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Conor Cunningham, of Melius Research, is an “uber cruise bull.” Why he likes airlines, Booking.com, and Hyatt Hotels, too.

Let’s get the bad news out of the way first: Even travel-stock analysts don’t have secret hacks to get cheap airfare at Christmas, says Conor Cunningham, an analyst at Melius Research who has covered the travel industry for nearly two decades.

Cunningham has something else, however: insights into an industry that he says is far less cyclical than people think. Plus, he has stock picks.

“I view travel as a secular growth industry that is going to grow at a much greater rate than gross domestic product,” he says. “There is a perception that people will change their travel plans at the drop of a hat because of economic fears related to tariffs. But I see a consumer who is changing, and is willing to continue spending on experiences more than goods.”

The numbers back him up. Global air passenger traffic grew by a record 10.4% in 2023, compared with a gain of 3.8% in 2019, before the onset of the Covid-19 pandemic. And nearly two-thirds of people surveyed last year by McKinsey said they were more interested in travel than they had been prepandemic.

“People always ask me when travel demand is going to fall off, and my view is, never,” Cunningham says.

He explained why in a June 16 interview with Barron’s, and offered his views on a variety of travel companies and stocks. An edited version of the conversation follows.

Barron’s: The number of international visitors to the U.S. began declining this spring, with a double-digit drop-off from Canada and Western Europe, according to the U.S. Travel Association. Regardless of the cause, which some blame on U.S. policies, is this a concern?

Conor Cunningham: Europeans and Canadians are still traveling, but they just aren’t coming here in the same numbers. If you take a thousand-foot view, however, you haven’t seen any real change in spending on travel. Besides, a lot of companies are agnostic about where customers travel. Booking.com doesn’t care if you’re going to go to Florida or Mexico when you book a trip. Would I like U.S. inbound traffic to be better? Yes, but it doesn’t make or break the demand profile for travel.

Airline stocks soared after the Covid-19 pandemic, but most couldn’t hold their gains. Yet, they ought to be prime beneficiaries of permanently higher travel demand. What is the issue?

The near-term outlook is challenging because we have seen a pullback in corporate travel, and the oil price has spiked. [Oil prices have since retreated.] But, from a long-term standpoint, I am encouraged because the industry structure has changed for the better, demand is strong, and the strongest players are seeing expanding margins. We forecast 1% growth for airlines this year, and 6% next year.

Things changed post-Covid. Basically, the U.S. government bailed out all the airlines. Those that went into the crisis with strong balance sheets, like Southwest Airlines, couldn’t benefit from that advantage.

Also, it is difficult to operate in the current environment because of increased costs and shortages of both labor and planes. And, the ultra-low-cost carriers (ULCC) that once grew by double digits annually can’t grow that fast anymore. They don’t have the assets to do so.

Historically, if you looked at the margin structure of the industry, the ULCCs were at the high end and Delta Air Lines, United Airlines Holdings, and American Airlines Group were at the lower end. Now that order has flipped. The big carriers have all sorts of benefits connected with their loyalty programs, which gives them an advantage over the low-cost airlines.

What needs to change in the industry is a doubling down on return on invested capital, free cash flow generation, and sustained, controllable margin improvement. That is what it will take for investors to embrace the stocks, and for the stocks to shed their image as merely trading vehicles.

What are your favorite airline stocks?

Of the Big Three legacy airlines—American, Delta, and United—we like the latter two the best, but have Buy ratings on all three, with price targets of $13, $53 and $80, respectively. All three trade cheaply, for well under 10 times enterprise value to Ebitda, or earnings before interest, taxes, depreciation, and amortization. Yes, adjusted earnings per share will decline this year, but we estimate they will rebound in 2026, climbing 23% and 18% for Delta and United, respectively, and 116% for America.

Cruising is another travel-related industry that looks a lot different—and a lot better—since the pandemic. What does the future hold?

The cruise industry accounts for 2% of global travel spend. It is a niche industry with a long runway for market-share gains. It isn’t about Royal Caribbean trying to steal passengers from Norwegian Cruise Line Holdings, but about cruise companies attracting people who might otherwise have gone to, say, Orlando or Las Vegas, and getting them on a boat for the first time. We forecast 8% growth for the industry this year overall.

Product drives a lot of this growth. The Icon of the Seas, the biggest ship in the world, which Royal Caribbean launched a few years ago, is a pretty significant change in the industry. It is a ship that offers something for everybody. And at the same time, Royal Caribbean is bringing you to a private destination where they can continue to monetize a higher percentage of your wallet.

So, you have a product that is significantly different and much better than it has ever been. All the cruise companies are launching new ships with bells and whistles that appeal to a younger demographic. Royal Caribbean, for example, would tell you that 50% of people coming onto their ships are millennials or younger. People are more willing to try a cruise than in the past. Cruises are 15% to 20% less expensive than a traditional land-based vacation, so cruise operators have an opportunity to raise prices.

Which of the cruise stocks do you favor?

I cover Royal, Norwegian, Carnival, and Viking Holdings, and I have Buy ratings on every one of the stocks, with price targets of $270, $24, $28, and $51, respectively. Royal Caribbean and Viking are at the forefront of the industry and are considered best-in-breed right now: Royal Caribbean’s management is dead-set on expanding margins and Viking is a unique asset with customer demographic that make its returns much more resilient than other areas of travel.

But I see an opportunity ahead for Carnival and Norwegian, too. I never would have thought I would become an uber cruise bull, but I am. There is just an underappreciation for how good these companies became in the past couple of years. We’re forecasting double-digit growth in earnings per share for all four cruise operators in 2025, from a 44% increase for Carnival at the high end to 13% for Norwegian. We expect that growth will slow next year, but not by much.

Most people still take land-based vacations, though. Which lodging stocks are most attractive?

People think the sector is hugely consolidated, but that isn’t the case. Marriott International has the most rooms in its network, but that is still only around 8% of the total. This is a highly fragmented industry.

Within the hotel group, Hyatt Hotels has a unique opportunity. Investors tend to think they can own Hilton Worldwide Holdings or Marriott forever, and I wouldn’t fight them on that. Hilton and Marriott are good companies with a long growth profile ahead. But Hyatt is now adopting more of an asset-light business model, which Hilton and Marriott have already done. Hyatt has an opportunity to generate a lot more free cash flow as a result of this change. It trades at a discount to Marriott and Hilton on the basis of EV/Ebitda. You could argue that it should trade at a premium, given that it tends to be more high-end.

What is your view of Airbnb?

Airbnb is a unique company. They caught lightning in a bottle with short-term rentals. Now they have become a verb. But they have become overly reliant on the U.S. consumer and the U.S. market. Places like New York City have banned short-term rentals. The company is running into a lot of regulatory barriers, and its growth has slowed materially.

Airbnb needs to start growing again to command a higher price/earnings multiple. How? My view is that they should invest heavily in other markets. They are doing it now in Japan, and have had some success, but growth has been relatively slow. Other companies have made a lot of headway in alternative accommodations, including Booking Holdings and Expedia’s VRBO. We have a Hold rating on Airbnb.

Why are online travel agencies (OTAs) like Expedia so popular when booking directly gets you more perks and loyalty points? Will they be replaced by ChatGPT and other artificial intelligence chatbots? And, which companies are best positioned?

Booking is a great company; we have a Buy rating and a $5,300 price target on the stock, and expect the company will grow earnings per share by 16% this year and 14% next year. Long term, the opportunity set remains significant as the company broadens out its travel offering.

Most leisure travelers are looking to book a trip once or twice a year. They don’t care about loyalty; they’re going purely on price, which makes OTAs attractive.

Is that person willing to pick up a new app, one based on AI, and book on a platform like that? That would be a change in consumer behavior, and many people aren’t there yet. People are willing to use AI when an AI company such as ChatGPT partners with an OTA. We are already seeing this with Booking and Expedia to some degree. You can use AI to plan trips or summarize reviews. Still, OTAs are entrenched in the public consciousness, and I don’t regard the growth of AI as an existential crisis for them.

OTAs need to expand beyond their reliance on lodging, however, and invest in other areas of travel, whether experience or attractions, or bundling–that is, booking your hotel and rental car both on their platform. How does a company get more of the overall travel wallet? By reducing friction and making it seamless to do it all on their platform.

What is your dream vacation?

For our honeymoon, my wife and I went on safari in Tanzania, and that was so much fun. I would love to go back again and maybe see the gorillas in Uganda.

Happy travels, Conor, and thanks.

In the last quarter of 2024, exchanges’ share of trading fell below 50% for the first time.

A trading platform called IntelligentCross has gotten under Wall Street’s skin.

This year, it passed UBS to become the largest of “dark pools”—those off-exchange platforms where institutions can trade without broadcasting their buying or selling intentions to the world. In February, IntelligentCross handled nearly 3% of the nation’s stock trades.

Some of those trades were for Wells Fargo Securities, which reported sending almost 75% of its market orders for S&P 500 stocks to IntelligentCross in March. By comparison, the big market maker Citadel Securities only got 2.5%, while Nasdaq got less than 1%.

A subsidiary of Stamford, Conn.-based fintech Imperative Ex, IntelligentCross has even bigger ambitions. With the backing of the industry self-regulator Finra, it has been asking the U.S. Securities and Exchange Commission to let it set national stock prices, like an exchange does. Instead of running dark, IntelligentCross prices would become part of marketwide quotes. Then SEC rules would oblige brokers to send it their orders if it has the best prices.

An array of Wall Street players oppose its request, including the market maker Citadel Securities, founded by billionaire Ken Griffin, Nasdaq, and some leading trade groups. Their letters to the SEC say that IntelligentCross handles trades in ways that can favor some traders over others.

With no explanation, the SEC has sat on the proposal for two years. It declined any comment to Barron’s.

“We don’t agree that the IntelligentCross matching process provides either side to a trade with any form of advantage,” says Imperative Ex CEO Roman Ginis. “But it is no surprise that certain detractors of the proposal are claiming so, to maintain their status quo under the current landscape.”

If IntelligentCross gets the SEC’s nod, and gains order flow, then other pools might follow its example. Their combined share of market volume has stayed around 15% for the last five years. Additional flow might come at the expense of stock exchanges. In the last quarter of 2024, the exchanges’ share of trading fell below 50% for the first time, with big market makers handling the rest.

Running a trading venue is a profitable business. This year, analysts expect Nasdaq to earn a cash operating margin of 57% on $5 billion in revenue. Market maker Virtu Financial is expected to earn a 58% margin on $1.8 billion in revenue this year.

Exchanges and pools have different ways of providing traders with liquidity—which is the ability to immediately trade something at the price and amount that you want.

On an exchange, much of the liquidity comes from market-makers, who hold inventory in a stock, with the exchange displaying the prices at which they will buy or sell. A spread between the bid and offer is their profit. The quotes from all 28 exchanges get reported on the consolidated “tape,” so brokers can see the best available price in a stock.

Pools get some of their liquidity from market makers, but mostly they match the order flows of institutional customers. Buy and sell orders typically get matched at the midpoint of the best public quote, with the pool charging a fee per trade. Only the pool’s subscribers see the price of offered trades.

Pools are supervised by Finra and operate under loose rules that the SEC created in 1998, when electronic networks like Instinet began taking some trading volume from exchanges.

Stock exchanges regulate their members and must get SEC approval for operational changes, says Haoxiang Zhu, a finance professor at MIT’s Sloan School of Management who was a top SEC official between 2021 and 2024.

The rules for dark pools allow flexibility, says Zhu. Pools can merely file a note informing the agency of a change in their operations. While an exchange must provide fair access to anyone who wants to trade, a pool can discriminate as long as its trading in any stock remains below 5% of the stock’s total market volume.

That leaves pools freer to innovate. IEX was a pool when it launched the fiber-optic-fenced refuge from high-speed trading that Michael Lewis made famous in the book Flash Boys. Later on, it became an exchange.

OneChronos uses a formula that matches stock trades at the prices where the most volume traded. At PureStream, orders are matched at a percentage rate of market-wide trade events, creating a concurrent stream of filled orders.

These complex protocols are designed to let fund managers accumulate or unload shares without attracting notice. That allows them to get in or out of a big position without moving a stock’s price.

To avoid tipping off predatory traders, institutional traders often split their big orders into pieces that they scatter across trading venues. They will even stagger the orders by fractions of a second, so they hit distant venues simultaneously.

Others in the stock market are watching out for those trades. High-frequency trading firms use algorithms to sniff out the start of an institutional trading program, and then try to front-run the remaining pieces—like people who buy land where they learn a theme park is planned.

Market makers also watch for the waves of an institution’s orders, which can move stock prices and can cause a loss on the market maker’s share inventory. That is why wholesale market makers like Citadel Securities and Virtu Financial make deals to get a retail brokers’ orders. Those orders of small investors generally lack direction, so the market maker can provide better prices to the retail brokers’ customers.

Among IntelligentCross’s lures for big traders are “private rooms”—where a customer like Wells Fargo can set its own rules for trading, and admit only the counterparties it chooses. By screening out high-speed traders, the private room host hopes to get better prices on bigger trades.

“With Intelligent Cross Hosted Pools, you can design a personalized trading environment tailored to your needs,” IntelligentCross advertises. “You decide the who, how, and when.”

A number of buyside firms and brokers have mentioned using private rooms on IntelligentCross or OneChronos, including: Raymond James, Evercore ISI, Jefferies, and XTX Markets.

The exclusivity of private rooms bothers some trading desks. “That liquidity isn’t accessible for the rest of the market,” says Joe Saluzzi, who heads the institutional trading firm Themis Trading.

In an April memo to the SEC, Citadel Securities complained that private rooms can discriminate and run trades in ways they need not disclose, because they keep their volume in a stock below 5% of the market. It said the SEC should lower the 5% threshold that triggers the fair-access rule. The agency had no comment on the matter.

Amid the fuss over its private rooms, IntelligentCross marketing chief Lorna Boucher told Barron’s that well over 90% of the platform’s volume is done in “all-to-all” matching among its subscribers.

“For the last couple of months, we’ve been the No. 1 venue for midpoint executions, across all [pools] and exchanges,” she said. Those trades happen outside of private rooms.

Another innovation at IntelligentCross is its ASPEN matching engine. That is the system whose quotes the pool wants the SEC to make part of nationally displayed prices. Then IntelligentCross will have a “protected quote,” meaning that brokers trying to buy or sell a stock will have to send orders to the pool whenever it posts better marketwide prices than exchanges.

“Not including IntelligentCross-displayed quotes as a protected quote has allowed market participants to effectively ‘ignore’ the IntelligentCross quote, even when it is the best displayed quote in the market,” said Roman Ginis of Imperative Ex.

Finra first asked the SEC to give IntelligentCross a protected quote in December 2022, saying the quotes would appear on a little-used Finra quote display facility. SEC staff members agreed, and recommended approval in August 2023. The next day, SEC commissioners put the proposal on hold, so they could receive additional industry comments.

In the two years since the SEC stayed the approval order, Ginis says that exchanges and other venues have traded some 27.6 billion shares, worth $1.95 trillion, at prices worse than those that were displayed at IntelligentCross ASPEN.

Comments received by the SEC during that time mostly oppose forcing traders to route to the pool’s quotes, because ASPEN has two unusual features: It only matches orders after a delay, and lets traders cancel their order during that interval.

On the surface, ASPEN’s delay is a speed bump like the one pioneered by IEX 10 years ago. At IEX, a fiberoptic coil delays all traffic into its exchange by 350 millionths of a second. That small fixed delay is enough to foil computerized traders who otherwise might see one piece of an institution’s trade on IEX, and then race to other venues to move a stock’s price before other pieces get there.

IntelligentCross delays matching trades by an interval that can vary between 150 and 900 millionths of a second, based on the prior day’s trading.

Generally, the delay is at the longer end, said Citadel Securities in a comment to the SEC. It said that Citadel’s studies of ASPEN’s delay found it was hardly ever shorter than 500 millionths of a second, and 75% of the time it is as long as 800 or 900 millionths of a second. Longer delays make front-running a trade easier, Citadel said.

“In electronic trading, this is an eternity,” said Citadel in an April 3 letter to the SEC. In less than 500 millionths of a second, a computerized trader can see if prices have moved at other venues, then act.

Among the potential actions is canceling a quote. A problem with protecting the pool’s quotes, say Citadel and others, is that IntelligentCross lets traders cancel orders during its delay.

A firm that posts a quote on ASPEN has time to see if prices move at other venues. It can then back out before the ASPEN match. Traders on the other side of the match would have been obliged to send orders to the pool, under the protected-quote rule, but those traders won’t have time pull back their order, say Citadel and other commenters.

A speedy trader posting protected quotes on ASPEN would have a one-sided advantage to avoid losses and front-run others, said Citadel in its April 3 letter to the SEC. That is a valuable subsidy for the dark pool and some of its customers, Citadel said.

Intelligent Cross disagrees. ASPEN doesn’t give an advantage to one side in its matching process, says IntelligentCross founder Ginis, because any trader can cancel his or her order. Those opposing IntelligentCross’s request to join the club of protected national quotes are trying to avoid competing with its better-priced quotes, he suggests.

Finra wouldn’t comment to Barron’s when asked about the IntelligentCross proposal and the fees Finra might earn from hosting the pool’s quotes on its underused display facility. In a March 13 update to its SEC application, Finra says IntelligentCross has tweaked its matching process and addressed all critics’ concerns.

The IntelligentCross proposal has supporters.

Giving the pool a protected quote would bring out more liquidity, says an April comment letter from Point72 Private Investments, an affiliate of Steven Cohen’s hedge fund firm, which describes itself as one of the first investors in the pool’s parent.

The IntelligentCross delay doesn’t favor one trader over another, the SEC was told in an April letter from Eric Swanson, who heads the American unit of XTX, a quantitative market maker based in London.

“The proposal reflects the type of innovation the Commission should be encouraging to make our equities market fairer and more efficient,” he wrote. Swanson told Barron’s that his firm is an investor and customer.

The enthusiasm of XTX for the IntelligentCross proposal fuels suspicion among trading industry executives, who tell Barron’s that the highly automated XTX would be positioned to benefit as a trader posting protected quotes in IntelligentCross’s delayed setting. In white papers, XTX disputes that, saying that delayed-matching venues can promote liquidity for all legitimate fund managers and market makers.

One last concern about forcing orders into the pool is that pools are relatively unregulated.

Traders shouldn’t be forced to use the lightly regulated pools, the capital markets advocacy group Healthy Markets told the SEC. Unlike an exchange, “IntelligentCross wouldn’t need regulators’ blessings to implement changes to its operations, governance, or fees,” wrote the group’s CEO Tyler Gellasch.

Nasdaq, in its comment letter, calls Finra’s proposal a regulatory arbitrage. If a pool wants the quote protection of an exchange, Nasdaq says it should become one—like IEX did—and assume the regulatory burdens of an exchange, too.

“If a pool can just pop up, put its quote on Finra’s display facility and get order protection, why would anyone be an exchange anymore?” a trading firm executive told Barron’s.

Amrize, spun off from Swiss building-materials company Holcim, is a bet on the U.S.

Sticks and stones may break your bones, but for Amrize, recently spun off from Switzerland’s Holcim, cement and rocks are a pathway to profits—for the company and investors.

Amrize, whose name is an amalgam of “ambition rising,” is the top North American cement producer and a leader in “aggregates,” the crushed rock used in construction. It also has a large commercial roofing business. All three have favorable dynamics. It was cast off by Holcim, an international building materials company, on June 23, when it began trading on the NYSE.

The company aims to generate mid- to high-single-digit annual revenue growth over the next three years and produce roughly 10% gains in pretax cash flow, while steadily expanding margins. This would represent some of the best growth in the industry. The company’s stock, at around $49, trades for about 19 times projected 2025 earnings and a more reasonable 16 times projected 2026 earnings of $3 a share. The appealing narrative, combined with a reasonable stock price, could make Amrize a winner.

“In our view, Amrize offers an attractive, all-American growth story,” RBC Capital Markets’ Anthony Codling wrote in initiating coverage. “The story has only just begun.”

The story starts with Holcim. Climate-conscious European investors have penalized the company since cement production is carbon-intensive, and Holcim figured its North American business would get a better reception in the U.S. market, where investors are less wedded to sustainable investing.

Amrize is one of the larger spinoffs in the past few years, with a market capitalization of $28 billion, plus about $5 billion in debt. Based in Chicago, the company has a sufficiently large market value to be eligible for inclusion in the S&P 500 index . The minimum now is $22.7 billion. Amrize’s Swiss domicile is not an obstacle to index inclusion. Insurer Chubb, for instance, is domiciled there.

The 58-year-old Jan Jenisch, Amrize’s CEO, is considered a management star in Europe, where he delivered market-beating results at Sika, a Swiss industrial company, from 2011 to 2017, and then as CEO of Holcim starting in 2017.

“This is the world’s most attractive construction market, and we feel there is no company better positioned than Amrize,” Jenisch tells Barron’s in an email. “Now as an independent, publicly traded company, we have the focus, financial firepower, market-leading operations, and broad range of advanced branded solutions to unleash our full potential organically and with value-accretive M&A.”

The aggregates market has long been an investor favorite in the U.S. Cement, which is mixed with water, sand, or aggregates to make concrete, is economically sensitive, but suppliers benefit from favorable supply/demand dynamics. It’s nearly impossible to get the permits to build a new plant due to environmental roadblocks and community opposition. The last new cement plant was Amrize’s facility in Ste. Genevieve, Mo., which is the largest in the country, with over five million tons of annual capacity, about 20% of its North American output. The centrally located facility on the Mississippi River was completed in 2009. As a result, imports fill the gap and account for about 20% of U.S. cement demand.

“The North American cement market is attractive, misunderstood, and undersupplied,” RBC’s Codling tells Barron’s. He has an Outperform rating and price target of $61 on Amrize shares, up 22% from Wednesday’s close.

It’s a similar situation with aggregates, where local producers dominate due to the high cost of transportation relative to prices of just $50 a ton. Amrize has 1,000 sites and facilities throughout North America, including 18 cement plants. In aggregates, it’s No. 1 or 2 in 85% of its markets, with 462 operations.

Codling isn’t the only bullish analyst. Several have Buy ratings and price targets around $60 a share, including Keith Hughes of Truist Securities, who wrote that the U.S. listing could help Amrize’s valuation. Hughes cited European companies like CRH, which specializes in building materials, and Ferguson Enterprises, which is focused on plumbing supplies, that shifted their primary listings to the U.S.

At its investor day in March, Amrize made financial projections through the end of 2028. It sees 5% to 8% annual revenue growth, 8% to 11% growth in earnings before interest, taxes, depreciation, and amortization, or Ebitda, and over $8 billion of free cash flow, an average of $2 billion a year, up from $1.7 billion in 2024. There was no projection of earnings per share. Codling says revenue and Ebitda projections are some of the higher ones among peers. And as an independent company, Amrize can focus on growth “without having to compete internally for capital within a group where cash returns and sustainability rank above growth,” he wrote.

The company’s priorities, in order, are capital expenditures, acquisitions, dividends, and stock buybacks. The company hasn’t declared a dividend yet or given guidance on a payout ratio. Codling sees a payout ratio of 30% and an initial annual dividend of 82 cents a share, resulting in a yield of 1.6%. Codling estimates about $300 million of annual buybacks, or about 1% of the shares outstanding. If the stock languishes, Amrize could get more aggressive with buybacks.

Institutional investors tend to value cement and aggregates makers based on Ebitda. Amrize trades for about 10 times projected 2025 Ebitda and nine times next year’s estimate, well below Martin Marietta Materials and Vulcan Materials, U.S.-focused aggregates producers that trade at about 15 times 2025 Ebitda and 30 times earnings. CRH has a comparable valuation to Amrize, but differs because it has operations in Europe.

Spinoffs don’t generate the hype of IPOs, and Amrize doesn’t fit hot themes like artificial intelligence. But that shouldn’t detract from a company well situated in three attractive businesses that is still building an investor base.

It may be wise to buy now before Amrize gets better discovered.

Stockpickers: Smaller asset managers shun the investment crowds

Niche funds are good for divestment, but not without risks

Trillions of pounds worth of assets are managed by London’s listed investment houses. Their purpose is to deliver financial security for clients by growing and preserving the value of their capital.

Larger managers, such as Legal & General, Aberdeen, M&G and Schroders, offer access to a wide range of asset classes and geographies, can handle the largest mandates and tend to focus on mainstream markets.

Smaller players offer distinctive investment approaches and niche and specialist options for diversification, often catering to wealthy individuals with an appetite for impact investing or risk, or who carry tax burdens that are suitable for easing through venture capital trusts and enterprise investment schemes. These enable investors to earn tax breaks in return for providing capital to young British companies. 

Among these smaller managers are Polar Capital, whose offering includes technology, scientific and financial funds. Foresight specialises in infrastructure and private equity opportunities that can help tackle climate change, and Liontrust with its range of funds focused on sustainability. A clue as to what makes Mercia Asset Management stand out is in the name of its range of VCTs: Northern.

This manager steers clear of overfished London and south-east England, preferring to find opportunities in regional towns and cities — 80 per cent of its investment activity is outside south-east England — where it can identify and support high-growth, ambitious businesses on attractive valuations, and which meet its impact and socially responsible requirements. 

Investing in niche areas and cutting-edge smaller companies is not without its risks, and while there is demand in the market for differentiation and diversification in terms of strategies and processes, good performance is essential to keeping fund flows and management fees coming in. 

BUY: Mercia Asset Management (MERC)

Inflows accelerated in the final quarter, writes Mark Robinson.

Mercia Asset Management slipped back into the black at its March year-end, as the specialist asset manager increased its cash margin. Performance was aided by economies of scale, and evidenced by a 390 basis point rise in the adjusted margin to 22.1 per cent.

It’s too early to judge whether this vindicates the “Mercia 27”, a 100 per cent growth target, as it was only outlined a year ago. But the scaling of the fund management business is under way, and it wouldn’t be fanciful to suggest that Mercia has already made strides to meet its Ebitda target of £10mn by full-year 2027.

The group realised a fair-value loss of £300,000 in the period, against a £4.5mn gain in the previous year, though fair-value movements strengthened appreciably in regard to unrealised assets. In contrast to many industry peers, Mercia increased its third-party funds under management (FUM) by around 10 per cent on an organic basis to £1.8bn, with no redemptions recorded. Venture FUM rose by 1.6 per cent to £928mn.

Meanwhile, the direct investment portfolio’s fair-value assessment stood at £126mn, against £117mn last time around. Management intends to offload about 70 per cent of these direct investments over the next couple of years, so exit activity is set to rise in the near term. Some mandates are moving into the realisation phase within its equity and debt funding businesses.

The bulk of the inflows were recorded in the final quarter of its financial year. They reflected both existing mandates and new fund management contracts. The period also saw successful Venture Capital Trust and Enterprise Investment Scheme fundraisings. Given the timing, it is unlikely that the related impact of the inflows on revenues is fully reflected in these figures.

Mercia’s ability to rejig its business focus is aided by an unencumbered balance sheet. And a number of funding rounds were completed following the period end. The group carries no debt and exited full-year 2025 with £39.3mn in net cash. This has underpinned a 5 per cent increase in the proposed final dividend, along with the commencement of an annual share buyback policy of up to £3.0mn.

It’s a niche offering for investors: venture capital funding, private equity and debt finance to high-growth regional UK small and medium-sized enterprises. Consequently, sell-side coverage is limited, but Mercia trades on a 45 per cent discount to the consensus target price, and by 23 per cent to net assets, giving rise to a price/book ratio of 0.7 times. We maintain that Mercia is undervalued, or maybe unfairly overlooked.

BUY: Currys (CURY)

The electronics retailer’s turnaround strategy is paying off despite ongoing cost pressures, writes Valeria Martinez.

Currys is showing why it was the right call to push back against Elliott Management’s takeover approach last year. The once-struggling retailer has turned a corner, with chief executive Alex Baldock’s turnaround plan starting to deliver. A sharp rise in free cash flow and profits has allowed the group to reinstate its dividend after a two-year break. 

While the company is still dealing with cost pressures, from high inflation to rising national insurance contributions, it has done a decent job of managing them so far. Another £32mn in annual costs is expected from last year’s Autumn Budget, but Currys plans to offset this by cutting central costs and automating and offshoring parts of the business.

Helpfully, demand has been resilient despite the wider economic backdrop. UK and Ireland like-for-like sales rose 4 per cent in the year to May 3, with operating profits up 8 per cent to £153mn. Margins held steady at 2.9 per cent.

A growing focus for Currys is more profitable revenue streams, such as credit, repairs and connectivity services. These so-called “solution” sales rely less on one-off product purchases and tend to deliver better margins. Revenue from these areas rose 9 per cent to £814mn last year, and Panmure Liberum estimates they now make up 28 per cent of UK and Ireland revenue. 

Net cash stood at £184mn at the year end, excluding leases and pensions. When accounting for a £103mn pension deficit, the net position is now £81mn, which Panmure Liberum analyst Wayne Brown said is £901mn better than six years ago. “The prospects for buybacks this year are very real,” he said, though they are likely to hinge on the outcome of the pension triennial review due later this year.

The shares are up more than 70 per cent over the past year, yet still trade at just 11.4 times forward earnings. That’s well below their five-year average of 31.7 times.

HOLD: Wynnstay (WYN)

Firm farm gate prices underpin the agricultural supplier’s interims, writes Julian Hofmann.

Good farm gate prices this year for all agricultural products has meant a decent profit harvest for suppliers to the industry. Feed and equipment supplier Wynnstay has reaped the benefit, reporting the same amount of profit in its first-half results as it managed for the whole of last year.

The half-year results are typically the highest point in the company’s annual working capital cycle as it stockpiles products in advance of the spring planting season. This meant the company’s business segments in fact reflected the vagaries of the preceding season.

For instance, feed and grain revenue more than doubled to £900,000, but grain trading was down 13 per cent as the poor harvest in 2024 worked its way through the supply system. In the meantime, the company sold off its Twyford mill and has outsourced milling for its poultry feed.

Arable profits tripled to £1.4mn on the back of better fertiliser prices and favourable spring planting conditions. Meanwhile, the company’s network of 51 stores generated a higher profit of £3.1mn with both footfall and margins remaining stable.

The company is midway through project Genesis, which is its plan to simplify the business and improve returns on capital consistently across the group and to invest where supply is constrained — Wynnstay’s investment in a new fertiliser facility in Avonmouth is part of this strategy.

Wynnstay’s shares have started to recover after a rocky couple of years. The price/earnings ratio of 13.6 for this year reflects its gradual reorganisation. However, until there is evidence of margin improvement, we remain cautious.

Warning was handed to EU trade commissioner at Washington meetings

The US has threatened to hit EU agricultural exports with 17 per cent tariffs in a twist to its trade conflict with Brussels, three people briefed on the discussions said.

The eleventh-hour move, which EU officials characterised as an escalation of the transatlantic dispute, came ahead of a July 9 deadline to agree a deal between the two trading giants.

US President Donald Trump imposed a 20 per cent “reciprocal”  tariff in April but reduced it to 10 per cent until July 9 to allow for talks.

Until recent days, EU officials had been expecting that talks with the US would hold duties at the baseline rate.

It was unclear if the 17 per cent on foodstuffs would be in addition to the other tariffs announced by Trump or instead of them.

Trump has demanded that Brussels give American companies wide-ranging exemptions from regulations and cut its trade surplus with the US, but EU officials have rejected Washington’s latest proposals on any such exemptions and food tariffs.

The EU is trying to secure its own carve-outs for some products. One Brussels official said aircraft parts and spirits are among goods for which the bloc is seeking exclusions.

They added that the two sides were working on a five-page draft “agreement in principle”, but this currently has very little agreed-upon text in it.

Ursula von der Leyen, the European commission president, said on Thursday that she hoped for an agreement in principle that would allow the sides to keep talking pending a final deal. 

However, Washington is pushing countries to agree binding deals by Trump’s deadline. 

Maroš Šefčovič, the EU trade commissioner, was warned of the proposed 17 per cent duties on agrifood on Thursday during meetings in Washington. The 27 member-state ambassadors were informed on Friday.

The value of EU agrifood exports to the US, including products such as wine, totalled €48bn last year. 

Šefčovič has repeatedly characterised the changing of EU regulations to suit the US as a red line. However, the EU is also on a deregulatory drive, weakening some environmental laws.

EU countries are divided between accepting some higher tariffs in return for a period of certainty and those who wish to retaliate to put pressure on the US to compromise.

Friedrich Merz, chancellor of Germany, the EU’s biggest and most export-dependent economy, has been pressing the commission, which runs trade policy, to settle for a quick deal. He is anxious for exemptions from Trump’s sectoral tariffs of 25 per cent on vehicles and 50 per cent on steel.

However, several ambassadors intervened in Friday’s meeting to press for stronger action against Washington, according to two people briefed on the meeting. 

Two EU diplomats said they had been told that the US had sketched out three scenarios for July 9: Countries with an “agreement in principle” would keep the 10 per cent tariffs, with possible further tariff relief at a later stage; for countries that failed to reach such an agreement, the tariffs would return to the level announced in April until a deal was struck; higher tariffs would be applied to countries that the US believes are not negotiating in good faith.

As the EU prepares its possible retaliation for US duties on its products, member states have already approved counter-tariffs on €21bn of annual US exports from July 14. The commission is assembling a package of €95bn more, including on aircraft and food.

A commission spokesperson said: “The EU position has been clear from the outset: we favour a negotiated solution with the US, and this remains our priority . . . At the same time, we are preparing for the possibility that no satisfactory agreement is reached.”

The White House has yet to respond to a request for comment.

On-board helpers, bad-weather suspensions, but no crashes. WIRED asked experts to grade Tesla’s Austin autonomous taxi service—and, crucially, how to know if the system is safe.

Whether due to consumer backlash or an aging EV lineup, or both, Tesla sales have again seen a global plunge, this time 13 percent last quarter compared to the previous year—proof that the electric automaker hasn’t yet turned around a dismal year that saw public opinion of controversial CEO Elon Musk plummet. It could mean Tesla faces a second straight year of falling sales.

And yet: Tesla is still the world’s most valuable automaker by market capitalization, worth some $990 billion. At least some of that market confidence is likely traced to the happenings of June 22, when Tesla finally began allowing paying passengers to ride its autonomous vehicle service in Austin, Texas.

The service rollout has been fairly smooth. If the metric for success is “no crashes,” mission accomplished: There have been no public reports of crashes or fender-benders involving the robotaxis. The select few riders who have been allowed inside them have praised the service online, which for now costs just $4.20 a ride. (The price seems to be a weed joke.)

But there are plenty of caveats. For one thing, the program’s “early riders” appear to be Tesla influencers, online content creators who have financial stakes in the company or who run media businesses that tend to cheerlead for Tesla and/or electric vehicles. Tesla has not said when it will open the service to members of the public. (The company, which disbanded its PR team in October 2020, did not respond to any of WIRED’s questions.) For another, Tesla’s area of operations is notably smaller than Alphabet subsidiary Waymo’s, which began offering robotaxi service in the city through the Uber app in March.

For one more, there are plenty of humans involved in this driverless service. Tesla has a safety monitor in the front passenger seat of its robotaxis, who, according to online videos, seems poised to intervene if the technology makes a mistake. And Tesla has been less than transparent about its use of human teleoperators, who can either remotely drive or remotely assist its driverless technology. (The former is likely much safer than the latter, experts say, but Tesla hasn’t said which approach it uses.)

Missed Milestone

“Tesla has what I call the trifecta of babysitting going on right now,” says Missy Cummings, who researches autonomous vehicles at George Mason University, and has herself been the subject of Musk’s displeasure. The human contributions likely make Tesla’s service much safer, she says—something for which the automaker should be praised. In fact, keeping babysitting humans in the drivers’ seat is exactly what rivals Waymo and Zoox did in the early phases of their testing. (Waymo now offers robotaxi service in five cities; Zoox has said it will start service in Las Vegas this year.) “I want to encourage them to keep doing that,” she says.

But, for Cummings, the choice is likely evidence that Tesla is behind its competitors. “If learning to deploy a self-driving car system was grades K through 12, Tesla is in first grade,” she says. “Everything we're seeing in Texas suggests significant immaturity in self-driving operations.”

This means, too, that Tesla hasn’t hit the milestone Musk promised back in January, when he told investors that the company would launch “unsupervised full self-driving as a paid service in Austin in June…no one in the car.”

“This is a demo or test using safety drivers—it’s not an [autonomous vehicle] deployment,” says Bryant Walker Smith, a law professor at the University of South Carolina who studies autonomous vehicles. “Tesla is splashing around in the kiddie pool and everyone is asking where it’s going to place in the Olympic swim competition.”

Bloopers and Sensors

Tesla has kept quiet about many of the particulars of its technology. And it’s hard to reach definite conclusions about its tech from social media posts uploaded by riders. But some of those posts appear to show less-than-smooth rides. In one video, a robotaxi attempting to make a left turn appears to cross a double yellow line into oncoming traffic. In another, a robotaxi apparently fails to detect a UPS truck stopping and reversing to park, and the front seat safety monitor has to intervene to stop the car.

One YouTuber uploaded a video showing a robotaxi “phantom braking”—suddenly coming to a stop for no apparent reason—a phenomenon that’s also been flagged by hundreds of users of Tesla’s less-advanced Full Self-Driving (Supervised) feature and investigated by the federal government. Unlike actual self-driving technology, Full Self-Driving (Supervised) requires users to keep their eyes on the road.

The service pauses for bad weather, according to Tesla’s website. One YouTuber had their ride halted for a rainstorm; the robotaxi dropped the rider in an Austin park as the wind began to whip around them. Minutes later, according to a video, the same Robotaxi picked the creator up to continue their ride. However, contradicting the above, one poster has reported the cars perform “FLAWLESSLY” in heavy rain.

The early bloopers aren’t surprising, experts say. Full Self-Driving (Supervised) requires a human driver to intervene when needed, and it appears robotaxi is the same right now, says Philip Koopman, a professor at Carnegie Mellon University who studies autonomous vehicle safety. The slip-ups the robotaxis have made are not unlike what human drivers do on the road, he says. But autonomy’s value add is supposed to be safety, so it makes sense that the videos—and the tech’s “rough edges”—are making people nervous.

Camera Quandary

The launch has reopened public debates about a core tenet of Tesla’s technology: its use of cameras alone to perceive and “make decisions” as it drives. Musk and his company have long argued that artificial intelligence, supplemented by the data collected by cameras, is sufficient to operate a safe, driverless car. The CEO has promised that all of its cars can become autonomous without any modifications, with a simple push of updated software (though Tesla also quietly reneged on this claim). Other companies see more expensive sensors, including radar and lidar, as important validators and support. (Lidar has dramatically dropped in price; many Chinese automakers are now including the sensor on every car that they sell.)

Advances in large language models have convinced some in the auto industry that Musk’s approach is the right one. In a podcast interview published this week, Kyle Vogt, the former CEO of General Motors AV unit Cruise, argued that images from multiple vehicle-mounted cameras plus advanced models can be “really accurate.” (Vogt stepped down from Cruise after one of its driverless vehicles hit and dragged a pedestrian. The company was not transparent with regulators about the incident, a report later found.)

For Cummings, the reports out of Austin have confirmed her beliefs that cameras alone aren’t enough to operate a car autonomously. “There is no robotic system that exists that is safety critical—meaning people can die [using it]—that has ever been successful on a single sensor strain,” she says. “It's unclear why Tesla thinks that they can do what has never before been done.”

One metric that might reveal Tesla’s internal success: how quickly it expands. Musk boldly said in May that Tesla will have hundreds of thousands—and perhaps up to a million—autonomous vehicles on the road next year. The company seems motivated. According to a job posting, Tesla is hiring for additional vehicle operators, who are paid to drive cars around Austin to collect data. But, of course, Musk is no stranger to deadlines unmet.

The French luxury group is also the owner of Paris Match, Le Parisien and Les Echos.

: LVMH Moët Hennessy Louis Vuitton is continuing to expand its media footprint with the acquisition of French media group Bey Médias.

Financial details of the deal were not disclosed.

The luxury group was already a minority shareholder of the company, which publishes daily newspaper L’Opinion and financial news website L’Agefi.

It has bought the stakes of founder Nicolas Beytout as well as those of other shareholders including Théthys, which is owned by L’Oréal’s Bettencourt founding family; American businessman Ken Fisher, and Dow Jones, the group owned by media titan Rupert Murdoch.

According to sources with knowledge of the matter, the acquisition was done through the group’s Ufipar subsidiary. L’Opinion and L’Agefi will be in an entity distinct from the Les Échos – Le Parisien group.

It is understood that the publications’ editorial structures and teams would remain in place. Beytout will continue to serve as the media group’s president as well as president and publishing director of L’Opinion, with Rémi Godeau remaining as editor in chief. Meanwhile, Alexandre Garabedian is staying as editorial director of L’Agefi.

L’Opinion and parent company Bey Médias were created in 2013 by Beytout, former president of Les Echos – purchased by LVMH in 2007 – and former editorial director of Le Figaro. At the time, they received financing from the French luxury group to launch.

Known for its liberal and pro-European stance, it has a partnership with Dow Jones-owned Wall Street Journal, allowing it to translate and publish articles drawn from the American publication.

In 2019, Bey Médias acquired L’Agefi, a 114-year-old publication then owned by Artémis, the Pinault family’s holding company.

Last year, the media group entered unsuccessful negotiations with Czech billionaire businessman Daniel Kretinsky. Prior to that, it was in talks with French-Lebanese global transport tycoon Rodolphe Saadé, who owns several media including business news site La Tribune and TV channel BFMTV.

LVMH also owns French people magazine Paris Match, acquired in October, and has owned daily newspaper Le Parisien and its national counterpart, Aujourd’hui en France, since 2015.