TheChek News Flow

Nobody goes there anymore, it’s too crowded. So said that late, great philosopher, Yogi Berra.

Case in point: Europe. And it isn’t just Barcelona, where locals protested the hordes of tourists last summer by spraying them with water guns.

Some contrarian-minded investors have rushed into European stock markets in recent months, notwithstanding the persistently sluggish economies on the continent, resulting in strong gains in those bourses. Most likely, they were drawn to Europe by the equities’ extreme undervaluation after longtime laggard returns. On that score, the MSCI EMU index of large- and mid-cap European stocks trades for about 14 times expected earnings for the next 12 months, less than two-thirds the 22 times forward price/earnings multiple on the S&P 500 index.

Many of these investment “tourists” now find they have too much company and are taking their winnings and going home. But more experienced global investors can still find compelling values among individual European stocks rather than the broad exchange-traded funds that first attracted the tourists.

For all the talk of American exceptionalism, European stocks have outpaced U.S. stock indexes of late, and that’s despite the dominance of the big technology names among the latter. Among major ETFs of the sort that would populate Barron’s readers’ portfolios, the Vanguard FTSE Europe ETF (ticker: VGK) has returned 9.96% in 2025 through Wednesday, according to Morningstar data, better than twice the 4.61% year-to-date return of the Vanguard S&P 500 VETF (VOO). The iShares MSCI Germany EWG +0.19%

ETF (EWG) has returned an even greater 13.32% so far this year.

Bank of America’s latest survey of fund managers, released this past week, found that 12% of respondents were overweight European stocks, the highest percentage of accounts since last June. While relatively low, that still represented a big swing from 36% having been underweight Europe just two months earlier, as bargain hunters were attracted to the vastly cheaper valuations of European equities compared with the Magnificent Seven stocks that dominate the U.S. market.

That investors would venture to Europe might seem counterintuitive, especially since Germany, the continent’s largest economy, is facing its third year of recession and has a crucial election ahead this Sunday. Still, the DAX hit a record this past Tuesday, and was up 28.5% from a year ago at Thursday’s close.

Intel’s Future Is Still Murky. Don’t Chase the Stock.

Intel shares have surged over the past week on the Trump administration’s promise to support domestic chip manufacturing and reports that semiconductor companies are weighing options to purchase parts of Intel.

Upon closer examination of the developments, investors should be cautious. The likelihood of any transformative deals in the near term is low, and not much has changed regarding Intel’s challenges. It may be wise for investors to not chase the stock.

The rally started early last week after Vice President JD Vance vowed more chips would be made in the U.S. during his speech at an AI conference in France. Intel stock gained further steam on reports from Bloomberg and The Wall Street Journal that Taiwan Semiconductor Manufacturing was considering taking a stake in Intel’s chip factories, while Broadcom was looking at buying Intel’s product business. All told, Intel stock rose by nearly 40% over five trading sessions through Tuesday.

But the flurry of news reports at times contradicted each other, with one saying the Trump administration raised the idea of TSMC taking a controlling stake in Intel’s chip factories, while another citing a White House official saying Trump would not likely support such a deal.

The most important thing is the common thread of all the reporting included phrases like “very early stages,” “informally discussed,” and no formalized structure. It is clear the discussions aren’t advanced.

Intel and TSMC declined to comment on the reports. The White House and Broadcom didn’t respond to a request for comment.

Speculation about a major Intel deal is nothing new. Last fall, there were reports of Qualcomm approaching Intel about a takeover. Nothing has happened since.

The fact is the prospects for a transformative Intel deal still face two primary challenges that will be difficult to overcome.

First, any major transaction for a purchase of Intel’s product group would need approval from global regulators. China blocked a much smaller $5 billion acquisition of Israel’s Tower Semiconductor in 2023, suggesting the Asian country isn’t keen on any acquisition that would help the U.S. chipmaking industry. It is unclear how China would then be amenable to Broadcom purchasing Intel’s product business.

Second, there isn’t an easy way to separate Intel’s chip manufacturing operations. In 2024, Intel Foundry generated $17.5 billion in revenue, down 7% versus the prior year, while losing $13.4 billion. Financially, it makes little sense for an external buyer to purchase a financial black hole with massive losses that isn’t viable on a stand-alone basis. It also doesn’t help sentiment about Intel’s foundry road map when Michelle Johnston Holthaus, interim co-CEO of Intel and CEO of Intel Products, repeatedly reiterates she would potentially use TSMC for data center CPUs in the future if it “made sense.”

All this comes as Intel still doesn’t have a permanent CEO after Pat Gelsinger retired last December. Intel would be better served finding a competent leader with technical expertise to figure out a turnaround strategy and stabilize the business. The chip maker shouldn’t discuss selling itself for parts while trying to find a quality CEO, especially when a deal may not even be possible.

For investors, it may be prudent to take some gains. Waiting for something that may not happen could prove disappointing.

In the world of luxury bags, it isn’t often that a star quarterback is a trendsetter. Yet when Philadelphia Eagles MVP Jalen Hurts’ Super Bowl Sunday kit included a Coach Empire bag, it was the latest triumph for the brand. Its owner, Tapestry, is thriving too.

Last April, the Federal Trade Commission sued to block Tapestry’s purchase of Michael Kors owner Capri Holdings, with the deal ultimately falling apart six months later. At the time, Barron’s argued that Tapestry would be just fine without the deal, while Capri shares could fall out of fashion. Since then, Tapestry stock has more than doubled, while Capri is down 25%.

This week, the two companies’ diverging fortunes were on display again, as Tapestry stock climbed after it announced it would sell its Stuart Weitzman footwear brand, and analysts had a lukewarm reaction to Capri’s investor day.

On Wednesday the company said Caleres —owner of Famous Footwear and Naturalizer— would buy Stuart Weitzman for $105 million in an all-cash deal set to close this summer. Tapestry CEO Joanne Crevoiserat said the move would allow Tapestry to “maintain a sharp focus on our largest value-creation opportunities.” The news comes less than two weeks after Tapestry’s beat-and-raise quarter.

“We have a positive view of the transaction, as it leaves Tapestry well​-​positioned to focus exclusively on the handbag market, where the company has stronger margins and strong global growth prospects,” wrote Barclays analyst Adrienne Yih, who argues the shares should trade up to $100 from a recent $86.49.

It makes sense for Tapestry to focus on Coach, which has been a standout in the affordable luxury handbag market.

“Coach’s New York bag family, which includes the Empire, the Brooklyn, and Times Square Tabby, highlight’s the brand’s innovation capabilities,” writes Jefferies analyst Ashley Helgans, who reiterated a Buy rating and $95 target on the shares, noting that if Coach’s momentum continues, there could be upside to consensus estimates for the next few quarters. “By leveraging its customer data, innovation platform, and brand management, management is able to provide newness not only through both new products, but also relaunching and modernizing vintage items and building on existing winners.”

By contrast, Capri, which tumbled after reporting disappointing earnings earlier this month, failed to impress with its analyst day, where it laid out a plan to turn around its key brands, increase full-price sales, and cut costs.

“Capri set long-term targets that we consider to be aspirational, especially for margins,” writes Raymond James analyst Rick Patel. “It’s an ambitious plan at an uncertain time as Capri contends with global macro headwinds, heightened competition, and fallout from execution missteps over the last one to two years.”

“Aspirational” and “ambitious” aren’t compliments—Patel thinks Capri is setting loftier goals than it can deliver.

Similarly, Telsey Advisory Group CEO Dana Telsey writes that she still thinks “there is significant work to do across the portfolio as management looks to stabilize the business over the next two years.”

Nor does Capri look cheap, trading at nearly 20 times anemic forward earnings, roughly double its five-year average. Tapestry trades around 17 times, above its average but bolstered by expected double-digit earnings growth this year and next.

Fashion is notoriously fickle. Coach may not always be trendy, and Capri can make a comeback. For now, however, it still seems like Tapestry has it in the bag.

It’s not all about oil, one of the president’s top priorities. Why natural gas leads our list of the industry’s most promising investments. Even some solar and wind stocks could climb.

Energy has taken center stage in the first month of President Donald Trump’s second term. It’s the linchpin of his plan to tame inflation, because oil drilling can drive down prices at the pump. And Trump sees oil and gas as America’s most powerful asset in trade negotiations. The U.S. has an abundance of those resources, and some of its biggest rivals, like China, don’t.

Energy has taken center stage in the first month of President Donald Trump’s second term. It’s the linchpin of his plan to tame inflation, because oil drilling can drive down prices at the pump. And Trump sees oil and gas as America’s most powerful asset in trade negotiations. The U.S. has an abundance of those resources, and some of its biggest rivals, like China, don’t.

“We’re going to make more money than anybody’s ever made with energy,’’ Trump said in the Oval Office earlier this month.

It’s less certain that energy investors will be rolling in dough, too.

Trump’s early moves in energy have been dramatic and controversial—and haven’t been great for stocks. Some, like his decision to halt already-approved payments on energy loans and grants, quickly landed in court. Others, like his tariffs on Canadian and Mexican energy and other products, have unsettled American companies and upset allies. Those tariffs are on hold until early March. But the fallout, and the possibility that Trump will remove sanctions on Russian oil, have knocked oil prices and stocks lower. The Energy Select Sector SPDR exchange-traded fund, which mostly reflects shares of large oil producers, is down 1.2% since the day before his inauguration, and up 3.8% since he won the election, versus the S&P 500 index’s 5.8% gain.

Some of the best opportunities in energy align with Trump’s interests, but they tend to be in areas that have demand drivers beyond federal policy. As things stand today, natural gas looks best positioned among energy segments, followed by, in order, nuclear power, oil, solar, and wind.

The centerpiece of Trump’s plan has been to declare an energy emergency, which he says gives his administration broad powers to do things like approve pipelines and power plants without going through the usual regulatory hoops. Trump describes the state of American energy in dire terms, calling it “dangerous” and “precariously inadequate.” But there’s ample evidence to the contrary. U.S. oil production is at record highs, and the country produces so much natural gas that suppliers had to curtail production last year to avoid an all-out crash. Even with those production cuts, natural-gas prices fell to their lowest inflation-adjusted levels ever.

“There’s not an emergency, as an objective matter,” says Ari Peskoe, director of the electricity law initiative at the Harvard Law School Environmental and Energy Law Program. If the U.S. were really in an emergency situation, Trump wouldn’t have also curbed permits for new renewable-energy resources, and made it easier for oil and gas producers to send U.S. resources overseas, he says. Peskoe adds that it’s “not at all clear” which special powers Trump’s emergency order will give him. Any attempt to bypass normal permitting will probably end up in court. If Trump loses there, it could markedly slow some of his plans.

Another problem with his orders is what they leave out. In defining energy sources subject to his emergency declaration, Trump listed every major source of electricity and combustion in the country except three: wind, batteries, and solar. But renewables are the fastest-growing electricity sources in the country, accounting for more than half of new generation. A recent Dallas Federal Reserve report said that solar and battery power “saved the Texas grid last summer.” Solar output in Texas rose more than 40% in the brutally hot summer of 2024 from 2023 levels, and battery storage nearly tripled. Even though power loads hit a record in August, state regulators didn’t have to ask consumers to cut back their electricity use even once, after having to do so 11 times in 2023.

To expand on that success, renewables could use help from the federal government in areas like speeding the rollout of new electricity transmission lines—one factor holding back deployment of renewables today. But the Trump administration’s early moves don’t point to much help for renewables.

Asked why wind and solar didn’t make the list of important energy sources, a White House official wrote that Trump will support “any energy infrastructure projects that increase our energy supply and security, whether it’s the Keystone XL Pipeline or a similar project, because a reliable energy supply is essential to our economy, national security, and well-being.”

When it comes to energy, Trump is clearly focused on expanding fossil-fuel development and transportation. As evidenced by the past month’s drop in oil stock prices, choosing winners won’t be as easy as picking his favorite industries.

Natural Gas

Natural gas has long played second fiddle to oil. Historically, its price was even pegged to crude prices. But it’s now taking on a more central role in U.S. energy policy, and the stocks of producers and exporters have benefited handsomely.

The industry has two major growth drivers in the years ahead: growing exports of liquefied natural gas, or LNG, to Europe and Asia, and rising electricity demand from artificial-intelligence data centers and industrial uses. Together, those industries are likely to boost natural-gas demand 10% to 20% by 2030. An end to sanctions on Russian gas could dent that growth but not derail the investment thesis.

LNG faced some uncertainty last year after President Joe Biden paused approvals of new LNG export terminals to study their environmental and economic impacts. Enough terminals had already been approved to ensure that the industry’s capacity would double by 2028, but the industry’s fate after that was up in the air. Trump quickly reversed the pause, and announced his administration’s first new LNG permit approval earlier this month for a project that could go into service in 2029.

Exporting LNG is a lucrative business. The stock of industry leader Cheniere Energy doubled in the past three years. But the field is getting more competitive, and analysts see a glut of LNG emerging by 2027. Those challenging economics may be one reason that Venture Global, another top LNG firm, has seen its stock fall 30% since going public in January.

Some think natural-gas producers can benefit as Trump opens up more LNG exports. Doug Rachlin, portfolio manager at Neuberger Berman, says he likes Antero Resources because it’s positioned to sell 75% of its gas into the LNG market. While the stock rose some 50% in the past year, it still trades at a reasonable 13.3 times expected 2025 earnings.

The companies providing equipment for new LNG plants are also well positioned to benefit. That includes Chart Industries, a Georgia company that makes equipment like cryogenic tanks and modular liquefaction plants. Chart just signed a multiproject deal with Exxon Mobil, one of the top global names in LNG. Analysts expect Chart’s earnings to jump 36% this year. “We think it deserves a revaluation,” says Rob Uek, a portfolio manager at Essex Global Environmental Opportunities Strategy, which owns Chart stock. Chart trades at 15.5 times its expected earnings, but Uek thinks it will eventually fetch a multiple of at least 20 times, more like other high-growth industrial companies. That would take the stock to $240 from a recent $195.

Nuclear

Nuclear power also came into 2025 with enormous momentum. In 2024, the industry woke up suddenly from a decadelong slumber. Tech and industrial companies turned to upstart nuclear developers for clean, reliable power for facilities like AI data centers. Microsoft even agreed to buy nuclear power from a shuttered Three Mile Island reactor in Pennsylvania, at what analysts said was a major premium to market electricity prices.

The Trump administration appears to be pro-nuclear. Trump has included the technology in his energy executive orders, and appointed nuclear advocate Chris Wright as secretary of energy. Wright served on the board of nuclear company Oklo, and has listed “commercialization of affordable and abundant nuclear energy” as one of his department’s top priorities. Enthusiasm about the industry continues to grow, as do valuations of the stocks. Attendance was up 50% at the Nuclear Energy Institute’s annual finance summit in New York earlier this month.

The Biden administration was also pro-nuclear, offering loans and grants to several projects—including the restart of a shuttered Michigan nuclear plant. Biden’s Inflation Reduction Act was generous to the industry, using tax credits to help establish a baseline price for nuclear-power generation and ensure that no current plants retire early.

The industry has a few requests for Trump. They want him to keep the tax credits Biden introduced, and they hope that low-rate loans will remain available.

Their other request is to get the federal government more directly involved in funding new nuclear plants, by agreeing to cover cost overruns when they get built. The last big U.S. nuclear plant expansion came in more than $15 billion over budget. “We have to have federal dollars,” says Caroline Golin, Google’s global head of energy market development and innovation, at the Nuclear Energy Institute conference. Google, part of Alphabet, has lately been investing in nuclear plants, agreeing to buy electricity from private reactor developer Kairos Power in the future.

Investors in nuclear stocks profited handsomely last year, but it could be hard to match those gains in 2025. The start-up nuclear stocks look extremely pricey, particularly given that none has built commercial plants yet. Oklo and Nuscale Power, which make next-generation reactors, were up 300% and 680%, respectively, in the past year.

The more promising stocks today are providers of fuel for nuclear plants, says Arthur Hyde, portfolio manager at Segra Capital, a hedge fund that invests in nuclear companies. That includes Cameco, a Canadian company that mines uranium in Canada and the U.S. and owns a stake in nuclear-reactor designer Westinghouse. He also likes smaller uranium miners, including Uranium Energy and enCore Energy. Hyde, whose firm also funds private companies, thinks that public-market investors could get more options soon. “I expect additional go-public activity across the nuclear technology space in the next 12 months,” he says.

Oil

The Biden administration put few lasting restrictions on the oil industry but often criticized the companies for their policies on share buybacks and the environment. Oil company executives appreciate the change in rhetoric around fossil fuels now. Trump “recognized that oil and gas has been disfavored in recent years, and I think his intent is to make sure that the country takes advantage of all the energy sources that it’s blessed with, including oil and gas,” said Chevron CEO Mike Wirth in an interview with Barron’s. Trump plans to ease environmental restrictions and open up more federal land to drilling, including in Alaska—though recent lease sales there have drawn few, if any, bidders.

The outlook is shaky for oil stocks today. Trump wants U.S. oil companies to drill more to force gasoline prices down. But lower prices will quickly discourage plans for new projects. Instead, oil companies are slowing their production growth in the face of tepid demand and hesitancy from investors.

What’s more, there’s an iceberg ahead. The Organization of the Petroleum Exporting Countries and its allies, including Russia, have been holding more than six million barrels of oil a day off the market, and have said they’ll start bringing it back later this year. Even if they don’t, the mere threat of a flood of supply should hold the stocks back. Historically, oil stocks have almost always trailed the broader market when that much spare production capacity is being held back.

Renewables

Solar and wind power face a treacherous road ahead because of Trump and a Republican-controlled Congress that is looking to cut climate-related funding. Congress is working on bills that could eliminate the tax credits that have sustained the industry in recent years. Biden’s Inflation Reduction Act offers renewable projects 30% tax credits related to the value of a project or the energy it produces, and the opportunity for more credits. A complete withdrawal of those credits would cause a steep downturn in renewables stocks, most of which have already been falling steadily. Morgan Stanley analyst Andrew Percoco doesn’t expect a wholesale repeal, but thinks that some tax credits could be axed or end well before their 2032 sunset date.

There’s reason for hope, however, say industry CEOs and bankers. For one thing, renewables did OK during Trump’s first term and struggled during the Biden years, even though they got more support; their problems had more to do with interest rates.

Companies making investments in renewables have to look at time horizons that span multiple presidential administrations. “The projects pay back over a much longer period,” says PJ Deschenes, co-head of Nomura Greentech, which helps finance sustainable energy transactions.

In fact, some savvy buyers think that the stocks have gotten way too cheap. Brookfield Asset Management, one of the world’s largest renewables developers, is considering buying beaten-down public companies that it could take private, says Jehangir Vevaina, global chief investment officer of Brookfield’s renewable power and transition group. “We follow the sector closely, and we do see opportunities out there,” he says. “Given valuations, we would absolutely look at it, consider it, and do it.”

Solar energy looks best positioned to keep growing in the Trump years. Industry executives think the president’s early actions are evidence of benign neglect. While changes to the Inflation Reduction Act would hurt solar equipment companies, Trump’s domestic manufacturing agenda could lift them. Domestic solar factories can now produce enough modules to nearly meet all domestic demand, though the precursor materials that go into modules are still largely sourced from Asia. America’s leading manufacturer, First Solar, is down 25% since the election, and trades at just 7.9 times its expected 2025 earnings. Even if tax credits go away, First Solar should benefit from high tariffs on foreign solar panels, says Maheep Mandloi, an analyst at Mizuho Securities. Mandloi thinks the shares could rise to $259 from a recent $164.

Wind power is in more precarious shape. Offshore wind, an industry that had just started to take off in the U.S. under Biden, is facing significant challenges. Trump has paused new offshore wind permits and even directed his administration to review older approvals, with the possibility they could be clawed back. Onshore wind, which needs fewer federal permits, could still persevere. Installations are on track to increase 31% this year, according to Bloomberg NEF. And market expectations are as low as ever; Vestas Wind Systems, the world’s leading turbine maker, is trading around where it did at the depths of the Covid-19 pandemic, despite ending 2024 with its largest backlog ever. Citi analyst Martin Wilkie thinks the stock can more than double.

At the right price, even wind power attracts bullish investors. It’s another sign that surprises could abound in energy investing for the next four years.

After a couple of blistering weeks, large funding rounds slowed down to a crawl, with only two rounds hitting nine figures. Not surprisingly, those two rounds came from the cybersecurity and biotech industries.

1. NinjaOne, $500M, cybersecurity: NinjaOne, which provides endpoint management, security and monitoring, raised $500 million in Series C extensions at a $5 billion valuation — more than doubling its value from just 12 months ago. The company said the new funding came in separate tranches led by Iconiq Growth and Google’s CapitalG, with participation from other investors. The Austin, Texas-based company announced a $231.5 million Series C led by Iconiq at a $1.9 billion valuation just a year ago. Securing endpoints has been a main pillar of cybersecurity since the industry started. However, the need has only increased as many people work outside an office and with a variety of networks and devices. NinjaOne’s massive raise is the largest since France-based I-Tracing, a managed security service provider, raised a venture round of approximately $516 million last June. Founded in 2013, NinjaOne has raised nearly $762 million, per Crunchbase.

2. Eikon Therapeutics, $351M, biotech: Eikon Therapeutics raised one of the biggest biotech rounds thus far in this young year. The Hayward, California-based drug startup closed on nearly $351 million in a Series D from the likes of Lux Capital and Alexandria Venture Investments. The round is the second biggest for a biotech startup this year, behind only London-based Verdiva Bio, a company creating treatments for obesity and cardiometabolic diseases, as it raised a $411 million Series A in January. This is just the latest big round for Eikon, which raised a $517.8 million Series B financing from nearly 20 different investors back in 2022. The company uses super-resolution microscopy to discover the effects of drugs on live cells. Founded in 2019, the company has now raised $1.1 billion, per Crunchbase.

3. Bitwise, $70M, crypto: San Francisco-based Bitwise, a crypto-specialist asset manager, raised a $70 million round led by Electric Capital. The company offers a suite of crypto asset management products and manages more than $12 billion in client assets. Its investment solution offerings include index funds, exchange-traded funds and exchange-traded products. Founded in 2017, the company has raised nearly $155 million, per Crunchbase.

4. Raise, $63M, loyalty: Miami-based Raise, a gift cards and loyalty company, raised $63 million led by Haun Ventures. The startup plans to use the new funds to further develop its proprietary blockchain-backed gift card program, Smart Cards. Founded in 2013, Raise has taken in $220 million from investors, per the company.

5. Taktile, $54M, fintech: New York-based Taktile, a decision automation platform, raised a $54 million Series B led by Balderton Capital. The company, which helps fintech companies and financial institutions with their risk management strategies, will use the new cash to equip customers with the necessary tools and controls to build AI-powered risk decisioning automation. Founded in 2020, the company has raised nearly $79 million, per Crunchbase.

6. (tied) Metronome, $50M, billing: San Francisco-based Metronome, a usage-based billing platform, announced a $50 million Series C led by New Enterprise Associates. Founded in 2019, Metronome says it has raised $128 million.

6. (tied) Mimic Networks, $50M, cybersecurity: Palo Alto, California-based ransomware cybersecurity startup Mimic secured a $50 million Series A led by GV and Menlo Ventures. Founded in 2023, the company has raised $77 million, per Crunchbase.

8. Auditoria.AI, $38M, artificial intelligence: San Jose, California-based Auditoria.AI, a developer of finance-related AI agents, raised a $38 million round led by Innovius Capital. Founded in 2019, the company has raised nearly $60 million, per Crunchbase.

9. (tied) Camber, $30M, healthcare: New York-based Camber, a healthcare payments startup, locked up a $30 million Series B led by Andreessen Horowitz. Founded in 2021, Camber has raised $50 million, per the company

9. (tied) Regie.ai, $30M, sales: San Francisco-based Regie.ai, an AI sales platform, raised a $30 million Series B co-led by Foundation Capital and Scale Venture Partners. ​​Founded in 2020, the company has raised nearly $51 million, per Crunchbase.

9. (tied) Skylo, $30M, wireless: Mountain View, California-based Skylo, a provider of direct-to-device satellite connectivity, announced a $30 million funding round led by NGP Capital. Founded in 2017, the company has raised $183 million, per Crunchbase.

Big global deals

India saw the largest deal of the week outside the U.S.

India-based Blinkit, a quick-commerce platform that provides a delivery service for groceries and other daily needs, raised a round worth approximately $172 million

Matt Perelman and Alex Sloane got their start buying up Burger King restaurants

They share an office with one big desk and one telephone. They often eat three meals a day together, and take all their meetings as a pair.

Matt Perelman and Alex Sloane’s relationship is an unusual one on Wall Street, where executives are better known for undercutting rivals to consolidate power. Their lifelong friendship helped build a private-equity firm that is drawing high-profile investors and a portfolio of regional restaurants that recently surpassed $1 billion in annual sales.

“It’s probably not the most efficient way to do things, but it’s worked for this long,“ said Perelman, 38 years old, about how he does just about everything with Sloane, 37.

Garnett Station Partners, which the duo started in their 20s, invests in everything from funeral homes to gyms and car washes. Whatever the business may be, the two apply the same strategy they honed buying up restaurants: finding promising local concepts, and scaling them.

The New York-based firm recently closed its fifth fund, netting about $1.2 billion in just four months and pushing the firm’s total assets under management to over $3.5 billion. That is even as a growing list of firms have struggled to raise capital.

“They’ve established themselves as the next generation of moneymakers,” said Marc Lasry, founder of private-equity shop Avenue Capital Group. Lasry, a mentor to the pair, said he rarely invests outside of his own firm but has put money into Garnett Station.

Other investors who have served as mentors include Oaktree Capital Management co-founder Howard Marks, Continental Grain Chairman and Chief Executive Paul Fribourg and 3G Capital Co-Managing Partner Daniel Schwartz.

Perelman and Sloane have known each other since they were toddlers, having grown up three blocks from each other on New York’s Upper East Side. They still live there today with their respective families (their wives are also best friends). The two see each other as brothers, sibling squabbles and all.

In 2023, for instance, they said they argued for weeks over whether to sell a collision-repair shop business. Perelman, who tends to be more skeptical and pessimistic, was pushing for a sale and ultimately prevailed, netting hundreds of millions of dollars for investors. Sloane, the more reliably upbeat of the two, said their dynamic is what helps them spot both the potential and risks in deals.

It is why they still take all their work trips together.

“It may be an unusual style, but it works,” said Royce Yudkoff, co-founder of Abry Partners, a private-equity firm based in Boston. (Yudkoff met the pair in 2014 while he was teaching a course at the Harvard Business School, and later invested in their firm.)

Garnett Station’s portfolio companies include a pet-services franchiser, a vacation-rental property manager and a business that offers disaster recovery help. But restaurants are where it all started.

“We love investing in businesses that do really well in their core market,” said Perelman. “What works in Ohio doesn’t necessarily work in Arizona.” The firm’s Primanti Bros, for instance, has a cult following in Pittsburgh for its massive sandwiches stuffed with french fries.

In 2013, Perelman and Sloane were still in business school at Harvard when they tried to strike their first deal, for a handful of Kentucky Fried Chicken locations. They were in their 20s at the time and rejected for lacking franchise experience. Perelman later gifted the original business plan in a leatherbound book for Sloane.

The following year, the duo spent the summer in North Carolina, doing diligence on nearly two dozen distressed Burger King restaurants. It was enough for them to clinch their first deal.

That Burger King portfolio eventually grew to more than 220 locations across the Southeast before it was sold in a stock deal in 2019 to Carrols Restaurant Group, the Whopper maker’s biggest U.S. franchisee. (Burger King parent Restaurant Brands International bought Carrols for $1 billion last year.)

Garnett Station launched Authentic Restaurant Brands in 2021. The restaurant holding company’s acquisitions have included a New Jersey and Pennsylvania sports-bar chain (PJ Whelihan’s), a Latin-inspired chain in Houston (Mambo Seafood) and the Pollo Tropical restaurant business.

The company’s latest purchase was Tavern in the Square, a sports-bar chain in the Boston area known for its fried pickle chips.

Sloane said other private-equity firms avoid starting out with smaller businesses because building the infrastructure for expansion can be challenging. “But once you do that, there will be a lot more buyers for that business than there were when you first found it,” he said.

The duo expect to sell Authentic Restaurant Brands within the next 12 to 18 months. A deal could fetch anywhere between $1.5 billion and $2 billion, going off of recent industry deal multiples. (They say they plan to do more restaurant deals in the future.)

Regulatory uncertainty could widen the scope of power stocks riding the AI wave

When the excitement around artificial intelligence started spreading to power stocks, the rally was concentrated on those with a big portfolio of nuclear power plants, such as Constellation Energy CEG 0.32%increase; green up pointing triangle and Vistra VST 2.81%increase; green up pointing triangle. This could now be changing.

Thanks to regulatory scrutiny in key markets of deals between nuclear plants and data centers, most of which effectively draw power away from the rest of the grid, investor favor may shift to others: Companies that can quickly build new gas-fired power plants and vertically integrated utilities.

Shares of NRG Energy NRG 0.57%increase; green up pointing triangle, which doesn’t own any nuclear capacity, had lagged behind the surge seen by nuclear-owning peers Vistra, Constellation Energy and Talen Energy TLN 3.04%increase; green up pointing triangle over the past two years. But on Wednesday, its shares jumped 11% after it made two big announcements.

One was an agreement with gas turbine manufacturer GE Vernova GEV 2.73%increase; green up pointing triangle and contractor Kiewit to construct more than 5 gigawatts worth of new gas-fired power plants, which would be enough to power millions of homes. Separately, the company said it is in talks with two data center developers to supply power, primarily from new natural gas-fired plants. Even after a broad selloff among power stocks on Thursday, its shares are outperforming Vistra and Constellation so far this year.

Vistra shares fell 12% on Thursday after it failed to disclose any new contracts in its earnings call. Chief Executive Jim Burke said on the call that “there are a number of questions to be answered” from regulators before Vistra can finalize certain contracts with data center customers. The company expects more regulatory clarity by midyear. Constellation disclosed quarterly results last week without announcing new contracts. Constellation and Vistra operate the largest and second-largest nuclear power fleets, respectively, that operate in competitive power markets.

There are many reasons why funneling energy from existing nuclear power makes sense for data centers. It is quicker than building a power plant from scratch and provides round-the-clock clean power. Because these sites have plenty of land, it is possible to co-locate data centers and possibly dodge transmission fees. The sites also have ready access to cooling water. These are also the most lucrative contracts for power plant owners, who get to charge higher power prices for an existing asset.

But these deals are facing skepticism from regulators in the largest competitive power markets, which are already seeing surging power prices. Late last year, the Federal Energy Regulatory Commission blocked part of Talen Energy’s plan to sell power from its existing nuclear power plant directly to Amazon’s data center in Pennsylvania. Trump-nominated FERC Chair Mark Christie said an agreement of that type could have “huge ramifications for both grid reliability and consumer costs.” The regulators last week voted to launch a review of issues associated with such arrangements in PJM Interconnection, a market that includes Pennsylvania.

Meanwhile, Texas’ state Senate introduced a bill a few weeks ago that, if passed, would add transmission costs for large power customers and create guardrails to make sure they don’t threaten grid reliability.

None of this spells complete doom for nuclear power plants looking to sign deals. Depending on how regulation shakes out, it could just mean such customers have to pay more transmission fees. The bigger risk is that the regulatory process drags out. FERC’s Christie has said the commission would act quickly, but given the sensitivity around grid stability and power prices, there could be legal challenges to their decision.

Time is of the essence for data center customers; they may prefer to ink contracts that involve less regulatory uncertainty. “It’s not just the money, it’s really the time,” notes Stephen Byrd, equity analyst at Morgan Stanley. His team’s analysis shows that there is going to be some 42 GW worth of shortfall between data center demand for power and actual grid capacity through 2028 in the U.S.

Easier contracts to strike could include ones for new natural gas-fired power plants, such as those NRG announced. Next to existing nuclear power, new natural gas-fired power is the best bet for AI because it runs around the clock and can be built much faster than nuclear power. Tech companies might also find it easier to put net-zero ambitions on the back burner under the current administration.

NRG said long-term contracts on those new gas-fired power projects could range from $70 to $90 per megawatt-hour, similar to industry analysts’ estimate of what Talen Energy’s nuclear power plant would get from its lucrative contract with Amazon. There is enough potential profit here that even Exxon Mobil and Chevron, oil majors with higher return hurdles, plan to build new natural gas-fired power plants for data centers. Because there is a limited supply of gas turbines, investors will want to keep an eye on companies that have secured slot agreements.

Vistra, for its part, said it has gas turbines booked for delivery in 2026 and 2027.

More data center customers could also look to work with vertically integrated utilities rather than power producers in competitive markets. Going this route may not come with the same level of speed or long-term fixed price certainty, but it could be simpler because it only involves dealing with one entity, according to Rodney Rebello, co-portfolio manager of Virtus Reaves Utilities ETF. Shares of utilities announcing data center deals have rallied: Entergy, which operates across several Southern states, is up about 74% over the past 12 months, while Alliant Energy, which serves Iowa and Wisconsin, has gained 36%.

As tech companies broaden the pool of prospective contracts, the AI power rally should spread across more stocks, not just a few highfliers.