Offshore
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Dimitry Nakhla | Babylon Capital®
“At the same time, I’ve found it important to balance those “builders” with the cash cows — $MA, $V, $SPGI, $FICO etc — businesses with exceptional FCF margins, durable moats, and minimal capital requirements.
𝐓𝐡𝐚𝐭 𝐜𝐨𝐦𝐛𝐢𝐧𝐚𝐭𝐢𝐨𝐧 𝐚𝐥𝐥𝐨𝐰𝐬 𝐚 𝐩𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨 𝐭𝐨 𝐩𝐚𝐫𝐭𝐢𝐜𝐢𝐩𝐚𝐭𝐞 𝐢𝐧 𝐭𝐡𝐞 𝐀𝐈 𝐚𝐧𝐝 𝐜𝐥𝐨𝐮𝐝 𝐛𝐮𝐢𝐥𝐝𝐨𝐮𝐭 𝐰𝐡𝐢𝐥𝐞 𝐫𝐞𝐦𝐚𝐢𝐧𝐢𝐧𝐠 𝐫𝐞𝐬𝐢𝐥𝐢𝐞𝐧𝐭 𝐢𝐟 𝐭𝐡𝐞 𝐂𝐚𝐩𝐄𝐱 𝐜𝐲𝐜𝐥𝐞 𝐜𝐨𝐨𝐥𝐬 𝐨𝐫 𝐬𝐞𝐧𝐭𝐢𝐦𝐞𝐧𝐭 𝐬𝐡𝐢𝐟𝐭𝐬.”
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“At the same time, I’ve found it important to balance those “builders” with the cash cows — $MA, $V, $SPGI, $FICO etc — businesses with exceptional FCF margins, durable moats, and minimal capital requirements.
𝐓𝐡𝐚𝐭 𝐜𝐨𝐦𝐛𝐢𝐧𝐚𝐭𝐢𝐨𝐧 𝐚𝐥𝐥𝐨𝐰𝐬 𝐚 𝐩𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨 𝐭𝐨 𝐩𝐚𝐫𝐭𝐢𝐜𝐢𝐩𝐚𝐭𝐞 𝐢𝐧 𝐭𝐡𝐞 𝐀𝐈 𝐚𝐧𝐝 𝐜𝐥𝐨𝐮𝐝 𝐛𝐮𝐢𝐥𝐝𝐨𝐮𝐭 𝐰𝐡𝐢𝐥𝐞 𝐫𝐞𝐦𝐚𝐢𝐧𝐢𝐧𝐠 𝐫𝐞𝐬𝐢𝐥𝐢𝐞𝐧𝐭 𝐢𝐟 𝐭𝐡𝐞 𝐂𝐚𝐩𝐄𝐱 𝐜𝐲𝐜𝐥𝐞 𝐜𝐨𝐨𝐥𝐬 𝐨𝐫 𝐬𝐞𝐧𝐭𝐢𝐦𝐞𝐧𝐭 𝐬𝐡𝐢𝐟𝐭𝐬.”
There are several respected investors who have long stayed away from companies like $GOOG, $AMZN, $MSFT & $META — skeptical of the returns on the enormous capital expenditures tied to cloud and AI infrastructure.
I understand the concern, but I don’t think that’s the right conclusion.
These businesses are building the digital backbone of the next decade, and exposure to them still remains beneficial.
At the same time, I’ve found it important to balance those “builders” with the cash cows — $MA, $V, $SPGI, $FICO etc — businesses with exceptional FCF margins, durable moats, and minimal capital requirements.
𝐓𝐡𝐚𝐭 𝐜𝐨𝐦𝐛𝐢𝐧𝐚𝐭𝐢𝐨𝐧 𝐚𝐥𝐥𝐨𝐰𝐬 𝐚 𝐩𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨 𝐭𝐨 𝐩𝐚𝐫𝐭𝐢𝐜𝐢𝐩𝐚𝐭𝐞 𝐢𝐧 𝐭𝐡𝐞 𝐀𝐈 𝐚𝐧𝐝 𝐜𝐥𝐨𝐮𝐝 𝐛𝐮𝐢𝐥𝐝𝐨𝐮𝐭 𝐰𝐡𝐢𝐥𝐞 𝐫𝐞𝐦𝐚𝐢𝐧𝐢𝐧𝐠 𝐫𝐞𝐬𝐢𝐥𝐢𝐞𝐧𝐭 𝐢𝐟 𝐭𝐡𝐞 𝐂𝐚𝐩𝐄𝐱 𝐜𝐲𝐜𝐥𝐞 𝐜𝐨𝐨𝐥𝐬 𝐨𝐫 𝐬𝐞𝐧𝐭𝐢𝐦𝐞𝐧𝐭 𝐬𝐡𝐢𝐟𝐭𝐬.
The builders power the future; the cash cows become even more efficient by leveraging AI within their own operations — expanding margins, driving automation, & compounding value quietly in the background.
Lately, we’ve seen many quality compounders sold down to compelling valuations, while capital has chased anything labeled “AI,” even pre-revenue businesses now worth tens of billions.
𝘛𝘩𝘢𝘵 𝘥𝘺𝘯𝘢𝘮𝘪𝘤 𝘭𝘪𝘬𝘦𝘭𝘺 𝘸𝘰𝘯’𝘵 𝘭𝘢𝘴𝘵 𝘧𝘰𝘳𝘦𝘷𝘦𝘳.
Eventually, when the market begins to see cracks in AI-related CapEx or re-evaluates growth expectations, capital will likely rotate back toward predictable, high-margin compounders quietly executing in the background.
It’s not about being contrarian against AI — it’s about being contrarian within quality.
The great opportunities often come from owning world-class businesses everyone’s temporarily disinterested in. tweet
Offshore
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EndGame Macro
When the Freight Cushion Disappears
This is the Truckload Rejection Index basically the share of loads carriers are turning down even though they’re already under contract. When that number rises, it’s a sign the freight market is tightening and carriers are starting to get picky again.
What stands out here isn’t just the level, it’s the shape. Rejections drifted along for most of the year, then started climbing in the fall, and now they’ve jumped to a new 2025 high around 9.5%. That tells you the system has a lot less slack than it did a few months ago.
Why this is happening
The biggest driver isn’t a sudden demand boom. It’s capacity quietly leaving the market. After a long stretch of weak rates, marginal trucks get parked, small fleets disappear, and carriers stop running lanes that don’t make sense anymore. Everything looks calm until it isn’t.
There’s also a pricing mismatch at work. Contract rates adjust slowly. When spot rates start to firm, carriers reject lower paying contract freight and chase better opportunities. Rejections rise not because freight is exploding, but because leverage is shifting back toward carriers.
Seasonal friction just pours fuel on it. Year end volumes, weather, tighter delivery windows, none of these matter much when capacity is abundant. When it’s tight, every little disruption shows up in the data.
The real test from here
The key question is what happens after the holidays. If rejections fade back down, this was mostly a seasonal squeeze. If they stay elevated, it’s a sign the freight market has moved into a structurally tighter phase, one that feeds through to shipping costs, supply chains, and eventually prices.
This is an early warning that the cushion is thinner than people think.
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When the Freight Cushion Disappears
This is the Truckload Rejection Index basically the share of loads carriers are turning down even though they’re already under contract. When that number rises, it’s a sign the freight market is tightening and carriers are starting to get picky again.
What stands out here isn’t just the level, it’s the shape. Rejections drifted along for most of the year, then started climbing in the fall, and now they’ve jumped to a new 2025 high around 9.5%. That tells you the system has a lot less slack than it did a few months ago.
Why this is happening
The biggest driver isn’t a sudden demand boom. It’s capacity quietly leaving the market. After a long stretch of weak rates, marginal trucks get parked, small fleets disappear, and carriers stop running lanes that don’t make sense anymore. Everything looks calm until it isn’t.
There’s also a pricing mismatch at work. Contract rates adjust slowly. When spot rates start to firm, carriers reject lower paying contract freight and chase better opportunities. Rejections rise not because freight is exploding, but because leverage is shifting back toward carriers.
Seasonal friction just pours fuel on it. Year end volumes, weather, tighter delivery windows, none of these matter much when capacity is abundant. When it’s tight, every little disruption shows up in the data.
The real test from here
The key question is what happens after the holidays. If rejections fade back down, this was mostly a seasonal squeeze. If they stay elevated, it’s a sign the freight market has moved into a structurally tighter phase, one that feeds through to shipping costs, supply chains, and eventually prices.
This is an early warning that the cushion is thinner than people think.
Truckload rejections continue to surge to 9.46%, a new 2025 high.
LFG! https://t.co/gL3kw3KWda tweet
The Few Bets That Matter
$NFLX used to be a compounder with solid growth, tons of cash flow and a huge market left to tap in.
The Warner Bros deal changes the risk profile. A $70B+ acquisition for a $420B company means leverage and execution risk.
It doesn’t mean failure. It means the market prices in risk and won't give the stock its premium anymore.
If anything, this could turn into a great opportunity given how great management has been and the potential of all the IPs.
But it’s going to take time.
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$NFLX used to be a compounder with solid growth, tons of cash flow and a huge market left to tap in.
The Warner Bros deal changes the risk profile. A $70B+ acquisition for a $420B company means leverage and execution risk.
It doesn’t mean failure. It means the market prices in risk and won't give the stock its premium anymore.
If anything, this could turn into a great opportunity given how great management has been and the potential of all the IPs.
But it’s going to take time.
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Offshore
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Dimitry Nakhla | Babylon Capital®
$MA derives 60% Rev from its payments network
Just a credit card co? Nope
Other 40% flows from Value-Added Services & Solutions (VASS) — high-margin cyber, analytics, & consulting offerings
Best part: VASS growth accelerated annually since 2021 & on track for ~20% YoY in 2025 https://t.co/q2vUxnx37V
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$MA derives 60% Rev from its payments network
Just a credit card co? Nope
Other 40% flows from Value-Added Services & Solutions (VASS) — high-margin cyber, analytics, & consulting offerings
Best part: VASS growth accelerated annually since 2021 & on track for ~20% YoY in 2025 https://t.co/q2vUxnx37V
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Offshore
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Quiver Quantitative
BREAKING: Senator Jon Ossoff has said that there are private conversations to prevent a ban on congressional stock trading. https://t.co/tyZMNSXnvR
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BREAKING: Senator Jon Ossoff has said that there are private conversations to prevent a ban on congressional stock trading. https://t.co/tyZMNSXnvR
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The Few Bets That Matter
Compute providers continue to raise CapEx with $ORCL now planning up to $50B FY26, and $AVGO confirmed that demand for switches & hardware in general are through the roof.
Meanwhile, every actor in the industry confirm that the bottleneck was energy, which can be resolved two ways.
More energy sources or more efficient hardware.
All those points converge to a handful companies selling hardware focused on compute efficiency and optimization, one of them being $ALAB.
And no one talks about this.
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Compute providers continue to raise CapEx with $ORCL now planning up to $50B FY26, and $AVGO confirmed that demand for switches & hardware in general are through the roof.
Meanwhile, every actor in the industry confirm that the bottleneck was energy, which can be resolved two ways.
More energy sources or more efficient hardware.
All those points converge to a handful companies selling hardware focused on compute efficiency and optimization, one of them being $ALAB.
And no one talks about this.
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Offshore
Photo
Dimitry Nakhla | Babylon Capital®
Oracle’s long-term debt has grown at a faster CAGR than its revenue, net income, & free cash flow—a quiet but important divergence
It begs the question: would you feel comfortable owning the entire business?
🤔 $ORCL https://t.co/HaJrf63FRU
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Oracle’s long-term debt has grown at a faster CAGR than its revenue, net income, & free cash flow—a quiet but important divergence
It begs the question: would you feel comfortable owning the entire business?
🤔 $ORCL https://t.co/HaJrf63FRU
BREAKING: Oracle stock, $ORCL, falls over -7% on reports that some of their data centers for OpenAI have been delayed from 2027 to 2028. https://t.co/RIaLaSNgbY tweet
The Few Bets That Matter
RT @WealthyReadings: My problem today is that I can find too many great setups in the market.
$TMDX = flawless.
$BTC / $ETH = bottom vibes.
$KWEB & $BABA = textbook retest.
$ALAB & $NBIS = uptrend reclaim.
$SLB & $HAL = ripping new highs.
$LULU & $NKE = breaking out.
& tons of names still below my buy levels.
Can't catch them all.
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RT @WealthyReadings: My problem today is that I can find too many great setups in the market.
$TMDX = flawless.
$BTC / $ETH = bottom vibes.
$KWEB & $BABA = textbook retest.
$ALAB & $NBIS = uptrend reclaim.
$SLB & $HAL = ripping new highs.
$LULU & $NKE = breaking out.
& tons of names still below my buy levels.
Can't catch them all.
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