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Wednesday, November 11, 2026

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Cat-Scratch Fervo

Fervo Energy raised $2 billion in its May IPO, then fell nearly 70% below issue price after a Morpheus short report, despite targeting 1 GW of geothermal power by 2030.

FRVO $2.3B
Doomberg 2 clicks

From X

@StableBread

Fajasy on X

Root's $ROOT annualized premium run rate (premiums in force) fell 5.4% y/y in Q3, nearly double Q2's 2.8% drop, as larger carriers cut prices and Root gave up direct-to-consumer growth to protect returns. Policy growth offset the lower premium per policy in Q1, but policies in force were flat from June at 484k (+3.8% y/y) while premium per policy fell 8.9% y/y, to $1,441. $ROOT's gross accident period loss ratio (losses from crashes in the quarter over premium earned) rose 4.6 points y/y, to 61.1%, but only 1.6 points from Q3 2025's first estimate of 59.5%, which $ROOT has since revised down to 56.5%. The 10-Q blames (1) higher repair and medical costs per claim, (2) more frequent claims, and (3) a shift in channel mix, so claims costs are rising while premium per policy falls, though 61.1% is still inside $ROOT's 60-65% target range. The net combined ratio (losses plus expenses over premium; under 100% is an underwriting profit) improved 4.9 points y/y, to 97.2%, but ~4.2 points of that is Carvana warrant expense falling $15.3M after a one-time catch-up in Q3 2025, so the underlying gain was under a point. $ROOT's Q3 letter to shareholders says it repurchased $36.2M of stock "during the third quarter," but the 10-Q shows $15.5M in Q3, down from over $20M in Q2; the $36.2M is the total since the May authorization, with $38.8M left as of September 30. $ROOT also began deploying its new pricing model in Q4, which it expects to be its largest improvement in predictive power to date, and which it says lets it cut rates for better drivers while keeping its target returns. At ~$56/share, $ROOT trades at ~2.6x its $327.0M book value as of September 30, the low end of the $55-80 base case in my August 10 update, on a Q3 annualized ROE of ~18%, the low end of that case's 18-22%. So I read Q3 as $ROOT playing the soft market the way I expected, holding its margins and shrinking rather than buying growth, which keeps the stock priced as if it never grows again. What I'd want to see from here: 1) Policies: Whether policies in force grow from the flat 484k once the new pricing model reaches more of the book. 2) Partnerships: Whether new business through partners and independent agents, up 19% y/y in Q3 and now 52% of the total, keeps growing. 3) Loss ratio: Whether 2026's first estimates come down a year later, like Q1-Q3 2025 did.

Investor Letters

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Airbnb 3Q26: Business Update

Airbnb’s 3Q26 revenue rose 19% to $4.9 billion as nights and seats grew 16%, with app bookings up 29% and Reserve Now Pay Later adding…

ABNB $111B
Speedwell Memos 2 clicks

Research update

S&P Global research will assess Platts, Kensho and ratings growth; Benefit Systems’ 72% YTD rally changed its valuation, while Netflix and…

SPGI $136BICE $96B
Global Outperformers 3 clicks
OSW · short

One Spa World

OneSpaWorld (OSW) faces about 37% downside as its valuation requires unattainable growth in average revenue per customer after major-market…

OSW $3.1B
Value Investors Club

💥Tead-ering💥

Teads’ revenue fell 26% and its stock dropped 38% as Google AI summaries cut publisher referral traffic, worsening losses and straining its…

TEAD $17MGUTS $11M
PETITION 2 clicks

The AutoNation Story

AutoNation shed rentals and megastores, focused on dealerships, and retired 91.1% of its shares through buybacks after its 1990s roll-up…

AN $5.9B
Cannibal Stocks 3 clicks

The 10-Q Fills In the Buyback

Empire State Realty Trust bought $86.1 million of stock through November 6, while corrected sum-of-the-parts values range from $9.12 to…

ESRT $1.3B
Orphan REITs 2 clicks

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