Year In Review: Kingdom Capital

Jan. 10, 2022 1:18 PM ETALTO, AMRK, DOLE, DTEA, DXLG, POL, JOE, CHRD, RROYF, SG, SLNH, SLNHP, SNBR, SQBGQ, UNFI, RE:CA9 Comments9 Likes
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Kingdom Capital
3.57K Followers

Summary

  • I published 26 articles in 2021, generating an average return near 80%.
  • My results were very skewed at the top, thanks to Destination XL, which was a 20 bagger during 2021.
  • My largest wipeout was Sequential Brands, which filed for bankruptcy in August and wiped out shareholders.
  • There are some current and some new ideas I'm pursuing in 2022, and I'm launching a new personal venture.

Green arrow upward on stack of coins and growth graph on bokeh background

smshoot/iStock via Getty Images

Hello Seeking Alpha,

2021 resulted in my best annual investment returns to date, so I wanted to recap what worked (and what didn't) in relation to the articles I published on this site. To be clear, the following statistics are summary-level only, and do not reflect my actual returns. I do not post trades or allocations from my personal portfolio; therefore, I will reference each idea from the date published to end of the year. Lastly, I am not declaring victory or defeat on many of these ideas - though in the case of SQBG, I lost.

Ticker

Publish Date

Rating

FY21 Total Return After Publication

DXLG

1/10/2021

Very Bullish

2003.7%

UNFI

1/17/2021

Very Bullish

119.0%

SLNH

8/24/2021

Very Bullish

33.6%

JOE

3/4/2021

Very Bullish

11.5%

DOLE

11/22/2021

Very Bullish

-1.6%

ALTO

7/28/2021

Very Bullish

-7.5%

SLNH

4/13/2021

Very Bullish

-10.1%

RROYF

4/9/2021

Very Bullish

-13.5%

SQBGQ

3/9/2021

Very Bullish

-100.0%

OAS

2/12/2021

Bullish

164.5%

AMRK

2/1/2021

Bullish

81.1%

MAC

2/21/2021

Bullish

38.9%

ALTO

5/10/2021

Bullish

-17.5%

SNBR

7/27/2021

Bullish

-21.3%

DTEA

6/16/2021

Bullish

-39.4%

SLNH

2/11/2021

Neutral

100.6%

SAVA

9/15/2021

Neutral

-0.6%

BWL.A

1/18/2021

Neutral

-8.2%

AGX

2/8/2021

Neutral

-14.2%

MSTR

9/9/2021

Neutral

-15.1%

BTBT

9/20/2021

Neutral

-31.8%

GOED

6/21/2021

Neutral

-38.9%

INPX

6/1/2021

Neutral

-45.5%

NXTP

7/7/2021

Neutral

-60.0%

SQBGQ

9/3/2021

Neutral

-100.0%

SG

11/24/2021

Bearish

-15.7%

Very Bullish

I published nine "very bullish" articles in 2021, and it's easy to argue I should have quit after the first.

(Source: DXL Investor presentation)

  • Destination XL (DXLG) exceeded even my most optimistic assumptions, having cash-flowed over $60m YTD after trading with a $10m market cap at the beginning of the year. Even after its recent pullback from $9/share, DXLG remains far and away the most successful idea I published.

(Source: UNFI Investor presentation)

  • United Natural Foods (UNFI) was an idea carried over from three prior pieces I published in 2020, and the stock eventually eclipsed my $50 PT from prior articles. The grocer has deleveraged as expected, and sustained pandemic earnings have positioned the company to begin returning capital to shareholders.
  • Alto Ingredients (ALTO), Dole PLC (DOLE), The St. Joe Company (JOE), and Soluna Holdings (SLNH) all continue to execute on the strategies identified in my articles, having yet to materially deviate from expectations. The market continues to value these names similar to before my analysis, and I anticipate some price appreciation in 2022.
  • RE Royalties (OTCPK:RROYF) has exhibited slower growth than expected based on their disclosed pipeline, and their dividend strategy has reduced cash available to reinvest into future royalties. The stock trades at an attractive valuation relative to their only public comp, Altius Renewable Royalties (OTCPK:ATRWF), but needs to gain additional scale to maximize their attractive business model.
  • Last and certainly least, the artist formerly known as Sequential Brands (OTC:SQBGQ) was my most public wipeout of 2021, and while I didn't ride it to $0, I gave back more on paper than any other trade. That said, anyone who bought after my initial article around $17-$18/share could have sold without a loss the day after the chairman fled the company. Due to the negative outcome, I wrote my first post-mortem reviewing what went wrong after their bankruptcy filing.

Bullish

(Source: Nov-21 Presentation)

  • Oasis Petroleum (OAS) was a fantastic way to play the oil and gas revival in 2021, and warrant holders had even more to celebrate after bankruptcy left them scrambling. Despite the stock rerating, the company can still make a strong valuation argument per the above.

(Source: AMRK Investor presentation)

  • A-Mark Precious Metals (AMRK) has remained one of my favorite investments in 2021, taking advantage of the silver squeeze in January and making strategic acquisitions in the bullion space. AMRK now owns two mints and has shifted their sales mix towards direct-to-consumer, firmly boosting their margins compared to prior years. They have also continued to innovate, launching a Cyber Metals platform to add an alternative to traditional bullion ETFs. I expect AMRK to obliterate street estimates of ~$6 EPS for FY22.
  • Sleep Number (SNBR) and DavidsTea (DTEA) have both declined since I published due to concerns about lapping Covid earnings. DTEA has printed negative comps to FY20, but also landed coveted space with both Costco (COST) and Walmart (WMT) in Canada. Reed's (REED) is a great example of how a company can get plenty of wholesale locations and never put it all together, but DTEA will seek a more lucrative expansion. Sleep Number has posted excellent numbers but traded down with other mattress manufacturers, and I expect they will recover if they can show the market continued strength in FY22. Share repurchases have been strong and continue to be accretive to EPS.

Neutral

(Source: Goedecker's Investor presentation)

Of my neutral articles, the most interesting to me now (aside from Soluna) is 1847 Goedecker (GOED), which has traded back down near the price where they massively diluted shareholders earlier this year. Management has recently introduced a repurchase plan to help clean up their capital structure, but the 5-year $2.25 warrants will remain an overhang for some time. Trading at ~7x EBITDA and expecting to double revenues in the next 3-4 years, strong execution could make shares (and warrants) multi-bagger opportunities.

Bearish

I only wrote one bearish article in FY21, having learned in the past couple years that shorting on valuation rarely ends well in the current market environment. However, I did highlight how little sense the Sweetgreen (SG) valuation makes given peers like Chipotle (CMG) and Shake Shack (SHAK) from earlier in their growth cycles. An optimistic perspective on Management's growth strategy only gets you to 20x FY30 EBITDA (while also ignoring further dilution). The stock is down about 15% since I published, and I think it could see single digits in FY22 on any signs of weakness.

2022

While some of the ideas above remain enticing, I'm also working on new investment ideas that I have yet to publish to Seeking Alpha. My investing journey has led me to launch Kingdom Capital Advisors, which is now onboarding clients. I will continue to publish to Seeking Alpha, but as a Registered Investment Advisor, my fiduciary duty will be to my client's investments so I won't be able to post as frequently. Feel free to follow me on Twitter (@kingdomcapadv). Thanks for reading, and happy new year! May 2022 be better than 2021.

This article was written by

Kingdom Capital profile picture
3.57K Followers
Deep value investor focused primarily on microcap stocks. Registered Investment Advisor located in Virginia.
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Disclosure: I/we have a beneficial long position in the shares of DOLE, SLNH, ALTO, JOE, AMRK either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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