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).
Telcos: More selective stock picking required
European telecom stocks have outperformed again in 2025, up 17% YTD, adding to 2024’s 12pp outperformance and validating New Street’s long-term thesis of regulatory improvement. However, with sector upside narrowing to 17% (vs. 31% at the start of the year), returns are likely to become more stock-specific and increasingly dependent on M&A. They highlight French names and Telecom Italia as most geared to deal-making. New Street’s top picks are BT (strong FCF growth); DT (German and US upside); Bouygues (undervalued FCF growth and M&A upside); and Vodafone (special sit. with value to be unlocked). They recently upgraded Telia to Buy seeing good cost control and the possibility for extraordinary cash returns.
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.
Strong 2025 short performance, consistent long-term hit rate
Bios Research has published 7 short ideas in 2025, with 5 generating absolute returns. This builds on a strong trailing 12-month run with 13 of 18 short calls delivering positive returns. Positions closed in recent months include Twist Bioscience (-25%), Repligen (-26%), Bio-Techne (-22%) and Butterfly Network (-43%). Since inception in 2012, Bios has published 183 short ideas with a 69% hit rate and 42% producing >25% returns. Focus areas include medtech, commercial biotech, services/tools and potential frauds. Bios currently has 13 active short positions and will soon launch a new $10bn+ biotech short which Aaron Fletcher believes has up to 80% downside before the end of 2025.
Aviation Weekly: Tactical insights & trading opportunities
Reno Bianchi offers incisive commentary on key developments across the aviation sector. Highlights from his report this week 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.
IT Survey: Robust spend, GenAI boom, staffing cuts
Rosenblatt’s July survey of 100+ senior IT managers reveals a surprisingly robust IT spending outlook, with two-thirds of budgets being revised higher since the start of 2025, despite macro concerns. GenAI is the top investment priority, with 60% increasing spend and nearly 70% expecting a material organisational impact. Over 75% expect developer staffing cuts of 10%+. Cybersecurity remains a defensive spending priority with investment flowing towards securing modern, distributed environments (Cloud, SASE/SSE) and data itself - benefitting CrowdStrike, CyberArk, Palo Alto, Zscaler and Fortinet. AWS fared much better, ranking first in "cloud service provider best positioned in AI," with 28% (vs. 16% in Dec 24), surpassing Google and Microsoft. Infrastructure names like Snowflake, Rubrik and MongoDB are also well-positioned amid data estate modernisation.
Despite a solid Q3 beat and raise, MU shares fell on misplaced concerns over HBM oversupply. Arete sees strong FY26 growth, with HBM projected to reach ~40% of DRAM sales by late 2026, reinforcing MU’s status as an essential yet still undervalued AI stock. Nvidia continues to request additional HBM and potential resumption of H20E (with HBM3E-8Hi) sales could act as a catalyst for further global HBM supply tightening. MU must demonstrate HBM4 competitiveness (16-layer stacking capability) within 6-8 months to ease investor concerns. Arete also expects MU to gain eSSD market share at the expense of Samsung and SK Hynix. A combination of stable traditional DRAM pricing and rising HBM mix to drive a 63% Y/Y rise in FY26 EPS to $12.78. TP increased to $150 (35% 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.
At Revelare’s TMT Investor Idea Event, a long thesis on Unity argued the company is entering a turnaround phase after missteps in M&A, leadership and pricing strategy. With both Create and Grow segments rebounding, 2025 is expected to be a reacceleration year. The launch of Vector, Unity’s new AI ad platform, could restore momentum in Grow, while Unity 6 is showing early traction in Create. EBITDA in 2026 could be $600m+ vs. the Street at $440m. Revelare also hosted a separate discussion with former a Unity executive to further explore the company’s strategic reset and execution path. Since these events Unity’s shares have risen ~40% with further upside anticipated.
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.