Top large cap picks for 2H25
Following a strong 1H25, AIR remains focused on companies that can continue gaining market share through exceptional management, innovation and cost discipline - all driving rising operating margins and FCF, even in challenging environments. The following names pass all 45 of AIR’s proprietary filters (3 layers of 15 valuation and quality criteria), along with strong technical setups and are expected to significantly outperform over the next 12 months: 1) Adidas, ranked No.1 in AIR’s quantitative system, with accelerating EBIT, margin gains and surging FCF; 2) Aena, with best-in-class margins, strong traffic growth and a robust balance sheet; and 3) Prysmian, a key player in energy transition and digital infrastructure with a record €40.3bn order book. AIR rates all three stocks as Strong Buys, with 50-100% upside potential.
Notable insider buys at Prosus & Nordea Bank
Fabricio Bloisi, CEO of Prosus since Aug 24, has purchased €20m of stock at €48.29, increasing his stake by ~325%. This is his second purchase since joining, following a €4m purchase at €31.71 last Aug. Notably, this latest investment is 5x larger and made at a 50% higher price - underscoring growing conviction in the company’s outlook. Meanwhile, three Nordea Bank directors bought a combined €189k of stock at ~€12.20 post-earnings. Jonas Synnegren (Non-Exec since May 20) made his first buy since joining (€104k), Petra Van Hoeken (Non-Exec since Mar 19) made her largest to date (€35k) and Lars Rohde (Non-Exec since Mar 24) bought €50k of stock in his first purchase. This cluster of unusual activity has led Smart Insider to assign both stocks a +1 rating (highest conviction).
Nokia is undergoing a major transformation under new CEO Justin Hotard, who brings a Silicon Valley mindset to this legacy European company. The recent Infinera acquisition signals a strategic pivot from legacy RAN to high-growth hyperscale data centre infrastructure. The RAN business appears to have bottomed after a multi-year downturn, with pricing power set to improve amid the first hardware upcycle in a decade and increasing replacement of Huawei equipment in Western markets. Nokia also benefits from stable IP licensing cash flows, expansion into new areas (Amazon streaming) and renewed momentum in networking. Despite a strong balance sheet, ~3.5% dividend yield and a clear path to margin expansion, shares trade at just ~12x FY26 EPS. With potential EPS power of $0.70, the stock could “easily” double (assuming 15x multiple) with minimal downside.
Flutter & DraftKings: Bespoke CEO project
Paragon Intel is launching a bespoke CEO assessment project on FLUT’s Jeremy Jackson and DKNG’s Jason Robins. While both leaders boast headline achievements, they now confront converging pressures - higher state betting taxes, rising CAC, regulatory scrutiny and complex integrations. With Robins shifting focus towards FCF generation and Jackson tasked with defending FanDuel’s margin edge amid intensifying competition, Paragon will evaluate whether each CEO possesses the capital-allocation discipline, governance model and operating rigour to convert scale into durable profitability. They will also explore how differences in ownership control impact succession, strategic agility and shareholder alignment as the US sports betting market matures.
Aviation Credit In Focus: Tactical insights & trading opportunities
Reno Bianchi's weekly report offers incisive commentary on key developments across the aviation sector. Highlights include Delta’s strategic push towards AI-driven pricing, persistent capacity constraints from Pratt & Whitney engine issues and the latest fallout from the EU-US aerospace tariff standoff. In credit, short-dated EETCs like UAL B 4.6% due 2026 imply spreads near 1,000bps and offer compelling value if sourced at quoted levels. For AA tranches, Reno recommends 5yr paper with spreads ≥130bps; for A tranches, selected issues offering +200bps or more. He continues to favour Spirit’s 2015-1 B tranche. Term loans and senior secureds remain expensive, with Spirit and JetBlue as notable but risky exceptions. Domestic unsecureds are best avoided on tight spreads. LATAM remains his his preferred international credit, citing low leverage and relative upside.
Forensic Alpha has raised PAYX’s risk score to the highest level (10/10), citing a sharply rising trend in DSO as a key flag in the company’s latest 10-K. The increase stems from significant growth in “Purchased Receivables” tied to PAYX’s Funding Solutions business, which provides non-recourse payroll advances to staffing agencies. These receivables rose 23% Y/Y to $1.2bn, now ranking among the largest items on the balance sheet. Give its growth and size, Forensic Alpha was surprised there is only one passing reference to it within the investor presentation and no mention of it on the Q4 earnings call. Changes in cash flow presentation and more optimistic revenue recognition assumptions further raise concerns about transparency and earnings quality.
BEP signs a landmark Hydro Framework Agreement with Google, representing the largest-ever corporate hydroelectric power deal. However, Veritas estimates the deal’s initial pricing of $56-76/MWh is below BEP’s current US hydro average of $83/MWh in 2024, contrasting with management’s expectation of ~2-4% annual FFO growth from hydro recontracting. Furthermore, BEP faces significant barriers to scaling beyond the initial 670 MW, including long-term contractual commitments and geographic mismatch between available hydro capacity and Google’s priority markets (PJM & MISO). Despite the market’s positive reaction to the news, Veritas maintains their Sell rating and TP of US$20.
Profiting from Japan’s parent-subsidiary delisting wave
Yuka Marosek discusses the structural shift in Japan’s corporate landscape following the Tokyo Stock Exchange’s Feb 25 statement discouraging parent-subsidiary listings. These structures have come under increased scrutiny due to governance concerns - subsidiaries often prioritise parent interests, limiting minority shareholder influence and strategic independence. The recent backlash to Toyota’s undervalued tender offer for Toyota Industries underscores investor frustration. Yuka presents a curated list of potential delisting candidates and notes that over 80% of such delistings in the past five years have resulted in share price gains.