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🍋 Wall Street’s New Pariah

🍋 Wall Street’s New Pariah

Plus: Subway-owner buys Dave's Hot Chicken for $1B, Equinox and SoulCycle sued for making it hard to cancel memberships, and are AI data centers the next bubble?

Short Squeez
June 03, 2025

Together With

“Luck, is largely responsible for my reputation for genius. I don’t walk into the office in the morning and say, ‘Am I smart today?’ I walk in and wonder, ‘Am I lucky today?’” — Jim Simons

Good Morning! Big Pharma dealmaking is heating up again - Sanofi is buying Blueprint Medicines for up to $9.5B, and Bristol Myers is licensing a BioNTech cancer drug for up to $11.1B. Meanwhile, Dave’s Hot Chicken was sold to Subway-owner Roark Capital for $1B.

Equinox and SoulCycle are under fire for making it hard to cancel gym memberships, Musk firms are launching a fundraising blitz post-White House, and Wall Street is bracing for a deeper dollar slide.

Plus: Big brands back off Pride, U.S. office space shrinks for the first time in 25 years, and are AI data centers the next bubble?

Zillow’s founders are back, this time unlocking luxury vacation homes across the globe. Here’s your chance to invest in a new model of luxury living. Learn more about their raise.

SQUEEZ OF THE DAY

Wall Street’s New Pariah

There’s a new private credit ratings agency that is seemingly causing a stir on Wall Street (and not in a good way).

Egan-Jones Ratings Co. is fast becoming the Northwestern Mutual of the rating agencies world. It’s apparently the most prolific grader of private credit on Wall Street, operating with just 20 analysts out of a Philly suburb.

In 2024 alone, they graded over 3,000 private credit deals, averaging 150 issuances per analyst. That's roughly one every two business days per person.

But Egan-Jones isn’t your standard Moody’s or S&P. Their turnaround time? Five days. Report length? Often a single page. And their clients? Mostly insurers eager for "investment-grade" stamps to lower capital charges and juice returns.

But that speed and optimism come at a price. Egan-Jones gave a BBB rating to Chicken Soup for the Soul Entertainment, which defaulted just 14 months later with $25,000 left in the bank. Crown Holdings? Defaulted in six weeks. Another Egan-rated borrower, 777 Partners, had a 14% interest rate loan labeled as investment grade (that deal also went south).

Now, Wall Street’s biggest players (BlackRock, Carlyle, Apollo, Golub, and Morgan Stanley) have blacklisted Egan-Jones from their deal docs, and regulators are circling.

A withdrawn NAIC report found firms like Egan-Jones often rated debt three to six notches higher than reality. Lawsuits, former-employee whistleblower claims, and a past SEC settlement ($2M+) are further darkening the firm's credibility.

Takeaway: At best, Egan-Jones is the scrappy outsider giving small firms a shot at capital. At worst, they’re the WeWork of ratings with community-adjusted fundamentals, and they hope nobody double-checks their math.

Either way, as the private credit industry soars past $1 trillion and the economic clouds darken, the question isn’t whether this ends badly. It’s who gets caught holding the bag.

HEADLINES

Disrupting the $1.3T Vacation Home Market

When the team that co-founded Zillow and grew it into a $16b real estate leader starts a new company, investors notice. That's why top firms like SoftBank invested in Pacaso.

Pacaso is transforming the $1.3T vacation home market through a sleek co-ownership model, making second homes more accessible than ever.

They’ve already generated $100M+ in gross profits and helped over 1,500 homeowners unlock luxury living.

Now, the company is focused on international expansion – achieving record-breaking sales in Paris, securing 7 homes in Cabo, and recently acquiring their most valuable European property yet in London.

The best part? You can join them as an investor for just $2.90/share right now. Grow with Pacaso as an investor today.*

CAPITAL PULSE

Markets Rundown

Market Update

Stocks opened June higher, rebounding from early losses sparked by renewed trade tensions. President Trump announced a doubling of tariffs on steel and aluminum to 50%, while China officials accused the U.S. of violating trade agreements.
Energy and technology sectors led the rally, while industrials were the only sector to finish lower.
Bond yields rose, with the 10-year Treasury yield climbing to 4.44%, as inflation and tariff risks remained top of mind.
Oil prices advanced after OPEC+ opted to hold output steady, while the U.S. dollar slipped against major currencies.

Economic Data Highlights

S&P U.S. Manufacturing PMI (May): Rose to 52.0 vs. 50.8 expected, marking five straight months of expansion.
ISM Manufacturing PMI (May): Declined to 48.5 vs. 49.5 forecast; new orders and supplier deliveries provided some support.
10-year Treasury yield: Increased to 4.44%, up 4 basis points.

Reported Earnings

Credo Technology (CRDO): Reported after the bell. Results highlighted strong demand in AI data infrastructure and solid momentum in high-speed connectivity products.

Earnings Today

CrowdStrike (CRWD) – Reporting June 4 (After Market Close): Focus on ARR growth, cloud workload security, and Fed customer expansion.
Hewlett Packard Enterprise (HPE) – Reporting June 4 (After Market Close): Investors watching AI server momentum and GreenLake platform metrics.
Asana (ASAN) – Reporting June 4 (After Market Close): Key metrics include enterprise customer additions and net dollar retention rate.

Movers & Shakers

(+) Applied Digital ($APLD) +48% after signing a $7B new lease deal with CoreWeave.
(+) BioNTech ($BNTX) +18% because Bristol will license its cancer drug for up to $11.1B.
(–) Ford Motors ($F) -4% after Trump doubled tariffs on the steel industry.

Private Dealmaking

Sanofi to buy US biopharma group Blueprint for up to $9.5 billion
TAE Technologies, a fusion energy startup, raised over $150 million
Mubi, a streaming service for independent films, raised $100 million
Wander, a vacation rental platform, raised $50 million
Fore Biotherapeutics, a cancer drugmaker, raised $38 million
Conduit, a stablecoin payments platform, raised $36 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

NEIGHBORHOOD WATCH

Real Estate Digest

Need help with real estate? Our official partner, Nest Seekers International, can help you buy, sell, rent, or invest, anywhere in the world. Get in touch here.

Mortgage rates inched up this week but continue to be lower YoY. New listings to market are up 6% YoY while prices have remained flat, giving buyers more opportunity to pursue their homeownership goals. In a marketplace with stabilizing rates, it is always good to shop for the lowest rate possible between lenders.

Latest News

New Listings

22 Renwick St Apt: 4 New York, NY: 4 Bed / 4 Bath - $4.65M
444 N Lucerne Blvd Los Angeles, CA: 6 Bed / 6 Bath - $3.5M
27 Adams Ln Southampton, NY: 6 Bed / 7.5 Bath - $8.8M
Carrer Camí a Premià de Dalt, Spain Teià, Barcelona: 5 Bed / 7 Bath - $3.84M
51200 Valle de Bravo Mexico: 4 Bed / 6 Bath - $2.9M

BOOK OF THE DAY

High Functioning

Are you going through a period in your life when things feel “off”? Do you struggle to find joy in happy moments? Are you walking around feeling numb? Do you feel restless when you aren’t busy or empty when you are sitting still?

We all know what can’t-get-out-of-bed depression looks like. But there’s another, lesser-known side of depression that is hidden.

Those of us with High-Functioning Depression (HFD) usually don’t act the way we think a depressed person might. On the surface, we seem fine: We are succeeding at work, pulling our weight at home, and carrying on with our typical social life.

Yet behind that mask of productivity we are barely surviving, and certainly not thriving. And we may have no idea why, or what to do about it.

In High Functioning, Dr. Judith Joseph draws on original research, client cases, and her own personal struggles with HFD to demystify this poorly understood condition.

“This isn’t just a book. It’s a roadmap back to yourself.”

DAILY VISUAL

Highly Unusual Divergence in US-EU Inflation Outlook

Source: Apollo

PRESENTED BY DELETEME

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DAILY ACUMEN

Strong Network

A strong network isn’t something you build once and forget—it’s a living system that needs regular care.

Staying in touch doesn’t require grand gestures, but it does require consistency and a generous mindset.

A quick check-in, a useful article, a thoughtful comment on someone’s post—all of these are small touches that keep relationships active.

Social media can help you stay visible at scale, while occasional personal updates or progress reports give people a reason to think of you.

The key is to show up with value, not just when you need something.

A warm network isn’t just a safety net—it’s a source of opportunity, insight, and momentum when you least expect it.

ENLIGHTENMENT

Short Squeez Picks

How to master your presence at work
7 ways to boost productivity without burning out
When life feels off, you may be losing your true self
People in the happiest relationships do 5 things on weekends
Why the best kind of workout trains both your body and brain

MEME-A-PALOOZA

Memes of the Day

📣 Partner With Us: Get in front of an audience of over 1 million finance professionals, business leaders, and policy influencers. Submit a partnership inquiry.

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🧢 Wall Street Shop: Explore our collection of finance-themed apparel and merchandise. Visit the shop.

📬 Deals Newsletter – Buysiders: A curated roundup of major M&A, private equity, and VC activity. Plus access to private deal flow. Subscribe here.

🏠 Real Estate Newsletter – City Squeez: Latest news and exclusive listings for those looking to buy, rent, or invest in real estate around the world. Sign up here.

📚 Courses: Level up with our excel, modeling, and private equity courses. View offerings.

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*Disclaimer: This is a paid advertisement for Pacaso’s Regulation A offering. Please read the offering circular at invest.pacaso.com. There’s no guarantee that Pacaso will file for an IPO.

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