Core Viewpoint - Kenvue Inc. has been downgraded by Jefferies from Buy to Hold, with a reduced price target of $18, reflecting concerns over limited upside potential and litigation risks following the approval of its merger with Kimberly-Clark [1][7]. Group 1: Merger Approval - Shareholders of both Kimberly-Clark and Kenvue have overwhelmingly approved the merger, with approximately 96% of Kimberly-Clark shares and about 99% of Kenvue's voting shares in favor [2]. - The merger is expected to create a global leader in health and wellness by combining well-known brands such as Huggies, Kleenex, Tylenol, and Neutrogena, with the transaction anticipated to close in the second half of 2026, pending regulatory approvals [3]. Group 2: Company Overview - Kenvue Inc. operates as a consumer health company across various regions, including the US, Europe, the Middle East, Africa, Asia-Pacific, and Latin America, and is structured into three segments: Self Care, Skin Health and Beauty, and Essential Health [4].

Group 1: Chevron - Chevron offers a reliable dividend yield of 4% and has increased its dividend for 37 consecutive years, making it a strong candidate for passive income [4][6] - The company has outlined a plan to grow free cash flow (FCF) and earnings per share by at least 10% when Brent crude oil prices are at $70, with a breakeven point at $50 per barrel [5] - Chevron's solid balance sheet provides a cushion during downturns, allowing it to maintain its dividend even if oil prices fall below $50 [5] Group 2: Kimberly Clark - Kimberly Clark, known for brands like Kleenex and Huggies, is currently priced below $100 a share, which is a 12-year low, presenting a potential buying opportunity [9] - The company announced the acquisition of Kenvue, aiming for billions in annual cost synergies and expecting to grow earnings in the second year post-acquisition [9][10] - Kimberly Clark has a 5.2% dividend yield and a forward price-to-earnings ratio of 13.1, positioning it as a strong value stock for passive income [12]

Core Viewpoint - Consumer staples stocks, particularly those that are currently undervalued, present a significant buying opportunity for value investors, especially in light of their underperformance compared to the broader market [1][2]. Group 1: Procter & Gamble (P&G) - P&G experienced a challenging 2025, with a stock value decline of 14.5%, reaching a near three-year low [4]. - The company reported a 1% decline in sales volume and flat organic sales growth, leading to a 5% drop in diluted net earnings per share (EPS) [5]. - P&G has adjusted its fiscal 2026 diluted net EPS growth forecast to a range of 1% to 6%, down from a previous estimate of 3% to 9% [5]. - The company is under new leadership and aims to enhance its value proposition by focusing on volume growth rather than price increases [8]. - P&G boasts a strong dividend yield of 2.9% and has increased its dividend for 69 consecutive years, making it an attractive option for income investors [9][11]. Group 2: Kimberly-Clark - Kimberly-Clark reported a modest 3.2% growth in adjusted EPS and flat adjusted operating profit, with a 1.7% increase in organic sales [12]. - The company is in a downturn but plans to acquire Kenvue to diversify its product offerings, which is expected to enhance its market position [13]. - Kimberly-Clark anticipates achieving $2.1 billion in annual cost synergies from the acquisition within three years [15]. - The company has a dividend yield of 5% and has increased its dividend for 54 consecutive years, making it appealing for value investors [17][19]. Group 3: Comparative Analysis - P&G is considered a higher quality company with a strong brand portfolio and better diversification, while Kimberly-Clark offers a cheaper valuation and higher yield, making it a potential turnaround play [20]. - Both companies are currently facing growth challenges due to a slowdown in consumer spending but continue to generate substantial free cash flow and earnings to support their dividends [20]. - A balanced investment strategy could involve a 50/50 split between both stocks, yielding an average of 4% [21].

Core Insights - Johnson & Johnson (JNJ) is recognized as a Dividend King, having consistently paid and increased dividends for over 50 years, making it a stable investment option during market volatility [1] - JNJ stock outperformed the market with a 43.7% increase last year, compared to the market's overall gain of 16.6%, and has continued to rise by over 10% in early 2026 [2] Business Structure and Performance - In 2023, JNJ spun off its consumer division into a separate company called Kenvue (KVUE), allowing JNJ to focus on a pure-play health care innovation business centered on drugs and medical devices [4] - The Innovative Medicine segment is the primary revenue driver, generating $15.7 billion in Q4 2023, a 10% year-over-year increase, and $60.4 billion for the full year, reflecting a 6% increase [4] - JNJ reported a 5.3% increase in worldwide sales to $94.2 billion, despite challenges from the loss of exclusivity on Stelara, with adjusted diluted earnings per share rising 8.1% to $10.79 [4] Growth Prospects - Oncology is projected to achieve 21% operational sales growth in 2025, with anticipated annual sales exceeding $50 billion by 2030, marking it as a significant growth engine for the company [5] - The MedTech segment also showed strong performance, with a 7.5% revenue growth in Q4 and 6.1% for the full year, generating $34 billion in sales, driven by advancements in Cardiovascular, Surgery, and Vision [5] - JNJ's MedTech division is supported by over 60 active clinical trials and multiple regulatory submissions planned, positioning it as a key growth pillar alongside Pharmaceuticals [5][6]

Group 1 - Kenvue Inc. is receiving institutional support for its proposed merger with Kimberly-Clark, which is valued at $40 billion, as recommended by Institutional Shareholder Services (ISS) [2] - The merger is expected to create positive synergies and advance strategic objectives, despite ongoing talcum litigation and concerns regarding Tylenol's active ingredient [2] - Meridian Hedged Equity Fund believes the market has overreacted to Tylenol safety concerns, noting minimal revenue impact and a lack of new scientific evidence [3] Group 2 - Kenvue's share price has decreased by 35% since its public listing in 2023, while Kimberly-Clark's share price has dropped by 17% since the merger announcement [4] - Kenvue focuses on consumer healthcare products, operating in Self Care, Skin Health, and Essential Health segments globally [4]

Group 1 - Kenvue Inc. is receiving institutional support for its proposed merger with Kimberly-Clark, which is valued at $40 billion, as recommended by Institutional Shareholder Services (ISS) [2] - The merger is expected to create positive synergies and advance strategic objectives, despite ongoing talcum litigation and concerns regarding Tylenol's active ingredient [2] - Meridian Hedged Equity Fund believes the market has overreacted to Tylenol safety concerns, noting minimal revenue impact and a lack of new scientific evidence [3] Group 2 - Kenvue's share price has decreased by 35% since its public listing in 2023, while Kimberly-Clark's share price has dropped by 17% since the merger announcement [4] - Kenvue focuses on consumer healthcare products, operating in Self Care, Skin Health, and Essential Health segments globally [4]

Group 1: M&A Market Overview - Global mergers and acquisitions (M&A) surged in 2025, reaching approximately $4.5 trillion, which is about 50% above 2024 levels and the second-largest annual total on record [1] - The deal boom in 2025 was characterized by a high value of cash transactions, with 68 deals worth at least $10 billion, marking the highest number of megadeals in recent years [2][3] Group 2: Notable Megadeals - The largest deal involved a bidding war between Paramount and Netflix for Warner Bros. Discovery, with Netflix's equity value at $72 billion and Paramount's revised bid at $108.4 billion [4] - The second-largest deal was an $88.26 billion rail merger between Union Pacific and Norfolk Southern, announced in July [5] - Electronic Arts (EA) shareholders approved a $55 billion sale to a consortium led by Saudi Arabia's Public Investment Fund, marking a record-setting leveraged buyout in the gaming industry [5] - Kimberly-Clark's acquisition of Kenvue, valued at $40 billion, was the fourth largest deal, involving a consumer health company known for various well-known brands [6] - The fifth largest deal was the $40 billion acquisition of Aligned Data Centers by a consortium led by BlackRock's Global Infrastructure Partners, marking the largest data center transaction on record [7]

Core Viewpoint - The Meridian Hedged Equity Fund's third-quarter 2025 performance reflects a market more influenced by policy easing than weakening fundamentals, achieving a net return of 1.67% despite concerns over stagflation [1] Fund Performance - The fund's return of 1.67% in Q3 2025 is compared to the S&P 500 Index's return of 8.13% and the CBOE S&P 500 BuyWrite Index's return of 3.53% [1] Company Focus: Kenvue Inc. - Kenvue Inc. (NYSE:KVUE), a consumer health company with brands like Tylenol and Neutrogena, is highlighted as a key investment despite a one-month return of -0.06% and a 52-week loss of 21.06% [2][3] - Kenvue's stock closed at $17.02 on December 23, 2025, with a market capitalization of $32.609 billion [2] Investment Rationale for Kenvue Inc. - The fund sees potential for Kenvue to unlock value through reinvestment in underfunded brands, cost optimization, and margin improvement [3] - Recent market reactions to studies linking acetaminophen to autism risk during pregnancy are viewed as overblown, with minimal revenue impact expected from pregnant women, who represent less than 1% of Tylenol's global sales [3] Hedge Fund Interest - Kenvue Inc. was held by 73 hedge fund portfolios at the end of Q3 2025, an increase from 72 in the previous quarter, indicating growing interest [4] - Despite this interest, the fund suggests that certain AI stocks may offer greater upside potential and lower downside risk compared to Kenvue [4]

Core Viewpoint - Kimberly-Clark Corporation (NASDAQ:KMB) is recognized as a strong investment opportunity, particularly following its better-than-expected third quarter earnings and plans to acquire Kenvue, enhancing its consumer health presence [2][3]. Group 1: Company Performance - Kimberly-Clark has recently upgraded its rating to Buy from Hold, with a price target set at $120, indicating a positive outlook despite recent stock lagging [2]. - The company reported better-than-expected earnings for the third quarter, which has contributed to the stronger outlook from analysts [2]. Group 2: Acquisition and Market Position - Kimberly-Clark plans to acquire Kenvue, a company that focuses on consumer health and owns several well-known brands, with the deal expected to be completed in the second half of next year [2][3]. - Both Kimberly-Clark and Kenvue operate in resilient product categories, making KMB an attractive long-term investment option [3]. Group 3: Revenue Generation - The majority of Kimberly-Clark's revenue is generated through direct sales to various channels, including retailers, distributors, and online platforms [4]. - The company serves a diverse global customer base, including supermarkets, big-box stores, drugstores, and institutional buyers across multiple sectors [4].

Core Insights - Kenvue Inc. (NYSE:KVUE) is currently under scrutiny due to litigation concerns, but the overall sentiment from analysts suggests that long-term shareholders should not be overly worried [1][2] - The company operates in the consumer health products sector, offering well-known brands such as Tylenol, Motrin, Calpol, Neutrogena, and Band-Aid [2] Company Overview - Kenvue Inc. provides a range of consumer health products, including pain relief, allergy care, digestive support, wellness, and personal care [2] - The stock is currently at a 4.5% yield, and the company has new leadership in place [2] Analyst Sentiment - Jim Cramer believes that while there will be lawsuits, the situation is manageable and not as dire as perceived [1][2] - Cramer does not expect significant upside for Kenvue's stock in the near term, indicating a cautious outlook [2]