and being tied up with Rocket Lab. Let’s just go back a second to my comment about the remaining Comcast business because Iridium currently operates about 66 satellites in low Earth orbit. what do they do? Well, they you know connect with handsets and other devices, giving some of that text to satellite and other capabilities that are out there.

Now, here’s the thing.

The transaction will complete a goal that Rocket Lab has had to operate its own satellite fleet. So we’ll need to see what Rocket Lab is going to announce. But our thinking is that between SpaceX, Amazon and Global Star, and now Rocket Lab Iridium, there are definitely going to be new challenges for mobile and broadband companies on the horizon. Not really an area that we want to be involved in. We want to see how the playing field will change, but it just doesn’t smell like. So I would I suspect that we’re going to continue to avoid that. But the larger message from my rattling off all those transactions is that as you can see, MA and advisory activity continues to percolate. And that along with market volatility, which continues to be a good thing for trading volumes, keeps us bullish on the shares of Morgan Stanley and Bank of America as we continue to monitor the IPO market and the window to see if it stays open.

With that in mind, we have four IPOs slated to price this week. In our Zero Capital Trade, we referenced one of them this morning. That is the Lime IPO. But the others include Bending Spoons, Cooper Tech Metals, and ITG, with ITG being led by our very own Morgan Stanley. So we have a lot to pay attention to this week, a lot of economic data that’s gonna give us some insights on inflation and job creation.

What we learn could shape or reshape expectations for monetary policy between now and the first quarter of 2027. And of course, we’re going to watch those transactions price. And we have our own reconstitution with the EPS All-Stars. More than enough reasons for you to continue to pay attention to what we’re doing. But put a cherry on it. We actually have an abbreviated set of office hours today from 4 p.m. to 4:30 p.m. We’ll have an alert out about that later.

And that just means we want you to continue to check your emails, your alerts. And if we happen to make any moves with the portfolio, we want you right there with us. Thanks for watching. We covered quite a bit of ground, a lot more to come.