Equity Highlights February 2024

Welcome to Broyhill's Equity Highlights, where we share a few quick takes on recent news across the portfolio every month.  

We aim to make these highlights easy to read and easy to repeat. Feel free to share our work! 

Nintendo delays release of a highly anticipated product due to major risk. Nintendo announced it would delay the release of the next generation Switch console to March 2025 to prevent resale bots from buying up supply and reselling the consoles at exorbitant prices. Knowing Nintendo usually releases consoles in March and announces their releases 1+ years in advance, we believed the probability of a surprise 2024 release was low.

Warner Bros. Discovery halts merger talks with Paramount Global, sources say. We initiated a starter position in PARA after Byron Allen made a $14B offer for the stock. While there is no clear buyer yet, a sale seems inevitable whether PARA sells in one piece or in several.

Ozempic Boom Leaves Room for Dialysis, Fresenius Medical Says. We recently detailed our new positions in dialysis players, Fresenius Medical Care and Baxter International, in our annual letter. While the market remains solely focused on the worst-case scenario for anti-GLP-1 stocks, we believe the impact on dialysis makers will be manageable. In our view, uptake of the drugs should translate to lower mortality rates in patients with chronic kidney disease.

Nicotine Pouches Are Facing Heat in Congress. Philip Morris Investors Are Shrugging It Off. Senator Chuck Schumer recently claimed that Zyn pouches were being targeted to minors on social media. The market barely reacted to the news. Nicotine pouches remain a less risky alternative to cigarettes, heated tobacco, and vapes.

Forget the TikTok Feud. The Music Business Is Getting Its Groove Back. Chris' thoughts on Universal Music Group were recently published in Barron's. Our take on the UMG vs TikTok feud is simple: "it’s in everyone’s interests to cut a deal, which I think will eventually happen, and with much better economics for UMG." For more on UMG, read our write-up here.