Tiny Biotech Stock Rallying 200%

Good morning. It’s October 21st, and today we’ll take a look at an activist investor that has acquired a large stake in Kenvue, another that is trying to get on the board of Southwest Airlines, and a tiny biotech stock that is rising nearly 200% in premarket trade.

Previous Close 📈

Stocks ended last week on a high note. However, whether the market can sustain these gains depends largely on earnings season, with around 20% of S&P 500 companies set to report this week.

Futures

Futures are slipping slightly today. Dow futures are down 29 points (0.1%), S&P 500 futures have fallen 0.2%, and Nasdaq-100 futures are off by 0.4%. Investors are keeping an eye on corporate earnings, which will ramp up this week, as well as economic data releases, including September’s leading indicators due later today.

Technology

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What to Watch

Dallas Fed President Lorie Logan will speak at 8:55 a.m. ET. The U.S. Leading Economic Indicators for September will be released at 10:00 a.m. ET.

Later in the day, Kansas City Fed President Jeff Schmid is scheduled to speak at 5:05 p.m. ET, followed by San Francisco Fed President Mary Daly at 6:40 p.m. ET.

On the earnings front, several companies will report their quarterly numbers after the market closes today, including Nucor (NYSE: NUE), W.R. Berkley (NYSE: WRB), Alexandria Real Estate Equities (NYSE: ARE), AGNC Investment (NASDAQ: AGNC), Wintrust Financial (NASDAQ: WTFC), Zions Bancorporation (NASDAQ: ZION), and RLI (NYSE: RLI).

Consumer Products

Hedge Fund Starboard Invests in Kenvue, Eyes Potential Brand Strategy Changes

Hedge fund Starboard Value has acquired a stake in consumer products company Kenvue (KVUE), according to sources familiar with the matter.

Kenvue, which went public last year after being spun off from Johnson & Johnson, has seen its stock price drop 18% since its listing in May 2023. The stock closed at $21.72 per share on Friday, giving Kenvue a market capitalization of $41 billion. Kenvue manufactures well-known brands such as Listerine, Tylenol, and Band-Aid.

Kenvue is up by nearly 6% in premarket trading today.

Sources suggest that Starboard may push the company to reevaluate its brand positioning and pricing strategies to enhance performance. Neither Starboard nor Kenvue representatives have commented on the matter.

The news comes ahead of the 13D Monitor Active-Passive Investor Summit, where Starboard’s chief investment officer, Jeffrey Smith, is set to present investment ideas.

Starboard is also expected to discuss its recent $1 billion investment in Pfizer, signaling a desire for the pharmaceutical giant to improve its financial performance.

Pfizer, known for delivering the first COVID-19 vaccine, has seen its stock lose nearly half of its value since the peak of vaccine demand in 2021.

Airlines

Elliott Investment Seeks Board Influence at Southwest Amid Strategic Overhaul

Elliott Investment Management is in early settlement discussions with Southwest Airlines to secure significant representation on the airline’s board, according to sources.

The talks are centered around Elliott gaining several board seats, though not full control. Southwest's board, which will shrink to 12 members next year following Chairman Gary Kelly’s departure, would likely see Elliott securing fewer than six positions.

The negotiations follow Elliott's public push for change at Southwest, where the activist investor holds an 11% stake.

Elliott has expressed dissatisfaction with the airline’s current leadership, calling for the ouster of CEO Bob Jordan and a major overhaul of the company’s strategic direction. Despite these demands, Southwest has continued to back Jordan, who has been with the airline for nearly 40 years.

Southwest is undergoing significant changes to its business model, including moving away from its open-seating policy and introducing extra legroom options to better compete with rivals.

The airline recently laid out a three-year plan aiming to add $4 billion to earnings by 2027 and authorized a $2.5 billion share buyback. Southwest is expected to report its third-quarter results on Thursday.

Technology

Microsoft Launches AI-Powered Autonomous Agents Amid Rising Investor Scrutiny

Microsoft (MSFT) is advancing its artificial intelligence (AI) offerings, unveiling a new suite of tools called "autonomous agents" during its AI Tour event in London.

The new software, set for public preview next month, allows enterprise users to build AI apps that automate repetitive tasks, freeing up time for more complex projects.

Companies like McKinsey and Pets at Home have already benefited from using their own autonomous agents to streamline tasks such as data entry and client proposal processing.

Users can create these AI-driven agents in Copilot Studio using low-code or no-code instructions, allowing employees to instruct the system in natural language.

The agents can sort through emails, pull relevant information, and handle data issues with minimal user input. Microsoft also ensures workers can monitor the AI’s work to correct potential errors.

The launch is part of Microsoft's broader strategy to capitalize on its massive AI investments, including its collaboration with OpenAI.

In fiscal 2024, Microsoft has already spent $55.7 billion on capital expenditures, most of which are AI and cloud-related. The tech giant is betting on its Copilot platform to drive revenue growth, especially as competition from Google and Salesforce intensifies.

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BioVie [BIVI] - Last Close: $2.35

BioVie’s stock is rallying by nearly 50% in premarket trading due to a major patent win in Japan.

The company received approval for a novel liquid formulation of terlipressin, a drug used to treat complications from liver cirrhosis and ascites.

This formulation offers a significant advantage because it stays stable at room temperature for up to 24 months, making it easier for home care use.

The new patent solidifies BioVie’s intellectual property in key markets, boosting investor confidence.

GRI Bio [GRI] - Last Close: $0.58

GRI Bio is skyrocketing nearly 200% in premarket trading.

The company presented positive preclinical data for its drug candidate, GRI-0621.

This treatment showed promising results in reducing inflammation and fibrosis in patients with Idiopathic Pulmonary Fibrosis (IPF), a severe lung disease with limited treatment options.

This breakthrough has sparked optimism about the drug’s potential.

Siyata Mobile [SYTA] - Last Close: $1.01

Siyata Mobile shares are soaring 130% so far today.

The firm announced a major partnership with T-Mobile. The company’s new 5G mission-critical push-to-talk (MCPTT) cellular radios, designed for first responders, will now be available on T-Mobile's extensive 5G network.

These rugged devices provide reliable, nationwide communication for public safety officials, enhancing their ability to respond quickly and effectively to emergencies.

With advanced features like superior sound quality and seamless connectivity, this collaboration is seen as a breakthrough in emergency communication technology, driving up investor excitement and boosting Siyata’s stock significantly.

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Everything Else

• India's green hydrogen costs declined, moving closer to government targets for 2030.

• Southwest and Elliott discuss a settlement granting activist investor seats on the board.

• AI startup Perplexity seeks a major valuation boost with their new $500-million funding effort.

• TTMS set its maximum IPO share price as it targets takeovers in European and U.S. markets.

• Eli Lilly targets online vendors and medical spas in lawsuits over fake Zepbound formulations.

• Crude oil prices rally as traders monitor rising geopolitical risks in the Middle East.

• JDE Peet’s shares surge 16% as JAB buys Mondelez’s stake for $2.3 billion.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.

Best Regards,

— Adam Garcia
Elite Trade Club

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