As These 2 Positions Become Oversized, We're Waiting to Ring the Register
We see more upside ahead, but some prudent Portfolio management may be called for in the near future.
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On Tuesday, we shared that we were closely watching the shares of Morgan Stanley (MS) and Bank of America (BAC) for a few reasons.
First and foremost, the continued strength in MS shares was close to pushing them past our $170 target, and over the last two days, they have done just that. Second, that continued ascent in MS as well as for BAC shares has made them the Pro Portfolio’s top two holdings, both of which are nearing a 4.5% position size.
As we explained on Tuesday, we are looking to see how the IPO offerings from Wealthfront (WLTH), Lumexa Imaging (LMRI) and Cardinal Infrastructure Group (CDNL) price this week and gauge their initial aftermarket trading. That will determine the degree to which we could see a burst of activity before the usual slowdown we see as the Christmas and New Year’s holidays approach. Because December 25 falls on a Thursday this year and New Year’s Day is a week later, we are likely to see IPO activity come to a close by Friday, December 19. We could, however, see M&A activity continue right up until the end of December.
Those deals have yet to happen, but we can trace the continued melt-up in MS and BAC shares to reports that Anthropic hired law firm Wilson Sonsini to work on its IPO, an offering that could come as soon as next year.
There are other reasons to be optimistic about the 2026 IPO market. Pitchbook expects the number of venture-backed company IPOs to reach 68 compared to the low-to-mid 40s each year since 2022. EquityZen sees continued IPO strength in AI infrastructure, cryptocurrency, fintech and enterprise software as a service, and flagged some likely candidates in the table below:
With the potential for lower interest rates as we move through 2026, we are optimistic about further IPO and M&A activity. With the market not too far off its highs, we could see secondary offering activity pick up as part of intended M&A moves.
What all of this means is the outlook as we see it on Thursday for our MS and BAC shares remains bright, and that means we’ll remain shareholders. As this next wave of IPO pricings hits, we’ll revisit our MS and BAC price targets, but if either or both become a 4.5% position size or more for the Portfolio, some prudent register ringing is likely to happen.
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At the time of publication, TheStreet Pro Portfolio was long MS and BAC.
