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PRO articles cover stocks that fly under most investors' radar screens.
Currency Exchange International: 2015 Update With A Catalyst
- Going into 2015, CXI's EBITDA and FCF will continue to benefit from a combination of new financial institution relationship wins and maturation of clients/branches won in 2014.
- Establishing the Banker’s Bank status is the main catalyst for value realization. We expect for this to occur sometime in 2015.
- Our 2015 price target is $30 - $35 per share, which is supported by accelerating EBITDA and private market comps in excess of 12x.
WhiteHorse Finance: An Orphan BDC At A Deep Discount To Tangible Book Value
- WhiteHorse Finance trades for 0.75x tangible book, which is steep considering its underlying asset quality.
- WHF is an orphan stock after the Russell BDC Index deletion and low float due to high inside ownership.
- The Company is not currently earning its dividend on a net investment income basis yet that should change in the near future.
Freshpet Inc.: A Fresh JOBS Act Short
- Freshpet operates a capital-intensive business reaching maturation.
- It is a non-differentiated business facing increasing competition.
- The stock faces 50%-80% downside.
Glentel Post-Mortem Analysis: Good Things Happen To Companies Trading For 7 Times Free Cash Flow
- On 11/28/14, BCE announced its intent to acquire Glentel for $26.50 per share, a 108% premium.
- The proposed deal highlights the value of Glentel's distribution capabilities.
- We believe the price fairly values Glentel; however, we think the current deal spread is attractive for merger arbs.
Glentel: A Free Cash Flow Machine At An Inflection Point
- Glentel trades for 7x depressed free cash flow and at a ~5% dividend yield.
- Glentel has been overly punished by the market due to a botched high yield offering and issues within its Australia segment.
- The market is overlooking strong results amongst its Canadian and United States operations.
Janus Capital Group Post Mortem: Good Things Can Happen To Cheap Stocks
- Janus recently announced the addition of bond guru Bill Gross to assist with the roll-out of the company's growing fixed income offerings.
- The story has shifted from a mediocre asset manager trading at a ultra low multiple of FCF to a fairly valued asset manager with a rosy outlook.
- We believe Janus is fully priced at a 7% LTM FCF yield and 9.7x EBITDA.
Marchex Post-Mortem Update
- The short thesis has played out at Marchex, with the equity declining ~66% since July.
- Re-cut of the Allstate pricing has served as the catalyst, supporting the notion that Marchex's offerings are non-differentiated.
- Marchex price action reflects the perils of investing in businesses with significant customer and vendor concentration.
Currency Exchange International: Compounding Cash Machine At A Deep Discount To Private Market Peers
- A unique opportunity to own a compounding machine with organic growth in excess of 20% and high returns on capital.
- OSFI approval to transition into a 'Banker's Bank' is a near-term hard catalyst for value creation.
- Currency Exchange trades at a steep discount to recent private market transactions. We believe shares at minimum have upside potential of ~70%.
Murphy USA: Post Mortem Of A Successful Spin-Off
- Since the original spin-off, investors have realized the massive mis-pricing.
- Although the share price has reached our upside case estimates, recent private market transactions support higher upside.
- At the end of the day, Murphy USA operates in a competitive industry with significant headwinds which were more than priced in at the spin.
Quartet Merger Rights: 40% Upside For A Short-Term Event Driven Investment
- Quartet Rights offer investors the opportunity to re-create Quartet common at $7.20 per share, or 40% upside if the rights trade up to the common.
- A near-term event is in place to unlock value. On September 29th, shareholders will vote on the Company's merger with Pangaea Logistics.
- Quartet boasts strong sponsorship through Eric Rosenfeld of Crescendo Partners and famed value investor Joel Greenblatt.
Reiterate Papa Murphy's Short Thesis: Q2 2014 Update
- Papa Murphy's Continues to be a compelling short with ~40% upside to the short thesis.
- Franchisee lawsuits have continued to intensify with a second lawsuit filed. Furthermore, we continue to see franchisee bankruptcies on the horizon with a recent bankruptcy in multi-unit franchiser in Texas.
- FRSH has recently initiated a royalty waiver program for new franchisees, signaling to use that the Company is having issues growing in new markets.
Marchex: Another Bubble Basket Stock
- Marchex is a low margin business with poor returns on capital trading for a staggering ~49x EBITDA.
- The Company is heavily reliant on search engines such as Google and Yahoo combined with a concentrated customer base.
- The bull thesis overlooks the Management team's poor capital allocation skills, numerous business flip-flops and finally insider sales.
Papa Murphy's Holdings Inc: Another Gift From The JOBS Act
- Papa Murphy's is a recent JOBS Act IPO and a compelling short at the current price.
- The Company is priced for perfection, as the business operates in a low barriers to entry environment combined with a over-levered balance sheet.
- Further headwinds include franchisee issues, potential upcoming exit of the Company's financial sponsor, reduction in SNAP benefits and the closure of a sales tax loophole.
- Digital Cinema Destinations: Investing In A Middle-Market Roll-Up Without The Private Equity Fees
- Franklin Financial: Thrift Shopping Among Community Banks
- Charter Financial: Post-Second Step Convert Trading Below Its Tangible Book Value
- Lumber Liquidators: Unsustainable Valuation For A No-Moat Business
- Chico's FAS: A Growth Story At A Value Price
- Ascena Thesis Reaffirmed: Positive Developments, Undervalued Business Point To Substantial Upside
- American Eagle Outfitters Offers Investors Multiple Ways To Win
- Lexmark: Strong Free Cash Flow Generator With Catalysts In Place
- Paradise, Inc.: A Net-Net That Is Ripe For A Buy-Out
- Murphy USA: Follow The Spin-Offs
- Weight Watchers: Investing In A Public LBO
- Ascena Retail Group: Leading Market Share And Aligned Management Below Its Private Market Value
- Janus: Abnormally High Returns On Invested Capital At A Low Multiple Of Free Cash Flow
- Cowen Group: Trading Below Liquid Assets With An Asset Manager Thrown In For Free
- Tellabs: Discounted Assets With A Catalyst