John Leonard, CFA
Special situations, micro-cap, contrarian, CFA

Negative Sentiment Towards Life Time Fitness Creates Asymmetric Investment Opportunity

Investment thesis

The bear case against Life Time Fitness (NYSE:LTM) is greatly exaggerated as investors rely on outdated assumptions and ignore ongoing operational improvements as well as an increasingly diverse revenue stream. LTM has multiple "value levers" it could pull in order to increase cash flow and extract value.

Company overview

LTM operates 107 multi-use sports centers in 23 states and one Canadian province.

Attractive valuation + high short interest = Potential short squeeze

The ~18% decline since July resulted in LTM trading at an attractive valuation and provides a low-risk entry point.

The peer comp analysis is limited given that most of its primary competitors are private (e.g. 24 Hour Fitness, Equinox, LA Fitness International, Gold's Gym)....

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