GME raises eyebrows with sales of assets in Canada, France. (0:15) Super Micro Computer shares up 100% from recent low. (2:00) Intel pops on talk of TSM-Broadcom deal. (3:17)Show NotesNine in 10 fund managers say U.S. stocks overvalued, most since 2001Episode transcripts: seekingalpha.com/wsb Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Chapter 1: What developments are happening with GameStop's international assets?
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Tuesday, February 18th, and I'm your host, Kim Kahn. Our top story so far. The GameStop plot thickens. GameStop announced that it intends to pursue a sale of its operations in France and Canada.
Chapter 2: Is GameStop considering investments in cryptocurrency?
The retailer said the decision was part of its evaluation of its international assets. The development is interesting after GameStop rallied last week amid buzz over a possible entry back into the crypto sector. CNBC reported that the retailer is eyeing investments in alternative asset classes, including crypto and especially Bitcoin.
Sources indicated that GameStop is still figuring out if the investment is sensible for its business. The report caught the attention of investors because GME had $4.6 billion in cash holdings at the end of Q3 compared to its current market cap of $12.1 billion. The company has a mixed history with cryptocurrency and blockchain initiatives in general.
Chapter 3: How has GameStop previously engaged with cryptocurrency?
It launched a self-custodial cryptocurrency wallet in 2022 that allowed customers to manage digital assets, including cryptocurrencies and non-fungible tokens. The move was part of GameStop's broader strategy to expand into the digital asset space.
On the economic front, the Empire State Manufacturing Index bounced up to positive 5.7 in February, moving to expansion territory from negative 12.6 in January. Economists were looking for a smaller rise to negative 0.5. New orders and shipments increased moderately, delivery times grew slightly longer, and supply availability was slightly lower.
Chapter 4: What recent changes occurred in the Empire State Manufacturing Index?
Pantheon macroeconomist Oliver Allen expressed some concern with the Prices Paid Index jumping to a two-year high, with prices received also rising.
Chapter 5: Why is there concern about the Prices Paid Index?
That might be a sign that the tariff-length surge in demand for durable goods since late last year is starting to put some upward pressure on prices, although neither index has yet strayed far from its typical pre-COVID range, and most other leading indicators of core goods prices remain relatively benign, he said.
Among active stocks, Supermicrocomputer is rallying again exactly one week before its February 25th deadline to file its 2024 annual report, along with its quarterly reports for the September 2024 and December 2024 periods. The stock is up about 100% from its recent February low before it released preliminary earnings, and it's up 200% since the 52-week low hit in December.
Chapter 6: What is driving Super Micro Computer's stock rally?
Medtronic is the biggest S&P decliner after it only reaffirmed its full-year outlook despite a major opportunity to consolidate its lead in the market for pulsed field ablation systems following a setback to rival J&J. J&J announced a temporary pause in its limited commercial rollout of the Veripulse pulsed field ablation platform, which was approved by the FDA just a few weeks ago.
While the company decided to resume the rollout on Friday after an investigation found no safety concerns, The damage was already done in its ability to gain an early lead in the PFA market. But Medtronic said it continues to expect its full-year 2025 organic revenue growth to reach 4.75% to 5% and its diluted non-gap EPS to stand at 544% to 550%.
And Constellation Brands is rallying after Warren Buffett's Berkshire Hathaway took a new position in the stock in Q4, valued at $1.24 billion. In other news of note, the sell side is weighing in as reports swirl that Taiwan Semiconductor and Broadcom could each look to acquire parts of Intel, sending shares of Intel sharply higher.
B of A analyst Vivek Arya said a scenario where Broadcom acquires Intel's chip design and marketing business and Taiwan Semi takes over the manufacturing business would be, quote, time-consuming and complicated. There would be extensive approval requirements from global regulators given Intel's dominant market share in the PC and server CPU spaces.
Other issues include Broadcom's $58 billion in net debt on its balance sheet and constraints provided by the CHIPS Act on Intel, which is required to own 50% or more of its manufacturing capabilities.
JPMorgan credit analyst Christian Crosby said, The ideal outcome is for Intel to separate its founder unit into a new company, which would include Taiwan Semiconductor taking a minority voting stake and operating responsibilities of the combined unit. And in the Wall Street Research Corner, B of A's February Global Fund Manager Survey shows that 89% of respondents see U.S.
stocks as overvalued, the most since at least April 2001. In addition, the U.S. exceptionalism trade looks to have peaked, becoming slightly less crowded in February. The trade has been characterized by a combo of strong U.S. dollar and equity bull market led by the Magnificent Seven group of stocks, strategist Michael Hartnett said. This month, long U.S.
exceptionalism was viewed as the most crowded trade by 73% of fund manager survey investors, a decline from the three-year high of 80% reached in January. But while they may be wary of U.S. stocks, money managers are putting cash to work in Europe and bond-sensitive assets, with cash levels of 3.5% at a 15-year low. That's all for today's Wall Street Lunch.
Look for links for stories in the show notes section. Don't forget, these episodes will be up with transcriptions at SeekingAlpha.com. And make sure you're getting the most out of your portfolio with quant, news, and analysis by heading to SeekingAlpha.com.
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