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The bear case against Life Time Fitness (NYSE:LTM) is greatly exaggerated as investors rely on outdated assumptions and ignore ongoing operational improvements as well as an increasingly diverse revenue stream.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)....

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
FREESA PRO MEMBERS
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details