Weekly Research Briefing: Nothing But Net

February 27, 2024

If you need any further proof that the stock market is now focused on earnings, NVIDIA just gave it to you. Not only were the company's results incredible, but the full earnings digestion gave investors a further look into just how big the AI data market could become. When a company like Microsoft is spending 1/3 of their capital expenditures on NVIDIA GPU's to expand their presence in AI, then you pay even closer attention and work to find more ways to invest in the winners of the AI movement.

In the last month, the S&P 500 is +4.5%. Meanwhile the market has shifted its forecast of Fed Fund cuts from six in 2024 to three. Had you taken a poll a month ago on the market reaction to half as many rate cuts, I'd have guessed that most would have voted down 5%, not up 5%. The market still wants falling inflation and FOMC cuts, but it is clearly equally happy to take the recent economic pickup with low inflation. You remember what we call this type of economy? Starts with "G". Ends with something that you put a key into. Don't say it or you might jinx it.

The financial markets love the earnings and news flow. Credit is on fire with companies returning to the market to replace expensive debt that they took on over the past two years. CEOs are again wheeling and dealing global lines of business. And investment banks have returned to poaching high level talent from each other. All arrows are pointing up as companies and management teams leave their two-year bunkers. On a more local financial level, Denver had its first weekend without snow (and 65-degree temps) which released a pent-up demand of realtors, homebuyers and open house signs. Both companies and consumers are feeling better and there are signals of it everywhere.

This is the last week of February which will bring us data on ISM manufacturing, housing, consumer, and the very important January PCE inflation figure. Also, a plenty of Fed speak lined up likely reiterating their 'no need to rush' on rate cuts message which has moved nearly all economists to June for the first cut. In Washington, if Congress fails to reach an annual spending agreement before Saturday, then the U.S. government will likely shut down in early March. Let's hope that air traffic controllers are at the end of the line for work stoppage or else we will need to trade that island vacation for one that is within driving distance. Have a great week.

NVIDIA puts up an insane amount of growth for their Q4...

"Data center revenue for the fiscal 2024 year was $47.5 billion, more than tripling from the prior year. The world has reached a tipping point of a new computing era. The trillion-dollar installed base of data center infrastructure is rapidly transitioning from general-purpose to accelerated computing…companies have started to build the next generation of modern data centers, what we refer to as AI factories, purpose-built to refine raw data and produce valuable intelligence in the era of generative AI." - Nvidia CEO Jensen Huang

The Transcript

NVIDIA just ran past the others as they have become the only game in town for the highest-level GPUs...

Wall Street Journal

The limit up growth won't continue forever, but good luck trying to bet against Jensen...


Some investors laugh at NVIDIA's $2 trillion valuation, but then quiet when they see the forward multiple...

Nvidia in June became the seventh U.S. company to reach $1 trillion in market value, joining a short list of tech giants. It reached $2.06 trillion Friday, but ended the session below the milestone at $1.97 trillion.

Part of the appeal for investors: Nvidia isn’t priced for crazy results given its rapid recent growth. Its shares recently traded around 32 times its projected earnings over the next 12 months, below its 10-year average of 35 times. The stock’s valuation soared to more than 60 times forward earnings last year.

Wall Street Journal

Remember Netscape and when the internet companies dropped onto the stock market?

How does this not feel different? Of course, one big difference is the major tech companies spending a quarter of their capex on AI data centers. Oh, and NVIDIA's 58% net margins!

The journey to become one of the most-valuable U.S. companies started at a Denny’s in 1993 and has been fast-tracked in recent years by Nvidia’s dominance of GPUs, or graphics processing units. These chips, worth tens of thousands of dollars each, have become a scarce, treasured commodity like Silicon Valley has seldom seen, and Nvidia is estimated to have more than 80% of the market.

Voracious demand has outpaced production and spurred competitors to develop rival chips. The ability to secure GPUs governs how quickly companies can develop new artificial-intelligence systems. Companies tout their access to GPUs to recruit AI workers, and the chips have been used as collateral to back billions of dollars in borrowing.

The chips are so valuable that they are delivered to the networking company Cisco Systems by armored car, said Fletcher Previn, Cisco’s chief information officer, at The Wall Street Journal’s CIO Network Summit this month...

The design of the chips makes them critical parts for training the giant language models that underpin generative AI bots such as OpenAI’s ChatGPT. Much of the AI spending by such tech companies as Microsoft, Alphabet and Amazon.com has gone to GPUs.

Jensen Huang, Nvidia’s chief executive officer and co-founder, said generative AI is kicking off a wave of investment worth trillions of dollars, which he believed would double the amount of data centers in the world in the next five years and deliver market opportunities for Nvidia.

“A whole new industry is being formed, and that’s driving our growth,” he said on the company’s earnings call. Nvidia on Wednesday reported quarterly sales of $22.1 billion and forecast another $24 billion for its current quarter, each more than triple what was posted a year earlier and ahead of Wall Street’s bullish expectations.

Wall Street Journal

Over 60% of the S&P 500's year over year net income growth is due to NVIDIA and Amazon...

The S&P 500 added $35 billion in net income in 4Q23 vs 4Q22, which is the 7% EPS growth. The contributions from NVDA 1.25% and AMZN 0.31% is staggering:

  • NVDA 1.25% added $10.7B net income 4Q23 vs 4Q22
  • AMZN 0.31% added $10.3B
  • NVDA is 31% of EPS growth, AMZN is 30%
  • these 2 accounted for 61% of all added net income


Now for a glance at the year-to-date performance split of the S&P 500 top ten...

@EarningsScout: It is worth noting that among the top 10 $SPY co’s their average YTD return is +16.04%. The index is up +6.69%. The remaining 490 co’s have an average gain of only +2.24%.

If you think that there are only a handful of stocks to make money in this market, then you would be wrong...

163 public company stocks hit all-time highs on Friday. This was 3.17% of all company issues traded on the NYSE and Nasdaq. 124 of the 163 companies had market caps greater than $5b which means almost 1/5th of large-cap stocks make new highs. Below is the full list of those large cap stocks making all-time new highs. Every sector is represented except for utilities.


Okay, so you didn't own NVIDIA last week. Don't be upset...

There will be plenty of other ways to participate in the growth of AI or its usage. Just consider the amount of energy that AI data centers will require to operate.

"You have data center chips doubling year-on-year, but the efficiency needs are the things that are really eye-catching. The New York Times ran an article that AI could soon need as much electricity as an entire country. So I'm sure you're curious like which countries? Sweden, the Netherlands, and Argentina. If you were to run all of the AI servers that market estimates have on DGX to DX-100, those kinds of devices, you would take 85 to 134 terawatt hours, terawatt hours. By the way, the great state of California, its entire power generation capability today is 30 terawatt hours for the entire state." - Intel GM Stuart C. Pann

“Data centers and power storage and data centers and the efficiency of power in the data center is going to be a huge deal. There have been some estimates that 10% of energy in the world will go to AI data centers in the next 5 years. So the opportunity for us to be able to work with customers who are designing components and equipment for those places is really high” - Fortive Corporation CEO James A. Lico

The Transcript

Away from earnings and back to wondering when the U.S. inflation data series will break...

The single-family home inventory market is tight. Home prices are beginning to accelerate higher again. This will add another dimension to the 3-D chess board.

The rental and ownership measures ordinarily move together because they are based on the same underlying data — the survey of thousands of rental units. But to calculate the ownership figures, the Labor Department gives greater weight to homes that are comparable to owner-occupied units. That means that if different types of housing behave differently, the two measures can diverge.

That could be what is happening now, some economists say. A boom in apartment construction in recent years has helped bring down rents in many cities. Single-family homes, though, remain in short supply just as millions of millennials are reaching the stage where they want more space. That is driving up the cost of houses for both buyers and renters. And because most homeowners live in single-family homes, single-family units play an outsize role in the calculation of owners’ equivalent rent.

“There’s more heat behind single-family, and there’s very good arguments to be made for why that heat will persist,” said Skylar Olsen, chief economist at Zillow.

New York Times

If inflation only consisted of raw material prices, then predicting it would be easy right now...

@lisaabramowicz1: The Bloomberg Commodities index has fallen to the lowest since 2021.

A big number this week that could surprise to the upside. But the downward trend should still be in tact...

@carlquintanilla: B of A: “.. Our estimate of underlying #PCE (personal consumption expenditure) inflation has fallen from a peak of 4.5% annualized in late 2021 to 2.8% today .. Reaching 2.3-2.6% by mid-year would support cuts in June.”

The FOMC Minutes last week once again laid out the Fed's case for waiting...

"Participants highlighted the uncertainty associated with how long a restrictive monetary policy stance would need to be maintained. Most participants noted the risks of moving too quickly to ease the stance of policy and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2 percent. A couple of participants, however, pointed to downside risks to the economy associated with maintaining an overly restrictive stance for too long." - FOMC Minutes

The Transcript

As a result, the bond market has pushed the first Fed Funds rate cut bet out into June...

CME Group

Speaking of economics, congrats to Jan Hatzius and the Goldman Sachs team for last week's shoutout by the WSJ's Greg Ip...

I have included a lot of Jan's work in the WRB the last few years because the team does an outstanding job and they have been correct more than others. You may not be a Goldman client, or you might even work for the competition, but that shouldn't keep you from keeping an eye on the best thinkers in the market. Our job is to win for our clients which means I will read all I can and put the best info and data that I can in front of you and my HL team. That info might be from a major economics team like Goldman's or it might be from a stay-at-home economist/strategist who runs circles around Wall Street. It's all about becoming better informed and making better returns on our investments for our clients.

Goldman Sachs is upbeat about the economy this year. Its economists see healthy growth of 2.3%, unemployment staying below 4%, and the probability of recession at just 15%—all more optimistic than the consensus. And they see inflation, excluding food and energy, continuing to fall, to a little over 2% (using the Federal Reserve’s preferred measure) by year-end.

Forecasts are a dime a dozen. Why care about Goldman’s? First, because its economists have been firmly in the soft-landing camp, which now looks prescient.

Second, Jan Hatzius, the firm’s chief economist, made an equally out-of-consensus, and prescient, call in the opposite direction in 2008. Back then, he correctly warned that mortgage defaults could cause a severe recession.

Nailing one big call might be luck; nailing two gets you a following. Hatzius is one of the most closely followed economists on Wall Street and in Washington.

Wall Street Journal

Good luck to the U.S equity bears who want to stand in front of a market with strong momentum and strengthening earnings...

@RyanDetrick: When the S&P 500 is higher in both January and February did you know the next 12 months have been higher 27 out of 28 times since 1950?! Average return of 14.8%.

If you thought the move in NVDIA last week was big, there are equivalent events happening over in the bond market right now...

Pharmaceutical giant AbbVie Inc. sold $15 billion of bonds in the US investment-grade market on Thursday to help fund its acquisitions of ImmunoGen Inc. and Cerevel Therapeutics Holdings Inc., adding to a recent rush of buyout financings.

The company offered the securities in seven parts. The longest portion, a 40-year bond, yields 105 basis points over Treasuries. It was previously pitched at about 130 basis points more than the benchmark, according to a person with knowledge of the matter.

Investors placed orders for more than $80 billion of bonds, according to a different person with knowledge of the matter. Both asked not to be identified because the details are private...

The bond sale is the latest in a string of recent offerings from blue-chip companies looking to fund acquisitions. Cisco Systems Inc. on Wednesday sold $13.5 billion of bonds to finance its purchase of Splunk Inc. Last week, Bristol Myers Squibb Co. issued $13 billion of bonds to help pay for its acquisitions of Karuna Therapeutics Inc. and RayzeBio Inc., a transaction that garnered more than $85 billion of orders.


And not just high grade, but high yield is also on fire...

@lisaabramowicz1: Spreads on US high-yield bonds have fallen to the lowest since the beginning of 2022.

Well, that was quick. The biggest banks are coming back to the CLO market...

The Wall Street banks have in recent months been selectively offering to underwrite the so-called equity portions of CLOs as part of a push to win deals, according to people with knowledge of the matter. CLOs bundle leveraged loans into slices of varying risk and return. The equity piece, while offering potentially juicy profits, is the last to be repaid, often making it difficult for firms that run the structures, known as collateral managers, to drum up demand.

It’s the latest attempt by banks to gain an edge in the lucrative industry of arranging CLOs. In years past, they emphasized their ability to source loan supply and ensure managers the best allotments, would offer more attractive terms on the credit lines that are used to gradually build a portfolio, and offer to buy up the largest, safest slices of the deals.

But as competition has ramped up and more banks seek to muscle into the fee-rich business of arranging deals, some are going to greater lengths to attract or retain clients. The risk with backstopping CLO equity, of course, is that if banks can’t quickly find a buyer, they’ll be forced to hold it on their balance sheet — incurring significant capital charges in the process — or sell at fire-sale prices.


Speaking of the Collateralized Loan Obligation market, here are some numbers...

@GunjanJS: "We smell a whiff of exuberance in the air. US CLO new issuance has its highest YTD tally ever ($30.3bn)" --JPM

Junk bond issuance is surging which is great news for the markets and for future M&A activity...

The average spread for high-grade bonds traded at the lowest level since November 2021 this past week as investors bet on Federal Reserve easing at some point later this year.

Another $35 billion of blue-chip debt is expected in the coming week — and at least one more jumbo deal may be possible before the end of the month, according to people familiar with the matter, who asked not to be identified discussing deals...

For finance chiefs, it’s hard to ignore the success of recent deals as bond buyers — from pension funds to retail traders — look to take advantage of currently high all-in yields. AbbVie drew in more than $80 billion of orders from investors, while Bristol Myers’ deal raked in more than $85 billion.

The hot demand is allowing companies to sell bonds at yields similar to what their existing debt pays. Borrowers in the US high-grade market, on average, paid 0.4 basis point more yield on Thursday for new bonds compared with the levels on their outstanding notes.


You can watch the tape and see the increase in M&A. But here are the raw U.S. figures...

U.S. M&A deal activity increased in January, going up 16.1% with 1,209 announcements compared to 1,041 in December. Aggregate M&A spending increased as well. In January, 10.8% more was spent on deals compared to December...

Topping the list of the largest deals announced in January are: Synopsys Inc. agreement to acquire ANSYS Inc. for $31.9 billion; Hewlett Packard Enterprise Co. deal to acquire Juniper Networks Inc. for $12.9 billion; BlackRock Inc. agreeing to acquire Global Infrastructure Management LLC for $12.5 billion; Chesapeake Energy Corp. deal to acquire Southwestern Energy Co. for $7.4 billion; a private group led by Brigade Capital Management LP and Arkhouse Management Co. LP proposing to acquire Macy's Inc. for $5.8 billion.


In the event that you need another sign that M&A is about to launch higher...

Last month’s newly appointed head of global M&A at J.P. Morgan just quit to go work for Citi. The name paint didn't even get to dry on his glass office door, and he was poached. Jane Fraser probably had to promise Vis the top job if he turned the biz into a top 3 unit. But more importantly, she wouldn't have gone and kicked Jamie Dimon in the shins if she and the board didn't think global M&A is about to go on a multi-year run.

Citigroup has appointed top JPMorgan investment banker Vis Raghavan as head of banking, completing its new management team and attempting to jump-start an underperforming business.

Raghavan, 57, is a 23-year veteran of JPMorgan Chase, the largest investment bank globally, and had been promoted to sole head of investment banking last month.

Citi touted the hire as a coup, with chief executive Jane Fraser saying: “Vis is a proven leader and his appointment is another example of our ability to attract the best talent to our firm.”

Financial Times

Speaking of M&A, an unloved S&P 600 and Russell 2000 index small cap healthcare IT company decides to go private today...

[AGTI] Agiliti to be taken private by PE firm THL Partners at $10.00/shr in cash, EV at $2.5B - Announced that it has entered into a definitive merger agreement pursuant to which an affiliate of private equity firm Thomas H. Lee Partners, L.P. (“THL”), the company’s majority shareholder, will acquire all outstanding shares of Agiliti common stock not currently owned by THL and its affiliates and certain management shareholders for $10.00 per share in cash, implying an enterprise value of approximately $2.5 billion.The purchase price represents premia of approximately 39% and 43% over Agiliti’s 30-day and 90-day volume weighted average price per share, respectively, as of February 23, 2024, the last trading day prior to public disclosure of the transaction.


Overseas M&A activity also rising as a French building industry giant reaches across the globe to Australia...

Cie. de Saint-Gobain of France offered to buy Australia’s CSR Ltd. for A$4.3 billion ($2.8 billion) as the building industry consolidates amid a shift to more climate-friendly materials.

The offer price of A$9 a share represents a 34% premium to CSR’s Tuesday closing price. The transaction would rank as the biggest takeover by a French company in 2024 and the second-largest transaction in Australia so far this year, according to data compiled by Bloomberg...

The French company has already lined up financing for the deal, people with knowledge of the matter said. The company had about €6.1 billion ($6.6 billion) of cash and equivalents at the end of December, according to data compiled by Bloomberg.

An acquisition of CSR could help Saint-Gobain diversify and boost growth in residential and commercial building products in Australia and New Zealand.


Alcoa also decides to cross the world for a major stock acquisition that would increase its market cap by 50%...

[AWC.AU] Alcoa announces agreement to acquire Alumina Limited (Australia) in All-Stock Transaction; Implied EV $2.2B

  • Transaction would further enhance Alcoa’s position as of one of the world’s largest bauxite and alumina producers with increased ownership of core, tier-1 assets
  • Transaction would provide Alumina Limited shareholders the opportunity to participate in the upside potential of a stronger, better-capitalized company with a larger, more diversified portfolio
  • Transaction would result in significant and long-term value creation for both companies’ shareholders from greater operational flexibility


In other corner office M&A news today, PPG is looking at selling its U.S./Canada paint business which could be a $3-4b transaction...

[PPG] PPG Industries to review strategic alternatives for architectural coatings business in the U.S. and Canada (corresponded to ~10% of Rev in 2023 and ~6.6K employees)

PPG’s architectural coatings business in the U.S. and Canada, which operates within the company’s performance coatings segment, is an industry leader in residential and commercial architectural coatings through its well-known portfolio of brands, including GLIDDEN®, OLYMPIC®, LIQUID NAILS®, HOMAX®, PITTSBURGH PAINTS & STAINS®, Manor Hall®, FLOOD®, DULUX® (in Canada), and SICO®, among others. The business manufactures and sells interior and exterior paints, stains, caulks, repair products, adhesives, and sealants for homeowners and professionals. It also includes certain light-duty protective coatings products that are primarily sold through company-owned stores and manufactured through a common factory footprint.

In total, the distribution network includes more than 15,000 touchpoints through company-owned stores, independent dealer locations, and major home improvement centers and retailers across the U.S. and Canada. In 2023, the architectural coatings business in the U.S. and Canada represented approximately 10% of PPG’s total net sales.

Despite the business delivering flat sales volumes in 2023, on a 3-year pro forma basis PPG’s overall company sales volume results would have improved cumulatively by over 200 basis points excluding the architectural coatings U.S. and Canada business. Also, the company’s Performance Coatings segment operating (EBIT) income, excluding the U.S. and Canada architectural coatings EBIT and the associated growth-related investments we have made, would have resulted in an approximately 300-basis point improvement in segment margins in 2023.


And Broadcom sells a $4b business to KKR which will make it the newest member of its employee ownership program...

[AVGO] Confirms KKR to acquire Broadcom’s end-user computing division, valued at ~$4B

  • To acquire its End-User Computing Division in a transaction valued at approximately $4 billion. Upon closing of the transaction, the EUC Division will become a standalone company, with greater access to growth capital and a dedicated strategic focus on empowering customers and partners worldwide with innovative digital workspace solutions.
  • After becoming a standalone company, the EUC Division will implement KKR's broad-based employee ownership program, which makes all employees owners in their respective businesses alongside KKR. This strategy is based on the belief that employee engagement and a strong ownership culture are key drivers in building stronger companies. Since 2011, KKR portfolio companies have awarded billions of dollars of total equity value to over 60,000 non-senior management employees across more than 40 portfolio companies.


Even large real estate portfolios are finding the lending environment much much more favorable today than a year ago...

Blackstone Inc. has completed European real estate’s largest-ever refinancing with €8.1 billion ($8.8 billion) of fresh debt for its Mileway warehouse business.

The private equity firm has agreed a trio of five-year loans, each priced at about 2.5 percentage points over benchmark rates, according to people with knowledge of the facilities. They include a €4.2 billion loan for Mileway’s portfolio in continental Europe, an €800 million revolving credit facility and a £2.7 billion loan secured against a portion of the company’s UK assets, said the people, asking not to be identified as the details are not public.

The jumbo loans show lenders’ appetite for logistics properties which have continued to see strong rental growth, helping offset the impact of rising rates on their valuations. The margins on the loans are significantly lower than other warehouse deals Blackstone financed last year and are roughly in line with the loans they are refinancing that were arranged before Russia’s invasion of Ukraine. Still, Mileway’s shareholders have injected about €500 million of equity as part of the deal to maintain a loan-to-value ratio of about 50%, the people said.


And you just know that the best CRE returns going forward will be in the office sector where current price dislocation will collide with a pickup in return to work this year...

If you know a 2024 grad who wants to work hard and learn how to make a killing in the financial markets, then point them toward the best commercial real estate investor that you know.

Office property developments can be “interesting lending opportunities” right now as the asset class suffers from a credit crunch, according to Paul Kelly, the head of alternative assets at Deutsche Bank AG’s investment arm DWS Group.

The market for US commercial real estate has experienced “lender pullback” with more than $2 trillion in loans coming due before 2028, Kelly wrote on Monday in an investor letter seen by Bloomberg News. “Private capital can help fill this funding gap.”

Kelly joins a growing number of finance executives who think the effort by many banks to cut debt exposure to commercial real estate amid plunging valuations and rising defaults can offer opportunities for others. That comes in the wake of an earnings season that has seen many banks in the US and Europe report soaring credit provisions for their property loans, especially those linked to US commercial real estate. The retreat of banks from the sector has helped drive up loan margins, allowing alternative lenders to charge more.

Standard Chartered Plc Chief Executive Officer Bill Winters echoed Kelly’s sentiment last week, saying that the current environment could offer an opening for the lender to increase its “relatively little exposure” to CRE. Similarly, Allianz CEO Oliver Baete said the same day that fire sales carried out by former real estate tycoons to service debt could be a chance to snap up properties at bargain prices given the huge discounts the sellers sometimes need to accept.


In the race to build the most important factories in the world, Japan takes the lead...

The world governments would do anything to get a new semi-fab built in their country. But Japan has just shown that it has the fastest map.

When Taiwan Semiconductor Manufacturing Co. unveiled plans to begin building a new chip fabrication facility in Japan in 2022 and start production in 2024, it looked like an implausibly aggressive schedule. Chip plants often take three years to complete, and, although the Taiwanese company had moved faster on its own turf, this would be its first such attempt in Japan — where it would have to navigate foreign bureaucracies and regulations.

Yet on Feb. 24, TSMC will officially open its Kumamoto fab, putting it on track to begin mass production later this year. The ribbon-cutting marks an early victory for Japan as governments around the world race to establish domestic chip capabilities in the wake of Covid-era disruptions and growing geopolitical tensions. While the US has also courted TSMC — the leading producer of the most advanced chips — the company has already pushed back start dates for both of its planned Arizona facilities after clashes with labor unions and delays in subsidy allocations.

The success in Japan stems from a combination of factors not easily repeated elsewhere: efficient government support, strict construction timetables and a low-cost workforce that flocked to the site from around the country and then labored 24-hours a day, seven days a week. Smoothing the entire effort was a deep partnership with local champion Sony Group Corp., an investor in and customer for the chip factory.

“We committed to getting it ready in two years because that’s what TSMC asked us,” Kumamoto Governor Ikuo Kabashima said in an interview. “Being on time is important to win trust.”


If Goldman's numbers are even close, then federal governments should be lining up to subsidize GLP-1 drugs...

GLP-1 drugs could significantly reduce obesity, and obesity-related health complications subtract 3% from per capita output according to academic estimates. Under reasonable estimates for uptake and effectiveness, we estimate that GLP-1 drugs could raise GDP levels by 0.4%, with the effect rising to 1% if the number of users reaches the 60mn benchmark our equity analysts see as possible.

Goldman Sachs

Out of all the good Berkshire Hathaway news this weekend, this story was by far the best...

The 93-year-old widow of a Wall Street financier has donated $1 billion to a Bronx medical school, the Albert Einstein College of Medicine, with instructions that the gift be used to cover tuition for all students going forward.

The donor, Dr. Ruth Gottesman, is a former professor at Einstein, where she studied learning disabilities, developed a screening test and ran literacy programs. It is one of the largest charitable donations to an educational institution in the United States and most likely the largest to a medical school.

The fortune came from her late husband, David Gottesman, known as Sandy, who was a protégé of Warren Buffett and had made an early investment in Berkshire Hathaway, the conglomerate Mr. Buffett built.

The donation is notable not only for its staggering size, but also because it is going to a medical institution in the Bronx, the city’s poorest borough. The Bronx has a high rate of premature deaths and ranks as the unhealthiest county in New York. Over the past generation, a number of billionaires have given hundreds of millions of dollars to better-known medical schools and hospitals in Manhattan, the city’s wealthiest borough.

Dr. Gottesman said her donation would enable new doctors to begin their careers without medical school debt, which often exceeds $200,000. She also hoped it would broaden the student body to include people who could not otherwise afford to go to medical school.

New York Times


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