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The Federal Reserve’s latest signal toward additional rate cuts has broad implications for equity markets, but small-cap stocks stand to benefit most prominently. With an estimated $7 trillion in cash and cash-equivalents—often referred to as “dry powder”—sitting on the sidelines, investors are preparing to put capital to work. Much of this capital is housed within private equity funds, institutional investors, and large asset managers, which are all seeking stronger returns as yields on cash and Treasuries decline in a falling-rate environment.

When interest rates fall, sitting on cash becomes less attractive. Investors, pressed to generate higher ROI, begin reallocating money into equities, private deals, and higher-growth opportunities. For small-cap companies, this creates a powerful tailwind. Not only do they benefit from increased investor flows, but they also operate with greater sensitivity to financing conditions. Lower borrowing costs can dramatically improve the profitability outlook for smaller firms, which often rely more heavily on debt and capital markets to fund growth compared to large caps.

M&A Activity and Its Ripple Effects

A large portion of sidelined capital resides within private equity funds, which thrive in environments where acquisition financing is cheaper. Rate cuts reduce the cost of leverage, making buyouts more attractive. The $7 trillion pool of global dry powder is a firehose of liquidity ready to be deployed into merger-and-acquisition deals.

This matters for small caps because acquisition premiums drive valuations higher across the board. As private equity firms, corporations, and even larger small-cap peers target acquisitions, multiples expand—not just for the companies being acquired, but for entire industries as investors speculate on who might be next. This “M&A halo effect” has historically been a significant driver of outperformance in the small-cap space.

Why the Russell 2000 Benefits Disproportionately

The Russell 2000, the most widely watched U.S. small-cap index, tends to be more cyclical and more domestic-focused than large-cap benchmarks. Rate-sensitive sectors such as financials, industrials, and consumer discretionary make up a larger share of its composition. This means the Russell 2000 is positioned to benefit more directly from looser monetary policy than the mega-cap dominated S&P 500 or Nasdaq.

Moreover, small-cap valuations remain historically discounted relative to large caps. The valuation gap, widened after years of tech-driven outperformance at the top end of the market, could narrow sharply as investors re-risk portfolios in search of higher growth potential. History shows that during periods of monetary easing, small caps have often outperformed, fueled by capital inflows, improved earnings prospects, and heightened M&A activity.

The Bottom Line

The confluence of Federal Reserve rate cuts, a massive capital overhang waiting to be deployed, and the natural sensitivity of small-cap companies to interest rate changes sets the stage for a potential rally in the Russell 2000 and broader small-cap landscape. Lower yields make cash less productive, driving investors toward equities. Private equity firms flush with capital will likely target acquisitions, boosting market-wide valuations. And small-cap companies, historically more nimble and growth-oriented, stand to capture the bulk of these benefits.

For investors focused on the small-cap arena, the coming months may present an exceptional entry point. The combination of monetary easing and $7 trillion in sidelined capital seeking higher returns could ignite the small-cap rally that many have been waiting for.

Tamboran Resources Corporation (NYSE: TBN, ASX: TBN) has agreed to buy Falcon Oil & Gas Ltd. (TSXV: FO, AIM: FOG) in a transaction that will combine roughly 2.9 million net prospective acres across the Beetaloo Basin and create a pro-forma company with a market capitalization above US$500 million. The deal, structured as a Plan of Arrangement, will see Tamboran issue about 6.54 million Tamboran shares and pay US$23.7 million in cash for Falcon’s subsidiaries. Falcon shareholders are expected to own about 26.8% of the enlarged business upon closing, which is targeted for the first quarter of 2026 subject to regulatory and shareholder approvals.

Strategically, the acquisition strengthens Tamboran’s working interest in the Phase 2 Development Area to roughly 80.6% ahead of an ongoing farmout process. The transaction also aligns Tamboran more closely with Daly Waters Energy across key EPs and brings a larger contiguous footprint across the Beetaloo depocenter. On a per-acre basis, the deal values Falcon’s assets at roughly US$169 per acre — slightly below Tamboran’s implied acreage valuation — making the transaction accretive on a headline basis.

What makes the tie-up significant for the wider industry is scale. Unconventional gas projects are capital intensive and require sizeable, contiguous acreage to attract majors and strategic farm-in partners. By consolidating acreage and increasing operator control over Phase 2, Tamboran is positioning itself to negotiate more favorable farmout terms, accelerate pilot development, and de-risk timelines for potential midstream and liquefaction projects, including the company’s proposed NTLNG concept at Middle Arm.

The move reflects broader sector trends in Australia and global upstream markets. As investors and partners demand clearer development pathways and lower execution risk, consolidation has become a common strategy: fewer operators with larger positions can pool technical expertise, reduce unit costs, and present more bankable project packages to capital providers. That dynamic is especially relevant in basins like Beetaloo where regulatory scrutiny, infrastructure needs and environmental permitting add layers of complexity that favor scale and experienced operators.

The acquisition also has ripple effects for service providers, regional supply chains and local communities. Larger, multi-phase development programs typically generate sustained demand for drilling services, completions crews, pipelines and processing contractors — supporting jobs and local procurement over longer horizons than single-well campaigns. Conversely, the sector remains sensitive to commodity price swings and permitting timelines; successful farmouts and access to capital remain critical near-term catalysts.

From a capital markets perspective, the consolidation could enhance Tamboran’s visibility with institutional investors and potential partners by simplifying ownership of the basin’s core acreage. That said, the deal requires customary approvals — including court and shareholder votes and Australian regulatory consents — and outcomes of the farmout process will be key to demonstrating commercial viability and securing further investment.

In short, the Tamboran-Falcon combination is more than a portfolio tweak: it is a strategic consolidation aimed at creating the scale and operating leverage needed to move the Beetaloo from pilot stage toward commercial development. For market watchers, the next milestones to monitor are the farmout announcements, regulatory clearances, and any near-term pilot results that will determine whether the enlarged Tamboran can translate acreage control into funded development.

Tuesday, September 30, 2025

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Activist Investor. Randian Capital, part of the “retail activist” group behind the sharp rise in Opendoor Technologies (OPEN) stock from less than a $1 mid-summer to around $8.20 today, released on social media platform X a turnaround proposal for The ONE Group. In a nutshell, the plan consists of Refocus the Portfolio, Revitalize the Brand, Strengthen Operations, and Capital Discipline & Growth. Radian sees a path to a $10+ stock over the next 12-18 months. STKS shares rose over 26% yesterday on the news.

Refocus & Revitalize. Randian calls for ONE Group to refocus solely on its Benihana concept, selling off all other concepts. The activist investor believes the STK concept alone could be worth more than the current market cap. Randian suggests rebranding as Benihana Group and changing the stock symbol. Revitalization by elevating the dining experience and engaging with cultural icons, among other changes.

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Integral Ad Science (Nasdaq: IAS), a global leader in media measurement and optimization, announced Wednesday that it has entered into a definitive agreement to be acquired by Novacap, a North American private equity firm, in a transaction valued at approximately $1.9 billion.

Under the deal, Novacap will purchase all outstanding shares of IAS for $10.30 per share in cash, representing a roughly 22% premium over the company’s closing price on September 23. The agreement, which has been unanimously approved by IAS’s board of directors, is expected to close before the end of 2025, pending regulatory approvals.

Once finalized, IAS will become a privately held company and its shares will no longer trade on public markets. Current shareholder Vista Equity Partners, which played a significant role in expanding IAS’s AI-powered platform and customer base, will exit its investment upon completion of the deal.

For IAS, the acquisition represents a chance to accelerate its growth and innovation strategy in digital media quality. CEO Lisa Utzschneider highlighted the move as a milestone that will provide the company with the resources and flexibility to expand its AI-first measurement and optimization platform.

“Our mission has always been to set the global benchmark for trust and transparency in digital media quality,” Utzschneider said in a statement. “With Novacap’s support, we’ll be able to further scale our platform and deliver even more value to advertisers, publishers, and media partners.”

Novacap, which manages more than $10 billion in assets, sees IAS as a category leader with significant potential. Samuel Nasso, a partner at the firm, said Novacap plans to work closely with IAS leadership to accelerate innovation and strengthen its solutions for global brands and publishers.

The transaction is not subject to any financing conditions, and a majority of IAS shareholders have already approved the deal through written consent. Financial advisory roles were split, with Jefferies advising IAS and Evercore advising Novacap. Legal counsel was provided by Kirkland & Ellis for IAS and Willkie Farr & Gallagher for Novacap.

Founded in 2009, IAS has established itself as a trusted player in the digital advertising ecosystem, providing data and tools to ensure ads are viewable, brand-safe, and optimized for performance. By joining forces with Novacap, the company is expected to sharpen its competitive edge and continue expanding its role as a benchmark for media transparency in the rapidly evolving adtech landscape.

If the transaction closes on schedule, IAS will continue operating under its existing name and brand while shifting into private ownership under Novacap.

U.S. equities extended their gains on Thursday, with the Russell 2000 index of small-cap stocks taking center stage as investors embraced the Federal Reserve’s latest policy shift. The move comes just a day after the central bank announced its first interest-rate cut of 2025, a decision that has sparked optimism about economic growth and reignited appetite for smaller, more domestically focused companies.

The Russell 2000 soared more than 2% to an intraday record, positioning itself for its first all-time closing high since November 2021. This surge has placed the index firmly ahead of its large-cap peers, with the S&P 500 climbing 0.5% and the Nasdaq Composite adding 1.1%. The Dow Jones Industrial Average rose 120 points, or 0.3%.

For small-cap investors, the Fed’s move signals a potential turning point. Unlike cash-rich technology giants that can weather higher borrowing costs, small- and mid-cap companies often rely heavily on external financing to support operations and growth. Lower interest rates reduce that burden, freeing up capital for expansion and making smaller firms more attractive to investors.

Beyond the macroeconomic boost, market sentiment has improved notably since the Fed’s policy shift. The American Association of Individual Investors (AAII) reported a surge in bullish sentiment this week, with 41.7% of respondents now optimistic on the short-term outlook for stocks, up sharply from 28% the previous week. While bearish views remain elevated, the optimism highlights growing confidence that the Fed’s pivot will continue to lift equities.

The Russell’s outperformance is also being fueled by a broadening of market participation. For much of the past year, the rally in U.S. equities has been concentrated in mega-cap technology names driven by artificial intelligence enthusiasm. The rate cut has shifted attention to smaller companies that had largely lagged during the high-rate environment. With valuations still relatively attractive compared to large-cap counterparts, the Russell’s resurgence is attracting both institutional and retail inflows.

Meanwhile, the broader market rally was supported by strength in both traditional and technology sectors. Notably, Intel surged more than 25% after Nvidia announced a $5 billion investment to co-develop chips for data centers and PCs, sending Nvidia shares up more than 3%. While big tech continues to contribute, the spotlight remains firmly on the Russell’s record-setting move.

Looking ahead, investors will closely watch whether the Fed follows through with its projection of two additional rate cuts before year-end. Continued monetary easing could further unlock momentum for small-cap stocks, though analysts caution that too much stimulus could risk overheating both markets and the broader economy.

For now, however, the Russell 2000 has emerged as the clear winner of the Fed’s rate shift—marking a powerful comeback for small-cap investors after nearly four years without a record high.

RESTON, Va., Sept. 18, 2025 /PRNewswire/ — V2X Inc., (NYSE: VVX), has been awarded a position on the Defense Threat Reduction Agency’s (DTRA) Cooperative Threat Reduction Integrating Contract IV (CTRIC IV). V2X is one of six recipients selected for this indefinite-deliver, indefinite-quantity contract, which carries a ceiling value of $3.5 billion over a five-year base period with five additional option years.

CTRIC IV supports the Department of Defense’s global Cooperative Threat Reduction program, which aims to reduce threats posed by weapons of mass destruction and related materials. Under this contract, V2X will execute current and future work to provide comprehensive support to counter and eliminate chemical, biological, radiological, and nuclear threats worldwide.

“This award underscores our proven ability to support high-consequence missions on a global scale,” said Jeremy C. Wensinger, President and Chief Executive Officer of V2X. “With our global footprint and strong operational capabilities, we are well-equipped to deliver innovative solutions in support of DTRA’s mission, wherever they are needed. We’re honored to be selected for the CTRIC follow-on contract, which reflects our track record of success. We look forward to building on this momentum and expanding our impact through this opportunity.”

The CTRIC IV contract expands V2X’s presence in critical global threat reduction efforts and reinforces its role as a trusted partner in domestic and international defense initiatives.

About V2X
V2X builds innovative solutions that integrate physical and digital environments by aligning people, actions, and technology. V2X is embedded in all elements of a critical mission’s lifecycle to enhance readiness, optimize resource management, and boost security. The company provides innovation spanning national security, defense, civilian, and international markets. With a global team of approximately 16,000 professionals, V2X enables mission success by injecting AI and machine learning capabilities to meet today’s toughest challenges across all operational domains.

Investor Contact
Mike Smith, CFA
Vice President, Treasury, Corporate Development and Investor Relations
IR@goV2X.com
719-637-5773

Media Contact
Angelica Spanos Deoudes
Director, Corporate Communications
Angelica.Deoudes@goV2X.com
571-338-5195

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SOURCE V2X, Inc.

Gold surged past $3,700 an ounce for the first time in history on Tuesday, as investors doubled down on expectations that the Federal Reserve will cut interest rates this week and possibly keep easing into 2026.

The rally reflects a powerful mix of falling Treasury yields, political pressure on the Fed, and growing concerns that government debt is no longer a safe haven. The U.S. dollar dropped to its weakest level in more than 10 weeks, further boosting gold’s appeal.

Markets have already priced in a rate cut at this week’s Fed meeting, but the real focus is on the central bank’s quarterly economic projections and Chair Jerome Powell’s comments in the post-decision press conference. A series of weak labor market reports and stable inflation readings have strengthened the case for further cuts this year. Since gold does not pay interest, lower rates typically increase its attractiveness compared to bonds.

The political backdrop is also fueling the rally. President Donald Trump has openly pressured the Fed to move faster on monetary easing and has pushed to remove Governor Lisa Cook. Meanwhile, Stephen Miran, a senior economic advisor in the administration, is expected to join the central bank as soon as Tuesday. These developments have reinforced market expectations that monetary policy will stay accommodative in the months ahead.

So far this year, gold has climbed more than 40%, outperforming major assets like the S&P 500. The metal recently surpassed its inflation-adjusted peak from 1980, cementing its status as the safe-haven asset of choice during a time of uncertainty. Central bank buying and strong inflows into exchange-traded funds have added fuel to the rally.

Analysts warn that the move may only be the beginning. Goldman Sachs has suggested that if just 1% of privately held U.S. Treasuries were reallocated into gold, prices could surge toward $5,000 an ounce. For investors wary of ballooning government debt in the U.S., Europe, and beyond, gold has become the natural alternative.

Other precious metals have also seen movement: silver rose to its highest price in 14 years, while platinum and palladium slipped.

With gold setting fresh records and momentum accelerating, markets are now watching whether the Fed’s tone confirms what traders already believe: that a new era of monetary easing has begun. If so, the path toward even higher levels of gold could already be set.

For more context on why investors are shifting away from government debt and piling into gold, read our in-depth analysis from last week here.