MERIDIAN RESEARCH

🧭 MACRO SNAPSHOT

Risk-on tape this morning. S&P 500 sits at 7,337 (record highs), Nikkei +5% overnight, and global equities are bid on reports of progress toward reopening the Strait of Hormuz (source: AP News, Investing.com). Brent is holding above $100 — high enough to keep energy earnings inflated (Shell beat, source: CNBC) but no longer pricing a worst-case shutoff. Fed funds at 3.64% (source: FRED) reflects the easing cycle that began late 2025; with unemployment at 4.3% and real GDP at $24.17T, the soft-landing narrative is intact, though I'd note CPI, the 10Y, and VIX all came back null today — a data gap I'm flagging rather than guessing through.

What matters for the book: (1) Energy holdings (XOM in target list) benefit from the Brent floor, but the bull case for oil weakens if Iran de-escalation actually delivers barrels back to market; (2) AI/tech leadership remains intact with NVDA +6.6% on the week and Arm's earnings reinforcing AI infrastructure demand (source: Barron's); (3) rate-sensitive names (HOOD, SOFI, COIN) get a tailwind from steady-to-lower funding rates, but credit spreads (null today) are the variable I want to track before adding consumer credit exposure.

₿ BITCOIN UPDATE

Action: STRONG HOLD | Conviction: 9/10

BTC at $80,032, -1.34% 24h, +2.65% 7d, +11.66% 30d. Dominance at 58.4% — meaningfully elevated vs. mid-cycle norms, which signals capital is consolidating in BTC rather than rotating into alts. No structural change this week: we remain ~13 months post-halving, in the historically kinetic phase of the cycle. Spot ETF flows, hash rate, and institutional adoption pathways unchanged from prior review. Thesis reaffirmed — this is the highest-conviction long-horizon position in the book and short-term volatility around the $80K level is noise, not signal.

🔬 TODAY'S DEEP DIVES

CARR — Carrier Global Corporation — NEW IDEA (also today's rolling review)

Conviction: 6/10 | Status: MONITORING | Sector: Industrials (HVAC/Climate)

WHAT THEY DO: Carrier is a pure-play global HVAC and climate solutions manufacturer, spun off from United Technologies in 2020. They make air conditioning, heating, heat pumps, refrigeration systems, and building automation products. Following the 2024 acquisition of Viessmann Climate Solutions (~$13B) and divestitures of Fire & Security and Commercial Refrigeration, they're now a focused four-segment business spanning Americas, Europe, APAC/MEA, and Transportation refrigeration (source: SEC filings, company business description).

WHY IT'S INTERESTING NOW: Two converging tailwinds — (1) global heat pump electrification driven by the EU's REPowerEU plan (60M heat pumps by 2030) and U.S. IRA incentives, and (2) data center cooling demand from AI compute build-out. Carrier is now positioned as a top-3 European heat pump player via Viessmann. The catalyst question: did they buy Viessmann at the cyclical peak?

BULL CASE:

• Heat pump and electrification tailwind: IEA projects global heat pump sales to more than double by 2030; EU targets 60M installs (source: IEA Future of Heat Pumps; EU REPowerEU).
• Viessmann gives Carrier #1 European heat pump position — if EU volumes recover from the 2024 destock cycle, segment growth could re-accelerate to double digits.
• Data center cooling is an under-appreciated AI derivative — thermal management demand is growing alongside hyperscaler capex.

BEAR CASE:

• 2024 European heat pump sales fell ~23% YoY (source: European Heat Pump Association). Viessmann was acquired near a cyclical peak — goodwill impairment risk is real.
• U.S. residential HVAC pressured by housing affordability and elevated rates.
• Valuation already prices recovery: forward P/E 21, EV/EBITDA 21.5, TTM P/E 44.8 (depressed earnings). Multiple compression risk if forward estimates miss.

KEY METRICS: Forward P/E ~21 vs. TTM P/E ~45 (source: yfinance) implies analysts model meaningful earnings recovery. Differentiator: only large-cap U.S. HVAC pure-play with European heat pump exposure post-Viessmann.

BOTTOM LINE: Belongs on the list at 6/10 — the structural thesis is real, but valuation requires the recovery to actually materialize before I upgrade conviction.

UPST — Upstart Holdings, Inc. — NEW IDEA (Screened, NOT Added)

Conviction: 4/10 | Status: MONITORING | Sector: Financials/Fintech

WHAT THEY DO: Upstart operates a cloud-based AI lending platform that connects consumers with bank and credit union partners to originate unsecured personal loans, auto loans, small-dollar loans, and HELOCs. Their pitch is that proprietary ML models price risk better than FICO, especially for thin-file/non-prime borrowers. They earn referral, platform, and servicing fees — they don't primarily lend off their own balance sheet (source: Upstart 10-K).

WHY IT'S INTERESTING NOW: TTM revenue +44.6% (source: yfinance) suggests origination volumes are rebounding from the 2023 funding-market trough. Forward P/E of 8.9 vs. TTM P/E of 70.7 implies analysts expect a sharp earnings inflection.

BULL CASE:

• Rate-cycle recovery + revenue inflection (44.6% TTM growth) as funding markets normalize.
• TAM expansion into auto and HELOC beyond the ~$150B personal loan market.

BEAR CASE:

• Active securities fraud litigation (multiple firms, May 2026): At least five law firms (Schall, Bernstein Liebhard, Rosen, Pomerantz, plus PRNewswire-listed actions, source: GlobeNewswire/PRNewswire 2026-05-05/06) have filed or are soliciting plaintiffs for class actions following Q1 2026 earnings.
• Funding-market dependency: Upstart's volume is gated by institutional demand for the loans, which is procyclical.
• Credit performance in a slowing labor market (4.3% unemployment, rising) is unproven through a downturn.

KEY METRICS: TTM rev growth 44.6%, forward P/E 8.9, TTM P/E 70.7. Differentiator: AI-native underwriting, but unproven moat.

BOTTOM LINE: Not added to target list — active securities fraud litigation is a binary catalyst I won't underwrite at conviction 4/10 when there are higher-quality fintech alternatives (HOOD, SOFI) already on the list.

CARR — Rolling Deep Review

(See above — today's new idea and rolling review are the same name; thesis reaffirmed at 6/10, no material change this week. Only minor price action (-0.24% 1W) and a routine Wolfe Research conference announcement (2026-05-05).)

📋 TARGET LIST STATUS

Conviction changes vs. last week: No upgrades/downgrades this week. Eight names at the 6/10 threshold (CEG, AAON, FOUR, RYAN, ITUB, CRWD, FDS, MDB) were dropped to make room. CARR earned a spot at 6/10 because the heat pump + data center cooling thesis combines two genuinely durable secular drivers, whereas dropped names lacked a similarly clear multi-factor catalyst path. UPST screened at 4/10 was not added — active fraud litigation is disqualifying at this conviction level.

💼 YOUR PORTFOLIO

• AAPL | 200 sh @ $50.46 | HOLD | 8/10 — Foundational holding +455%; ecosystem, services growth, and capital return remain intact.
• ALTO | 3,000 sh @ $1.04 | TRIM | 4/10 — +422% on speculative re-rate; thesis no longer fundamentally supported, harvest gains.
• BABA | 40 sh @ $127.86 | HOLD | 7/10 — Deep-value China tech bet; cloud/AI optionality intact, regulatory overhang persists.
• FSLR | 10 sh @ $186.18 | HOLD | 7/10 — Best-in-class U.S. solar manufacturer with IRA-driven cost moat in CdTe technology.
• GOOGL | 32 sh @ $320.20 | STRONG HOLD | 9/10 — Search + Cloud + YouTube + Waymo optionality at reasonable multiple; core long-horizon position.
• HIMS | 200 sh @ $45.12 | TRIM | 5/10 — Down 39%; GLP-1 narrative unwind and competitive pressure; thesis has cracked.
• ISRG | 5 sh @ $578.24 | HOLD | 8/10 — Dominant da Vinci franchise (~80% share); recent drawdown is multiple compression, not thesis breakage.
• MKL | 13 sh @ $909.50 | HOLD | 7/10 — "Mini-Berkshire" specialty insurance + Ventures portfolio; +95% gain, compounder intact.
• PLTR | 12 sh @ $176.97 | HOLD | 6/10 — Down 19%; AIP commercial traction is real but valuation remains demanding.
• SEG | 210 sh @ $22.91 | HOLD | 5/10 — Spinoff thesis on entertainment/real estate; execution unproven, low conviction.
• SOUN | 270 sh @ $11.13 | HOLD | 6/10 — Pure-play voice AI; speculative small-cap, watch revenue durability.
• TSLA | 83 sh @ $419.09 | TRIM | 5/10 — Auto margins deteriorating; FSD/robotics optionality embedded but auto core weakens.
• U | 100 sh @ $25.98 | HOLD | 6/10 — Real-time 3D engine duopoly with Epic; turnaround narrative tracking.
• UNH | 15 sh @ $314.29 | HOLD | 7/10 — Integrated payer/provider scale unmatched; +17%, MLR pressure to monitor.

⚠️ WATCH LIST

• ANET — Down 17.9% on the week after Q1 print despite top/bottom line beats. Stock is reacting to softer 2026 outlook upgrade, not a thesis break. If hyperscaler capex commentary from MSFT/META/GOOG confirms a deceleration vs. a digestion pause, I'd consider downgrading from 7/10. Right now: monitoring, no action.
• HIMS (portfolio) — At 5/10 conviction and -39%, this is the closest position to a SELL trigger. Trigger would be: another quarter of customer growth deceleration OR clear regulatory/competitive action against compounded GLP-1s. Currently TRIM bias.
• KNSL — Down 14.6% over the past month after Q1 disappointment. E&S softening cycle is the question; if combined ratio deteriorates further next quarter, downgrade to 6/10. The pricing cycle is what I'm watching, not the stock.
• XOM — Down 5.5% on the month and Iran de-escalation hopes are a near-term headwind. Thesis isn't price-of-oil dependent over 3-5 years (Permian + Guyana + LNG), but if Brent breaks $85 sustainably, I'll re-stress the FCF model. Holding at 6/10.