5i Research Weekly Rockets and Duds

Welcome to week six of 5i Research's market ROCKETS AND DUDS

H&E Equipment Services HEES      Wow, HEES shareholders got a very early New Year gift last week when United Rentals made a bid for the company at a giant premium. The takeover premium was 109%, and HEES rose 102% last week. HEES provides and rents out heavy industrial equipment. But, in a clear example of 'you can't please everyone', the law firm of Kahn Swick & Foti filed a lawsuit investigating the 'adequacy of price' in the proposed deal. Sheesh. Lawyers!.

Intra-Cellular Therapies Inc. ITCI   Well, I guess those investment bankers really do not take holidays. ITCI rose 33% this week on news that Johnson & Johnson (J&J) was to acquire the company for $14 billion. Again, lawsuits were filed on the deal. ITCI focuses on neuropsych therapies, helping people with schizophrenia and other health issues. J&J's deal made a splash as it came just as a JP Morgan healthcare conference was getting underway in New York. 

Wolfspeed Inc. WOLF  Wolfspeed rose 33.1% last week, but is still down 6% for the year so far. It rose 38% on Wednesday. In a contradictory move, shares rose on news that the company had completed a $200 million at-the-market share offering. Usually, diluting shareholders results in a weaker share price. But a bounce was in order, anyway. WOLF shareholders have been snarling, watching the stock decline a whopping 80% over the past year. WOLF develops 'semi-conductor products', so we cannot blame its decline on the sector, which remains one of the hottest around. Once again lawyers are involved, and we counted no less than four lawsuits filed against the company on last week's news. 

Signet Jewelers Ltd. SIG  Maybe some analysts at the "Bear Cave" got jilted at the altar recently. How else to explain the nasty short report the firm issued on Signet, resulting in a 26.1% decline in the shares last week. In the report the company noted SIG, a retailer of diamonds and jewellery, is likely going to get hit hard by the shift to lab-grown diamonds, believing the shift to lab products is accelerating. The youth of today don't get fooled so much by clever marketing, and since you can't tell the difference between a 'real' diamond and a lab diamond, why pay double or triple the price? Marketers used to say 'pay two months salary' for a diamond. Now, maybe it should be 'pay two months salary, minus whatever you just lost in the stock market'. 

FTAI Aviation Ltd. FTAI   Well, last week we kept up our streak of having an AI or quantum-related company in the Rockets and Duds. This week we could have easily talked about several of the companies we have discussed before, as all rose sharply this week as Microsoft made some positive comments towards the sector. But we are skipping the AI sector this week. No wait! FTAI has 'AI' right in its name and symbol!! Why did it go down? Well, despite the name FTAI is an aerospace company, providing leasing, repairs, engines and materials to the sector. It fell 31% last week, though, as short seller Muddy Waters attacked the company, calling its disclosure 'misleading'. The stock is up 132% in the past year and this was probably the real reason for the short report. Please fasten your seatbelts, FTAI is hitting some turbulence.

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Analysts of 5i Research responsible for this report do not have a financial or other interest in securities mentioned. The i2i Fund does not have a financial or other interest in securities mentioned.