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The Kobeissi Letter
BREAKING: US stocks rally sharply off their lows with the Nasdaq 100 now up nearly +1% on the day.
Reports suggest that President Trump and Justin Trudeau had a 50 minute phone call just now.
Commerce Secretary Lutnick said Trump is "leaning towards helping out" auto makers for 1 month.
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BREAKING: US stocks rally sharply off their lows with the Nasdaq 100 now up nearly +1% on the day.
Reports suggest that President Trump and Justin Trudeau had a 50 minute phone call just now.
Commerce Secretary Lutnick said Trump is "leaning towards helping out" auto makers for 1 month.
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Offshore
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The Kobeissi Letter
BREAKING: President Trump releases a statement on his call with Justin Trudeau regarding tariffs.
Trump says, "The call ended in a “somewhat” friendly manner!" https://t.co/6j4J9B737N
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BREAKING: President Trump releases a statement on his call with Justin Trudeau regarding tariffs.
Trump says, "The call ended in a “somewhat” friendly manner!" https://t.co/6j4J9B737N
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Investing visuals
Feels like this imposter had a stroke when creating its username🤨 https://t.co/N7eEmePYsR
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Feels like this imposter had a stroke when creating its username🤨 https://t.co/N7eEmePYsR
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Read
RT @virattt: I built a stock market API in 42 days.
All during @_buildspace s5.
What is the API?
Today, it lets you pull financials for 16,000 tickers going back 30+ years.
Why did I build the API?
Because the big providers have:
• poor API design
• poor documentation
• expensive sales contracts
• strict data retention policies
How did I build it?
I started building the API from scratch at the start of s5 in early June.
I got deep into the SEC Edgar API and cracked how to scrape at scale.
Sonnet 3.5 from @AnthropicAI was a godsend for this.
I hacked early mornings, late nights, and weekends, with a full-time job.
Day by day. Code by code.
I set weekly goals and hit each one.
End result: https://t.co/Li4F50LrMv
I’m excited to see where this API goes.
It may go nowhere, but I’ll always know that I can set goals and crush them.
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RT @virattt: I built a stock market API in 42 days.
All during @_buildspace s5.
What is the API?
Today, it lets you pull financials for 16,000 tickers going back 30+ years.
Why did I build the API?
Because the big providers have:
• poor API design
• poor documentation
• expensive sales contracts
• strict data retention policies
How did I build it?
I started building the API from scratch at the start of s5 in early June.
I got deep into the SEC Edgar API and cracked how to scrape at scale.
Sonnet 3.5 from @AnthropicAI was a godsend for this.
I hacked early mornings, late nights, and weekends, with a full-time job.
Day by day. Code by code.
I set weekly goals and hit each one.
End result: https://t.co/Li4F50LrMv
I’m excited to see where this API goes.
It may go nowhere, but I’ll always know that I can set goals and crush them.
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RT @quantscience_: This guy made an AI Hedge Fund...
Then open-sourced it for everyone to use.
This is the story. https://t.co/c7aJQ62tUx
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RT @quantscience_: This guy made an AI Hedge Fund...
Then open-sourced it for everyone to use.
This is the story. https://t.co/c7aJQ62tUx
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Offshore
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The Kobeissi Letter
Is stagflation here?
The ISM Manufacturing PMI fell -0.5 points to 50.3 in February, below expectations of 50.9.
New orders tumbled a whopping -6.5 points, into contraction territory of 48.6, highlighting a dismal outlook for the manufacturing sector.
The employment index fell 2.7 points, to 47.6, also contracting
Concerningly, prices paid spiked 7.2 points, to 62.4, the highest since June 2022.
Weakening economic activity with rising prices is the worst-case scenario for the Fed.
The economy is shifting.
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Is stagflation here?
The ISM Manufacturing PMI fell -0.5 points to 50.3 in February, below expectations of 50.9.
New orders tumbled a whopping -6.5 points, into contraction territory of 48.6, highlighting a dismal outlook for the manufacturing sector.
The employment index fell 2.7 points, to 47.6, also contracting
Concerningly, prices paid spiked 7.2 points, to 62.4, the highest since June 2022.
Weakening economic activity with rising prices is the worst-case scenario for the Fed.
The economy is shifting.
tweet
Offshore
Photo
The Kobeissi Letter
BREAKING: President Trump is granting a 1-month tariff exemption to the Big 3 automakers, per WSJ. https://t.co/OW2KQ7ggBR
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BREAKING: President Trump is granting a 1-month tariff exemption to the Big 3 automakers, per WSJ. https://t.co/OW2KQ7ggBR
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Offshore
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A quality valuation analysis on $NVDA 🧘🏽♂️
•NTM P/E Ratio: 25.37x
•10-Year Mean: 35.93x
•NTM FCF Yield: 3.54%
•10-Year Mean: 3.08%
As you can see, $NVDA appears to be trading below fair value
Going forward, investors can receive ~42% MORE in earnings per share & ~15% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $NVDA is a quality business
BALANCE SHEET✅
•Cash & Short-Term Inv: $43.21B
•Long-Term Debt: $8.46B
$NVDA has a strong balance sheet, an AA- S&P Credit Rating, & 259x FFO Interest Coverage Ratio
RETURN ON CAPITAL✅
•2020: 19.1%
•2021: 19.1%
•2022: 26.0%
•2023: 16.2%
•2024: 60.5%
•2025: 90.0%
RETURN ON EQUITY✅
•2020: 26.0%
•2021: 29.8%
•2022: 44.8%
•2023: 17.9%
•2024: 91.5%
•2025: 119.2%
$NVDA has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2020: $10.92B
•2025: $130.50
•CAGR: 64.23%
FREE CASH FLOW✅
•2020: $4.27B
•2025: $60.85B
•CAGR: 70.12%
NORMALIZED EPS✅
•2020: $0.14
•2025: $2.99
•CAGR: 84.46%
SHARE BUYBACKS🆗
•2020 Shares Outstanding: 24.72B
•LTM Shares Outstanding: 24.80B
$NVDA is investing in its own growth, driving innovation, and expanding its market leadership. This strategic use of capital is generating higher returns for investors
MARGINS✅
•LTM Gross Margins: 75.0%
•LTM Operating Margins: 62.4%
•LTM Net Income Margins: 55.8%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~42% MORE in EPS & ~15% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $NVDA has to grow earnings at a 12.68% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2026 - 2028 EPS growth over the next few years to be more than the (12.68%) required growth rate:
2026E: $4.50 (50.4% YoY) *FY Jan
2026E: $5.72 (27.2% YoY)
2027E: $6.42 (12.3% YoY)
$NVDA has an excellent track record of meeting analyst estimates ~2 years out, but let’s assume $NVDA ends 2027 with $6.42 in EPS & see its CAGR potential assuming different multiples
28x P/E: $179.76💵 … ~18.0% CAGR
27x P/E: $173.34💵 … ~16.5% CAGR
26x P/E: $166.92💵 … ~15.0% CAGR
25x P/E: $160.50💵 … ~13.5% CAGR
24x P/E: $154.08💵 … ~11.9% CAGR
23x P/E: $147.66💵 … ~10.3% CAGR
As you can see, $NVDA appears to have attractive return potential EVEN IF we assume some multiple compression relying on 24x earnings, a multiple generally below its historical averages & a multiple that’s justified given the company’s growth rate & moat
$NVDA is a good consideration today at $111💵
Given its volatility & high uncertainty, I’d likely strategically buy in tranches, enhancing margin of safety, while positioning myself to win-win regardless of short-term price action
E.g. purchase 1/3 at ~$111, 1/3 at ~$90, & 1/3 at ~$77
If the stock price goes 📉 I can accumulate more shares at an even more attractive valuation, if the stock price goes 📈 I’m in the green
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢�[...]
RT @DimitryNakhla: A quality valuation analysis on $NVDA 🧘🏽♂️
•NTM P/E Ratio: 25.37x
•10-Year Mean: 35.93x
•NTM FCF Yield: 3.54%
•10-Year Mean: 3.08%
As you can see, $NVDA appears to be trading below fair value
Going forward, investors can receive ~42% MORE in earnings per share & ~15% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $NVDA is a quality business
BALANCE SHEET✅
•Cash & Short-Term Inv: $43.21B
•Long-Term Debt: $8.46B
$NVDA has a strong balance sheet, an AA- S&P Credit Rating, & 259x FFO Interest Coverage Ratio
RETURN ON CAPITAL✅
•2020: 19.1%
•2021: 19.1%
•2022: 26.0%
•2023: 16.2%
•2024: 60.5%
•2025: 90.0%
RETURN ON EQUITY✅
•2020: 26.0%
•2021: 29.8%
•2022: 44.8%
•2023: 17.9%
•2024: 91.5%
•2025: 119.2%
$NVDA has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2020: $10.92B
•2025: $130.50
•CAGR: 64.23%
FREE CASH FLOW✅
•2020: $4.27B
•2025: $60.85B
•CAGR: 70.12%
NORMALIZED EPS✅
•2020: $0.14
•2025: $2.99
•CAGR: 84.46%
SHARE BUYBACKS🆗
•2020 Shares Outstanding: 24.72B
•LTM Shares Outstanding: 24.80B
$NVDA is investing in its own growth, driving innovation, and expanding its market leadership. This strategic use of capital is generating higher returns for investors
MARGINS✅
•LTM Gross Margins: 75.0%
•LTM Operating Margins: 62.4%
•LTM Net Income Margins: 55.8%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~42% MORE in EPS & ~15% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $NVDA has to grow earnings at a 12.68% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2026 - 2028 EPS growth over the next few years to be more than the (12.68%) required growth rate:
2026E: $4.50 (50.4% YoY) *FY Jan
2026E: $5.72 (27.2% YoY)
2027E: $6.42 (12.3% YoY)
$NVDA has an excellent track record of meeting analyst estimates ~2 years out, but let’s assume $NVDA ends 2027 with $6.42 in EPS & see its CAGR potential assuming different multiples
28x P/E: $179.76💵 … ~18.0% CAGR
27x P/E: $173.34💵 … ~16.5% CAGR
26x P/E: $166.92💵 … ~15.0% CAGR
25x P/E: $160.50💵 … ~13.5% CAGR
24x P/E: $154.08💵 … ~11.9% CAGR
23x P/E: $147.66💵 … ~10.3% CAGR
As you can see, $NVDA appears to have attractive return potential EVEN IF we assume some multiple compression relying on 24x earnings, a multiple generally below its historical averages & a multiple that’s justified given the company’s growth rate & moat
$NVDA is a good consideration today at $111💵
Given its volatility & high uncertainty, I’d likely strategically buy in tranches, enhancing margin of safety, while positioning myself to win-win regardless of short-term price action
E.g. purchase 1/3 at ~$111, 1/3 at ~$90, & 1/3 at ~$77
If the stock price goes 📉 I can accumulate more shares at an even more attractive valuation, if the stock price goes 📈 I’m in the green
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢�[...]
Offshore
Dimitry Nakhla | Babylon Capital® RT @DimitryNakhla: A quality valuation analysis on $NVDA 🧘🏽♂️ •NTM P/E Ratio: 25.37x •10-Year Mean: 35.93x •NTM FCF Yield: 3.54% •10-Year Mean: 3.08% As you can see, $NVDA appears to be trading below fair value Going…
� 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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