Investing

Ray Dalio warned that a bubble could be forming, but that it may not pop until the Federal Reserve tightens monetary policy.
He spoke at an investing summit in Saudi Arabia.

Bridgewater Associates founder Ray Dalio on Tuesday warned that a bubble could be forming around megacap technology in the U.S. amid the artificial intelligence boom, but said that it may not end until the Federal Reserve reverses its current easy policies.
“There’s a lot of bubble stuff going on,” Dalio told CNBC’s Sara Eisen in an exclusive interview from the Future Investment Institute in Riyadh, Saudi Arabia. “But bubbles don’t pop, really, until they are popped by tightness of monetary policy and so on.”

Added Dalio, “We’re going to be more likely to ease rates than to tighten rates.”
The hedge fund titan said he uses a personal “bubble indicator” that’s relatively high right now. Dalio joins a growing chorus of well-known market participants that have cautioned about the potential for a bubble tied to AI spending in recent months.
The Fed is set to cut rates for a second time this year on Wednesday and many investors expect the central bank it will do so again at its final meeting of the year in December.
The billionaire investor also pointed out that outside of AI-linked names, the market as a whole has done “relatively poorly” and there’s a “concentrated environment.” He noted that 80% of gains are concentrated within Big Tech. The three major indexes on Monday rallied to all-time closing highs, led higher by technology stocks with more good AI news expected from a series of Big Tech earnings this week.

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S&P 500, all-time chart

Dalio said there’s a “two-part economy,” with the easing of interest rates because of weakening in some places while a bubble develops elsewhere.

He said monetary policy cannot aid both ends of this spectrum given the divergence, making it more likely that the bubble will continue. Dalio said the outcome could be similar to what was seen in 1998 to 1999 or in 1927 and 1928.
“Whether or not it’s a bubble and when that bubble is going to burst, maybe we don’t know exactly,” Dalio said. “But what we can say is there’s a lot of risk.” More

Large-cap companies are seeing steady AI-related productivity gains since the release of OpenAI’s ChatGPT model in 2022 in terms of their real revenue per worker, while small-cap names are seeing a decline, according to Wells Fargo.
Breakthrough advancements in AI this year have led major corporations, such as Amazon, to notably go all-in on the technology, finding ways to eliminate human roles that can be replaced by AI machines.
The performance of the S&P 500 versus the Russell 2000 small-cap index reflect this divergence in productivity gains.

Amazon Proteus robots demonstrate autonomous navigation using barcodes on the floor during the Delivering the Future event at the Amazon Robotics Innovation Hub in Westborough, Massachusetts, US, on Thursday, Nov. 10, 2022. 
Bloomberg | Bloomberg | Getty Images

Artificial intelligence is widening the productivity gap between large and small companies, lifting up bigger firms that are able to effectively scale the technology and cut costs tied to human workers.
Large-cap companies are seeing steady AI-related productivity gains since the release of OpenAI’s ChatGPT model in 2022 in terms of their real revenue per worker, according to a Wells Fargo analysis. Small-cap names are witnessing a decline over the same period, the firm found.

“While productivity for the S&P 500 has soared 5.5% since ChatGPT, it’s down 12.3% for the Russell 2000,” Wells Fargo equity strategist Ohsung Kwon wrote in recent note to clients. “We see other examples of diverging trends in consumer, industrial, and financial markets.”

Arrows pointing outwards

Wells Fargo analysis comparing real revenue per worker between Russell 2000 and S&P 500 indices
Wells Fargo

Breakthrough advancements in AI this year have led major corporations such as Amazon to notably go all-in on the technology, finding ways to eliminate human roles that can be replaced by AI machines.
The performance of the S&P 500 versus the Russell 2000 small-cap index reflect this divergence in productivity gains. The broad market index is up 74% since ChatGPT’s 2022 launch, while the Russell is up only 39%.
The biggest U.S. companies have been internally deploying AI tools over the past few years to improve their productivity and supply chains and, in some cases, cut head count. A World Economic Forum survey published at the start of 2025 found that roughly 40% of companies around the world expect to reduce their workforces over the next five years in roles where AI can automate tasks.
Layoffs this year have been on the rise. Several big-name companies, including Target, Amazon, Meta, Starbucks, Oracle, Microsoft and UPS, have announced significant cuts to their total head count. For Target, the cuts are historic. Amazon is expected to announce historic cuts on Tuesday. Companies have mostly cited efforts to streamline operations and growth strategy as reasons for cuts, but many are nodding at AI as part of the reason that human worker roles can be axed now or in the future.

For one, Amazon has been a leader in robot deployment across its facilities, which the e-commerce giant has said is improving costs and delivery times. The New York Times reported this month that Amazon executives believe the company is on track to replace more than half a million jobs with robots, which they think will save about 30 cents on each item Amazon selects, packs and delivers to customers. Morgan Stanley said Amazon’s robotics efforts can save the company between $2 billion and $4 billion by 2027.
Klarna, which has been among the most transparent in how AI is affecting its head count, said it has shrunk its workforce by about 40%, in part due to its AI investments. CrowdStrike in May announced cuts to 5% of the company’s global workforce, citing AI efficiencies and saying that the technology “flattens our hiring curve.” IBM’s CEO has forecast 30% of non-customer-facing roles will be cut by 2028 and told The Wall Street Journal earlier this year that AI chatbots have replaced 200 HR employees, freeing up investments to hire more people in sales and programming.
Palo Alto Networks, Walmart and McDonald’s are other companies that have notably been leveraging AI in ways that analysts expect will improve margins, CNBC previously reported.
An Intuit QuickBooks Small Business Insights survey of 5,000 small businesses in the U.S., Canada, the U.K., and Australia in September revealed that 68% of businesses have integrated AI into their daily operations, with roughly two-thirds reporting an increase in productivity.
“The numbers don’t lie,” Wells Fargo’s Kwon said in his report. More

The Federal Reserve is expected to lower interest rates at the end of its two-day meeting on Wednesday.
Many types of consumer loans are impacted when the Fed trims its benchmark.
Here’s how a rate cut could affect your mortgage, credit cards and auto loans going forward.

The Federal Reserve is expected to lower borrowing costs again on Wednesday.
Another quarter-point reduction, on the heels of September’s cut, would bring the federal funds rate to a range between 3.75%-4.00%.

The federal funds rate, which is set by the Federal Open Market Committee, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves do have a trickle-down effect on many types of consumer loans.

The FOMC has also set expectations for another reduction in December, but after that, the path is unclear. President Donald Trump — who has said a pick to replace current Federal Reserve Chair Jerome Powell could come by the end of the year — has repeatedly weighed in on Fed policy, arguing that rates should be sharply lower.
It’s not a given that rates will continue to fall, and even if they do, not all consumer products are affected equally.

‘The Fed is not cutting every single interest rate’

When the Fed hiked rates in 2022 and 2023, the interest rates on most consumer loans quickly followed suit. Even though this would be the second rate cut in a row, many of those consumer rates are likely to stay higher, for now.
“The Fed is not cutting every single interest rate that exists in the world,” said Mike Pugliese, senior economist at Wells Fargo Economics.

Depending on their duration, some borrowing rates are more sensitive to Fed changes than others, he said: “At one end of the spectrum, you have shorter floating rates, and on the other end, you have a 30-year fixed rate mortgage.”
Those shorter-term rates are more closely pegged to the prime rate, which is the rate that banks extend to their most creditworthy customers — typically 3 percentage points higher than the federal funds rate. Longer-term rates are also influenced by inflation and other economic factors.

Credit cards won’t ‘go from awful to amazing overnight’

Olga Rolenko | Moment | Getty Images

According to Bankrate, nearly half of American households have credit card debt and pay more than 20% in interest, on average, on their revolving balances — making credit cards one of the most expensive ways to borrow money.
Since most credit cards have a short-term, variable rate, there’s a direct connection to the Fed’s benchmark.
When the Fed lowers rates, the prime rate comes down, too, and the interest rate on your credit card debt is likely to adjust within a billing cycle or two. But even then, credit card APRs will only ease off extremely high levels. And generally, card issuers have kept their rates somewhat elevated to mitigate their exposure to riskier borrowers.  
“Even if the Fed steps on the gas in the coming months when it comes to rate cuts, credit card rates aren’t going to go from awful to amazing overnight,” said Matt Schulz, LendingTree’s chief credit analyst. 

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For example, if you have $7,000 in credit card debt on a card with a 24.19% interest rate and pay $250 per month on that balance, lowering the APR by a quarter-point will save you about $61 over the lifetime of the loan, according to Schulz.

Slight benefit for car and home buyers

Although auto loan rates are fixed for the life of the loan, experts say potential car shoppers could benefit if borrowing costs come down in the future.
The average rate on a five-year new car loan is currently around 7%. Going forward, “a modest Fed rate cut won’t dramatically slash monthly payments for consumers,” Jessica Caldwell, head of insights at Edmunds, previously told CNBC, “but it does boost overall buyer sentiment.”

Longer-term loans, like mortgages, are less impacted by the Fed. Both 15- and 30-year mortgage rates are more closely tied to Treasury yields and the economy. 
Still, expectations of more cuts down the road could put some downward pressure on mortgage rates, experts say, and that may “spur more Americans to consider jumping back into the housing market after sitting on the sidelines for so long,” according to LendingTree’s Schulz.
Other home loans are more closely tied to the Fed’s moves. Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. Most ARMs adjust once a year, but a HELOC adjusts right away.
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Student loan borrowers are eligible for debt forgiveness under two repayment plans again, after an agreement was reached between the American Federation of Teachers and the Trump administration.
Those two programs are the Income Contingent Repayment plan and the Pay as You Earn plan.
President Donald Trump’s “big beautiful bill” will phase out ICR and PAYE as of July 1, 2028.

Students walk around the UCLA campus on Tuesday, Oct. 7, 2025 in Los Angeles, CA.
Juliana Yamada | Los Angeles Times | Getty Images

Millions of borrowers once again have access to student loan forgiveness, but they may need to take action to ensure they qualify.
The U.S. Department of Education will resume cancelling the debt of eligible borrowers enrolled in the Income Contingent Repayment plan, or ICR, and the Pay as You Earn plan, or PAYE, according to an agreement reached by the American Federation of Teachers and the Trump administration.

Earlier this year, the department had stopped cancelling the debt of borrowers in those two plans, citing a court order. 
Loan cancellation opportunities have become rarer under the Trump administration. While President Joe Biden was in office, the U.S. Department of Education made regular announcements that it was wiping away hundreds of thousands of borrowers’ debts.
More than 40 million Americans hold student loans, and the outstanding debt exceeds $1.6 trillion. 

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Some 2.5 million borrowers are enrolled in either ICR or PAYE, according to an estimate by higher education expert Mark Kantrowitz. The agreement may allow more of those borrowers to qualify for forgiveness. But it’s a limited window.
President Donald Trump’s “big beautiful bill” will phase out ICR and PAYE as of July 1, 2028. The Education Department has agreed to resume the relief only while ICR and PAYE remain in effect.

Here’s what borrowers need to know about the resumed loan forgiveness under ICR and PAYE.

3 plans lead to student loan forgiveness

Both ICR and PAYE are income-driven repayment plans, meaning they cap a borrower’s bills at a share of their discretionary income and lead to loan forgiveness after a certain period; ICR after 25 years and PAYE after 20 years.
Borrowers have had access to debt cancellation under ICR since 1994 and under PAYE since 2012.
Student loan borrowers also have access to forgiveness under the Income-Based Repayment plan, or IBR.

When the Education Department curtailed forgiveness under ICR and PAYE earlier this year, officials said they were responding to a February court order that blocked a Biden administration-era repayment plan, known as the Saving on a Valuable Education plan, or SAVE. The officials said that the ruling had implications for other repayment plans, although ICR and PAYE have both been available for over a decade.
Consumer advocates and the American Federation of Teachers, a union representing some 1.8 million members, disagreed with the administration’s interpretation of the ruling and said the agency was required to offer debt forgiveness under the well-established programs. In its March lawsuit, the AFT accused Trump officials of blocking borrowers from the relief programs mandated in their loan terms.

Borrowers in ICR, PAYE can stay put for now

Before the AFT and Education Department reached their agreement, student loan borrowers who had accumulated enough credit to get forgiveness under ICR or PAYE would have needed to transfer to IBR to get their loans discharged, said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York.
“Now, they don’t have to do that,” Nierman said. “They can remain in these plans and realize forgiveness.”
Borrowers who want to cancel a submitted request to switch into IBR can try calling the Federal Student Aid Information Center at 1-800-4-FED-AID, Kantrowitz said. You might also try contacting your student loan servicer to cancel your request.

Prepare for a future repayment plan switch

Once PAYE and ICR are phased out, borrowers in those plans who haven’t yet become eligible for debt erasure will need to switch to a repayment plan that still offers loan cancellation. The payments made under PAYE and ICR will count on the borrower’s timeline to the relief, Nierman said.
Borrowers should keep records of the payments they have made, to make sure they don’t lose any qualifying months.
One important point to note: Continued access to IBR will be available only to those who borrow before July 1, 2026. Loans taken out after that date will void eligibility for IBR.
Due to recent legislation, borrowers after that date will be able to enroll in only a new income-driven repayment plan called the “Repayment Assistance Plan,” or RAP, or a revised Standard Plan. More

Disruptions in government funding due to the shutdown have left many nonprofit organizations without the aid they need to operate.
At the same time, with hundreds of thousands of workers furloughed, the need for assistance from these groups is only increasing.
“The longer this shutdown lasts, the more people and communities are left without the critical services they depend on,” said Diane Yentel, president and CEO of the National Council of Nonprofits, an industry association. 

The Disability Awareness Council in Chapel Hill, North Carolina, assists individuals with disabilities in the community, offering aid ranging from transportation to housing advocacy. But for now, many services are on hold.
“Because of the shutdown and cuts, core disability services that people rely on every week are either paused, reduced or running with unpaid labor,” said Timothy Miles, the organization’s director and board liaison.

As the standoff in Washington drags on, many nonprofits have lost access to federal grants and must make tough decisions about what aid they can offer and for how long.
At the same time, the shutdown has put some federal assistance, such as the Supplemental Nutrition Assistance Program, or SNAP, at risk just when the need for help is increasing. With hundreds of thousands of federal employees and contract workers furloughed and without pay, that adds to the strain on nonprofits that are needed to help fill the gap.
“Nonprofits are on the frontlines of serving communities, but a government shutdown makes it harder for them to fulfill their missions,” said Diane Yentel, president and CEO of the National Council of Nonprofits, an industry association. 
“The longer this shutdown lasts, the more people and communities are left without the critical services they depend on,” she said.
The current government shutdown is now the second-longest federal funding lapse in U.S. history.

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Many nonprofits were already facing financial pressure before the shutdown due to disruptions in government funding earlier this year that was restricting their ability to meet community demand, according to the Urban Institute, a nonpartisan policy research organization.
The average nonprofit receives about 28% of its funding from the government, and 60% to 80% of nonprofits wouldn’t be able to cover their expenses if they lost that grant aid, according to the institute’s analysis of IRS data.
With a lapse in appropriations, nonprofits are now facing a potential shortfall, said Sarah Saadian, the National Council of Nonprofits’ senior vice president of public policy and campaigns.
“For those nonprofits that were waiting to get their grant renewed or need approval, there’s no one there,” Saadian said.

Miles said that is one of the biggest challenges the Disability Awareness Council currently faces. “We are waiting on some funding from the federal government,” he said, but there is “no direct contact with some of the agencies.”
The funding gap means some staffers will go unpaid and programs will be put on hold, according to Miles. The organization has a workforce of seven and serves hundreds of people in the area.

‘Real long-term consequences’

The longer the shutdown continues, the harder it will be for nonprofits to continue serving their communities, Saadian said.  
In many cases, if an organization lays off staff or puts a program or service on pause, it can be difficult to resume operations once the shutdown ends and funding kicks in.
“Once those organizations suffer those kinds of impacts, there can be real long-term consequences, because they’ve lost that infrastructure, they’ve lost that staff,” Saadian said.
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The stock market has been volatile lately as investors study the latest twists and turns in the the U.S.-China trade war as well as earnings of major American companies. Despite those challenges, investors can also choose to focus on stocks of companies that can navigate short-term pressures to deliver strong, long-term returns.
Tracking top Wall Street analysts can help investors pick some attractive stocks, as the recommendations of these experts are based on in-depth analysis of a company’s business fundamentals, opportunities and challenges.

Here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
Pinterest
This first stock pick is social media company Pinterest (PINS), scheduled to announce third-quarter results on November 4. Heading into those numbers, TD Cowen analyst John Blackledge reiterated a buy rating on Pinterest and a $44 price target. TipRanks’ AI Analyst is also bullish on Pinterest, giving it an “outperform” rating and a price target of $40.
Blackledge expects Pinterest Q3 revenue grew by 16.6% versus the year-earlier quarter, in line with the Street’s consensus estimate and toward the high end of the company’s own guidance. “We expect EBITDA growth of 20% y/y, outpacing rev growth, driven by modest [cost of revenue] and R&D leverage,” said Blackledge.  
The 5-star analyst remains confident about his mid-teens, year-over-year revenue growth estimate through the second half of 2025 and 2026, partly supported by continued adoption by advertisers of PINS’ Performance+ campaign tools.
Following a digital ad check call with an agency that runs more than $4 billion annually in managed advertising spending, Blackledge noted that ad spend on Pinterest rose 63% year-over-year in Q3 2025, a slight slowdown compared to 66% in the prior quarter. A TD Cowen expert noted that solid uptake continues in PINS’ Performance+ campaign types.

In fact, some advertisers have shifted all their Pinterest spending to Performance+. Blackledge said Performance+, rolled out in late 2024 with automated creative tools, has expanded to include automated bidding tools and other artificial intelligence (AI)-driven automated features.
Blackledge ranks No. 522 among more than 10,000 analysts tracked by TipRanks. His ratings have been successful 56% of the time, delivering an average return of 12.5%. See Pinterest Statistics on TipRanks.
Uber Technologies
Next up is ride-sharing and delivery platform Uber Technologies (UBER). Recently, Evercore analyst Mark Mahaney reiterated a buy rating on UBER along with a 12-month price forecast of $150 after hosting a quarterly webinar with Harry Campbell, founder of The Rideshare Guy and The Driverless Digest Dude, where they discussed the latest trends across rideshare, delivery and autonomous vehicle (AV) ecosystems. Like Mahaney, TipRanks’ AI Analyst is also bullish on UBER stock, with an “outperform” rating and a price target of $108.
Campbell was constructive about rideshare supply dynamics, given solid and stable driver economics, Mahaney noted. Campbell continues to see consistent demand and strong driver supply, particularly at Uber, which he described as operating near “all-time highs.” Despite robust supply, pricing continues to be high, reflecting sustained demand elasticity and limited alternatives for consumers, particularly for airport and nightlife rides.
The top-rated analyst also highlighted Campbell’s commentary about early-stage shifts in AV partnerships — particularly Alphabet’s Waymo’s evolving first-party vs third-party strategy and Uber’s expanding AV integration roadmap.
Mahaney further noted stable driver economics and widening platform margins. Notably, Uber’s “decoupling” of rider fares and driver payouts is driving incremental profit margin expansion, even with steady driver income.
Through incremental feature innovation, Uber is focused on enhancing ecosystem “stickiness.” Uber’s recent “Only on Uber” event rolled out small feature updates, including tip guarantees and safety enhancements. While not transformative, Mahaney said Campbell sees these efforts as part of Uber’s “broader push to create alternative income channels for drivers as AVs grow share over time.”
Mahaney ranks No. 473 among more than 10,000 analysts tracked by TipRanks. His ratings have been profitable 57% of the time, delivering an average return of 13%. See Uber Technologies Financials on TipRanks.
General Motors
General Motors (GM) jumped 15% on Tuesday after the Cadillac and Buick parent beat the Street’s revenue and earnings expectations despite a slight decline in sales. GM also raised its forward guidance, citing a lower-than-expected tariff impact.  
Following the Q3 results, Mizuho analyst Vijay Rakesh reiterated a buy rating on GM and raised his price target to $76 from $67. By comparison, TipRanks’ AI analyst has a price target of $66 and an “outperform” rating on GM.
“We remain positive with reduced tariff burden/risk, improved profitability and [internal combustion engine] SUV/pickup onshoring tailwinds through C26E+,” said Rakesh.
The 5-star analyst noted that GM raised its 2025 guidance for earnings before interest and taxes (EBIT), earnings per share (EPS) and adjusted free cash flow, driven by a smaller-than-expected impact from tariffs, and said GM is rolling back some of its electric vehicle (EV) plans to boost profitability. That involves GM’s sale of its Michigan EV battery plant stake to LG Energy, while keeping two battery plants, and transitioning its Orion plant to gas engine production from an EV focus by 2027.
Rakesh believes that smaller EV losses, tariff challenges and warranty costs, and a higher combustion engine mix, will support GM’s target to return to 8% to 10% EBIT margin in the North America business. Other tailwinds include $5 billion in deferred revenue from OnStar and Super Cruise models, with about 70% gross margins, combined with a stable average selling prices.
Rakesh ranks No. 67 among more than 10,000 analysts tracked by TipRanks. His ratings have been successful 64% of the time, delivering an average return of 24.8%. See General Motors Insider Trading Activity on TipRanks. More

The Fluor Corporation logo is displayed on a smartphone.
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Company: Fluor Corp (FLR)
Business: Fluor is a holding company that provides engineering, procurement, construction, fabrication and modularization, and project management services. The company’s segments include energy solutions, urban solutions and mission solutions. The energy solutions segment provides EPC services for traditional oil and gas markets, including the production and fuels, chemicals, LNG and power markets. The segment serves these industries with comprehensive project life-cycle services. The urban solutions segment provides EPC and project management services to the advanced technologies and manufacturing, life sciences, mining and metals, infrastructure industries and professional staffing services. The mission solutions segment provides high-end technical solutions to the United States and other governments. These include, among others, the Department of Energy, the Department of Defense, the Federal Emergency Management Agency and intelligence agencies. The segment also provides services to commercial nuclear clients.
Stock Market Value: $7.89 billion ($48.79 per share)

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Fluor performance year to date

Activist: Starboard Value

Ownership: Starboard Value
Average Cost: n/a
Activist Commentary: Starboard is a very successful activist investor and has extensive experience helping companies focus on operational efficiency and margin improvement. They are known for their excellent diligence and for running many of the most successful campaigns. Starboard has initiated activist campaigns at 18 prior industrial companies and their average return on these situations is 50.55% versus an average of 11.73% for the Russell 2000 during the same time periods. Starboard has taken a total of 162 prior activist campaigns in their history and has an average return of 21.13% versus 14.24% for the Russell 2000 over the same period.
What’s happening
On Oct. 21, Starboard announced a nearly 5% position in Fluor and stated their intention to unlock value from the company’s ~39% holding in NuScale Power, which represents more than 60% of the company’s market capitalization, including through a potential separation.
Behind the scenes
Fluor delivers integrated engineering, procurement, construction, and project management services, spanning a diversified set of end markets. Historically, the EPCM market was a highly competitive landscape that led to heavy risk taking, where growth was often prioritized over discipline and profitability. For Fluor, as well as much of the industry, this led to management aggressively increasing their backlog of higher-risk lump-sum and guaranteed minimum contracts, leading to execution risks, thin margins and cost overruns. Ultimately, this industry-wide shift caused many companies to scale back their construction efforts or even enter bankruptcy, and Fluor was no exception, with the company’s share price falling below $4 in March 2020.

However, this started to change when the company appointed David Constable as CEO at the start of 2021. Under his leadership, Fluor immediately pivoted to lower-risk reimbursable projects, growing from 45% of its backlog to 80%, while exposure to loss-making legacy projects have declined from $1.8 billion to $558 million today, materially reducing its risk profile.
Additionally, while largely associated with legacy energy projects, the company has levered into faster growing markets within its urban solutions segment, now 73% of its backlog compared to 37% in fiscal year 2021. As a result, even with this derisking effort, Fluor was still able to maintain a steady backlog and achieve meaningful EBITDA growth, a 14% compound annual growth rate from fiscal year 2021 to fiscal 2024, with analysts projecting a ~9% CAGR from fiscal 2024 to fiscal 2028.
With many of the large construction and EPCM players having exited the market, Fluor’s operational turnaround has allowed it to come out the other side of this turmoil on top, now operating in a duopoly of global end-to-end EPCM players with Bechtel, while the construction market has grown rapidly, now over $918 billion.
As a result of this successful operational overhaul, the market currently values Fluor at 8.9 time its enterprise value to calendar year 2027 estimates for consensus EBITDA, in between its EPCM (13x) and legacy construction peers (6x). So, Fluor appears to be a great business with a great management team operating in a duopoly in a growing industry that is fairly valued with a $6.7 billion enterprise value. However, Fluor also owns a 39% stake in NuScale, a publicly traded small modular nuclear reactor company.
Fluor invested in NuScale more than a decade ago, and its $30 million early investment played a pivotal in NuScale becoming the first U.S.-listed SMR company, and the only company of its kind with U.S. Nuclear Reactor Commission design approval.
As global power demand continues to rise, particularly alongside the data center boom, nuclear generation will be vital, and SMRs will play an essential role in providing energy to meet this growth. As a result, Fluor’s investment in NuScale has been highly lucrative – valued at approximately $4.3 billion ($3.4 billion post tax). That’s more than half Fluor’s current enterprise value.
If you were to back out the NuScale stake from Fluor’s valuation, then Fluor’s enterprise value would drop to $3.3 billion, implying an extremely depressed discount of just 4.6x, with peers trading from 6 to 13 times.
Starboard has amassed a nearly 5% position in Fluor and is urging management to unlock the value from its NuScale holdings. Starboard believes that Fluor has multiple paths to monetize its remaining NuScale stake. These options include simply selling their position through open-market sales, an exchange offer or a mandatory exchangeable bond, with proceeds potentially funding a large share buyback, which would be highly accretive to Fluor’s EPS, especially at its currently depressed valuation.
Alternatively, Starboard has proposed a tax-free spinoff of Fluor’s NuScale position, which could trigger a similar rerating of the core business while providing Fluor shareholders with the option to retain their exposure to NuScale’s long-term potential.
Thus, assuming Fluor maintains an 8.9x EBITDA multiple, which still could be improved upon given its discount to EPCM peers, the rerating that could come from this separation could yield over 200% of upside.
Starboard is a very experienced activist and also has a history in this industry. In June 2019, Starboard engaged another construction player, AECOM, where over the ensuing multiyear engagement, AECOM refreshed its board, appointed a new CEO, exited self-perform construction, and divested management services. This became one of Starboard’s most lucrative engagements in its history, returning 147% over its 13D filling versus 26% for the Russell 2000.
But more importantly, this is when they met David Constable for the first time. Constable is the executive chairman of Fluor, and until February, was its CEO. So, we expect that the mutual respect between Starboard and Constable will be conducive to an amicable, constructive relationship and beneficial to shareholders.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist investments. More

ETF Strategist

ETF Street
ETF Strategist

More Americans want to include alternative investments in their portfolios, which can include assets like cryptocurrencies, private-market assets and gold.
Two-thirds of Americans surveyed said investing success requires supplementing traditional assets, according to a new survey from Charles Schwab.
“Although there is constant noise in the investment landscape, chasing fads or the latest headlines can negatively impact an investor’s portfolio in the short and long term,” said Andy Reed, head of behavioral economics research at Vanguard.

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Amid growing consumer interest in alternative investments, financial advisors say it’s important to find the right way to invest.
Alternative investments are a broad category that covers many assets outside traditional holdings of cash, stock and bonds. Alts include private-market assets, real estate, commodities such as gold and oil, and cryptocurrencies, among others.

Investing in these products can entail added risks and complexities, advisors said. One smart way to get exposure to them is a more traditional vehicle: exchange-traded funds.

More from ETF Strategist:

Here’s a look at other stories offering insight on ETFs for investors.

The strategy represents an intersection of investor interest. Investors have put more than $1 trillion into U.S.-based ETFs so far this year, on pace to set a new annual record, State Street Investment Management said earlier this month. Much of that inflow has gone to gold and crypto ETFs, other analysts recently told CNBC.
Younger people, especially, are expressing disillusionment with conventional holdings, a phenomenon experts have dubbed “financial nihilism.”
Two-thirds of Americans surveyed said investing success requires supplementing traditional assets, according to a new survey from Charles Schwab. Nearly half of respondents, 45%, said they are interested in owning alternatives, such as private equity, real estate partnerships and hedge funds.
Schwab’s survey, conducted this spring, polled 2,400 people: a sample of 2,000 adults, plus an additional 200 Gen Z respondents and 200 cryptocurrency investors.

Shifting regulations may also allow more people to access a wider variety of alternative assets.
President Donald Trump signed an executive order in August designed to make it easier to get alternative products into workplace retirement plans. Meanwhile, the U.S. Securities and Exchange Commission recently made changes that could speed the launch of spot crypto ETFs.

‘Boring investing still works’

Using ETFs to get exposure to alts can help you sidestep some of the complexities of investing in such assets directly — namely, a lack of liquidity, said Cathy Curtis, the founder and CEO of Curtis Financial Planning in Oakland, California.
“These [private] investments often have multi-year lockup periods, limited redemption windows or depend on the underlying fund liquidating its holdings before investors can get paid out,” said Curtis, a member of CNBC’s Financial Advisor Council.
ETFs that hold these less-liquid assets, however, can typically still be traded freely throughout the day and during extended hours.

Curtis recommends limiting alternative investments to between 10% and 15% if you have a large portfolio, and to less than 5% if you have a smaller nest egg.
Those who are investing to buy a house, send their children to college or retire one day may find traditional stocks and bonds are still a better bet for the bulk of their portfolio, said Andy Reed, head of behavioral economics research at Vanguard.
“Although there is constant noise in the investment landscape, chasing fads or the latest headlines can negatively impact an investor’s portfolio in the short and long term,” Reed said.
History shows that putting money into a broad basket of stocks is highly profitable over the long term. If you invested just $1,000 in the S&P 500 on Feb. 1, 1970, you’d have more than $379,000 as of Oct. 20, according to Morningstar Direct. A $1,000 investment in the index on Jan.1, 2020 would be worth over $2,200 on Oct. 20.
“Boring investing still works,” Curtis said. More