TXNM

TXNM is now fundamentally a merger-arbitrage situation rather than an open-ended fundamental call. On May 18, 2025, TXNM signed a definitive agreement under which each share converts into the right to receive $61.25 in cash, with no financing condition. Shareholders approved the deal in August 2025, the HSR waiting period has expired without objection, and the FCC, FERC and PUCT have all signed off — FERC explicitly rejected claims tied to data centers, private equity ownership and cross-subsidization. With the stock at $57.06, the roughly 7% gross spread to the $61.25 cash price is the core of the thesis, and management expects closing in the second half of 2026.

The underlying business is a regulated New Mexico/Texas electric utility (PNM and TNMP) serving ~842,000 customers, which provides a credible standalone floor if the deal were to break. Fundamentals are typical of a capital-heavy regulated utility: FY2025 revenue grew to $2.14B (+9.0%) and operating cash flow rose to $584M (+15.0%), funding a heavy $1.20B capex program. Returns are modest — ROE of 5.0% and a net margin of 7.9% — and net income fell to $170M with diluted EPS of $1.48, pressured by rising costs and share count up 17.6%.