We're Bringing a New Contender Into the Bullpen

*Strong upfronts and what that says about its programming slate have us adding shares of Netflix to the bullpen

*Buffett and Bank of America: the headlines are missing the larger picture

In a blog post today, Netflix NFLX shared that, for its second year of Upfront negotiations, it closed deals with all major holding companies as well as independent agencies, with a 150% plus increase in upfront ad sales commitments over 2023. For those unfamiliar with upfronts, it is a period in which advertisers and their agencies negotiate and sign deals, typically with TV networks. But, as the way folks watch programming has changed, so too have upfronts.

Netflix’s reveal reaffirms the company’s move into ad-supported offerings and suggests a greater volume of advertising will be hitting its streaming service in the coming year. It also suggests that its slate of programming could woo subscribers. This is leading us to place NFLX shares in the bullpen, something that will prompt us to take a deeper dive into the company and its earnings prospects.

Anecdotally, we’ve noticed a step function higher in the advertising streaming across Amazon’s AMZN Prime Video platform in the number of ads per commercial break but also in the quality of those products and services. Those findings support our positive stance on Trade Desk TTD and Amazon's own advertising business, which accounted for just under 9% of June quarter revenue and has been growing above 20% year over year for the last several quarters.

Buffett and Bank of America: The Headlines Miss the Larger Picture

Bank of America BAC shares are trading off Tuesday as are shares of Morgan Stanley MS. The larger decline in BAC shares stems from word Warren Buffett sold 13,968,943 shares at $39.00 to $39.74 between August 15, 2024 and August 19, 2024. What the headlines aren’t telling you is that Buffett, via Berkshire Hathaway, still owns 928,460,939 BAC shares, which keeps his ownership stake in Bank of America near 12%.

Meanwhile, M&A activity continues to heat up. The news that AMD would acquire ZT Systems isn’t the only M&A chatter making the rounds.

Shares of 7-Eleven parent Seven & i Holdings Co. SVNDY are up following reports that the company received a takeover proposal from the owner of Circle K.

AMZN agreed to acquire Perceive Corporation, the developer of Ergo AI processor, from San Jose, California-based technology firm Xperi XPER for $80 million in cash.

And Piper Sandler called out Utz Brands UTZ, Celsius Holdings CELH and Freshpet FRPT as takeout candidates following the recent move by Mars to pick up Kellanova K. We tend to see companies play a game of musical M&A chairs from time to time, making a move before they are viewed as being left behind. Piper name drops Hershey HSY and it would make sense for the company to diversify away from its core chocolate business in general, but especially now given what’s going on with cocoa prices.

For us over at the Portfolio, we like the continued strength in M&A activity given our holdings in MS and BAC. We’ll also be watching the expected IPO later this week for autonomous driving company WeRide WRD and a few others.

For folks who are light on their BAC exposure, the shares are battling to keep support at the 100-day moving average (38.96), and we’d wait for a successful testing of that area. If we don’t get it, the next layer of support shows up just below $36 and brings with it a very compelling risk-to-reward tradeoff.

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