Highlighted Tweet by MachHBInvesting

January 15, 2019 in Twitter

Miguel de Juan sobre Seritage Growth Properties

January 14, 2019 in Ideas de inversión, MOI Global en Español

NOTA DEL EDITOR: Esta idea de inversión es obtenida de una carta a los inversores de Argos Arca Global A.

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Seritage Growth Properties [SRG] es una compañía americana escindida del grupo SEARS. Básicamente es la dueña de los locales y terrenos que antiguamente estaban dentro de la corporación Sears Holdings [SHLDQ] y que ésta sacó a bolsa; en resumen, sería un REIT que aún no reparte dividendo y que no lo tenemos en cartera con esa expectativa.

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Highlighted Tweet by MarcRuby

January 13, 2019 in Twitter

GTT: Mispriced, High-Return, Cash-Generative Growth Compounder

January 12, 2019 in Audio, Best Ideas 2019, Equities, Ideas

Zack Buckley of Buckley Capital Partners presented his in-depth investment thesis on GTT Communications (US: GTT) at Best Ideas 2019.

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About the instructor:

In 2011, Zack Buckley worked as an analyst for Baker Street Capital while launching Buckley Capital. Zack has been featured in The Wall Street Journal, Barron’s, Reuters, CNBC, Market Watch, Value Walk, Business Insider, and the Financial Post, and has also been a speaker at several Value Investing Congresses. Zack holds a Bachelor of Arts in Economics and a Bachelor of Business Administration in Accounting from the University of Miami.

Three NCAV Bargains: Passat, Nichiwa Sangyo, Sanko

January 12, 2019 in Audio, Best Ideas 2019, Equities, Ideas

Juan Matienzo of Mercor Investment Group presented his investment theses on Passat (France: PSAT), Nichiwa Sangyo Co. (Japan: 2055), and Sanko Co (6964) at Best Ideas 2019.

Thesis summary:

Passat (France: PSAT) is a family-controlled French seller of home and beauty products. Sales and earnings have declined sharply over the last few years, but the business remains profitable. The shares recently traded at negative enterprise value and a discount to liquidation value.

Nichiwa Sangyo Co. (Japan: 2055) is a manufacturer of feed mixtures. The shares trade at a quarter of book value and a high-teens FCF yield.

Sanko Co (Japan: 6964) is a maker of precision components. The shares trade at negative enterprise value and a large discount to liquidation value. The company is profitable and has significant insider ownership.

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About the instructor:

Juan F. Matienzo is the Managing Partner of Mercor Investment Group, where he is responsible for the portfolio. Juan follows a deep value investing philosophy, and prefers companies that trade for less than liquidating value and at low multiples of normalized earnings. He has a BBA from UDLAP, and an MBA from the Harvard Business School.

Thor Industries: Dominant Global RV Player at Discount to Tangible Book

January 12, 2019 in Audio, Best Ideas 2019, Best Ideas 2019 Featured, Equities, Ideas

Brian Hennessey of Alpine Woods Capital presented his in-depth investment thesis on Thor Industries (US: THO) at Best Ideas 2019.

Thesis summary:

Thor Industries is the largest manufacturer of recreational vehicles in the U.S., with 48% market share. Thor will soon be the only truly global player, driven by the acquisition of German private RV maker Erwyn Hymer, which has the largest share of the European RV market at 29%.

Thor has a long history of financial and operational prudence, with a nearly forty-year history of uninterrupted profitability and 25 consecutive years of positive FCF in a cyclical industry.

As the acquisition (expected to close in January 2019) will leverage the balance sheet (2.4x net debt to 2018 pro forma EBITDA) at what is feared to be the top of the cycle, Thor’s stock has been cut by nearly 70% from a peak in January 2018 and recently traded at a pro forma P/E of 7.0x and a price-to-book value multiple of 0.7x. The acquisition immediately adds at $2.25+ per share to earnings and is a catalyst as investors do their diligence on the target’s growth trajectory.

A 10x multiple would place the stock at $70+ per share, or ~40% upside. If the downcycle is milder than feared, which seems plausible as dealer inventories approach tight levels, the upside may be even greater.

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About the instructor:

Brian Hennessey began his career in high yield fixed income research at Putnam Investments, then climbed the quality spectrum to investment grade fixed income at Partner Re Asset Management, then whet his appetite in event driven, arbitrage and distressed hedge fund strategies at Tribeca Global Management (unit of Citi Alternative Investments) and Litespeed Partners. For the last ten years he has been at Westchester-based asset manager Alpine Woods Capital Investors LLC, currently as a manager of several long/short hedge funds focused on real assets as well as “deep moat” companies.

Franklin Covey and School Specialty: Two Misunderstood Micro-Caps

January 12, 2019 in Audio, Best Ideas 2019, Equities, Ideas

Patrick Retzer of Retzer Capital Management presented his in-depth investment theses on Franklin Covey (US: FC) and School Specialty (US: SCOO) at Best Ideas 2019.

Thesis summaries:

Franklin Covey is a global company specializing in organizational performance improvement by providing training and consulting services in seven areas: leadership, execution, productivity, trust, sales performance, customer loyalty and education. They have consistently created shareholder value in a tax efficient manner, having bought back $62 million of stock in the past fifteen quarters and carry almost no net debt. The Company is a high gross margin, high FCF company that has completed the transition from a traditional sales revenue model to a subscription-based revenue model.

Pat presented Franklin Covey last year when the stock was $20.45 per share. It subsequently ran up to $31.20 per share in January after the company reported earnings. FC recently hit $21.45 per share, providing an opportunity as the company ramps up adjusted EBITDA, deferred revenue, and FCF. On the most recent earnings call, management reiterated an interest in restarting share buybacks.

School Specialty is a leading provider of supplies, furniture, technology products, supplemental learning products and curriculum solutions to the educational marketplace. SCOO serves, in some manner, 90+% of school districts and 70+% of schools in the U.S., with 100,000+ SKUs. The 21st Century Safe School value proposition looks to improve student outcomes by addressing the social, emotional, mental and physical well-being and safety of students on a cohesive and holistic basis. The Safety & Security and Guardian offerings address the needs of schools in the face of recent school shootings.

Pat presented SCOO last year when the stock price was $16.65 per share. It subsequently reached a high of $20.02 per share last June, but plunged after missing on their third quarter earnings. The miss was based on higher transportation costs, higher than normal employee turnover and the slippage of some high margin business into 2019. SCOO trades at ~5.5x enterprise value to lowered 2018 EBITDA guidance. With management’s view that 2019 could be the year they expected in 2018, the stock appears poised for material upside.

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About the instructor:

Patrick Retzer spent the first several years of his career in public accounting and then developing tax planning software all while earning a Master’s in Taxation. He moved into investment management in 1987, joining Heartland Advisors, manager of the Heartland family of mutual funds in Milwaukee, Wisconsin. While at Heartland, he was portfolio manager of the Heartland US Government Securities Fund (#1 General US Government Fund for the 5 years ended 12/31/93 according to Lipper), he started and managed the Heartland Wisconsin Tax Free Fund (Wisconsin’s first double tax free fund) was co-manager of the Heartland Value Plus Fund, and managed private accounts. In 2000, Pat left Heartland Advisors to start Retzer Capital Management, LLC and the Retzer Fund I, LP. Pat believes his 30+ years of experience in both fixed income and equity management as well as his background as a CPA and tax specialist give him a unique perspective on the financial markets.

Intelligent Systems: Owner-Operated Card Issuer Processing Software Firm

January 12, 2019 in Audio, Best Ideas 2019, Equities, Ideas

Avram Fisher of Long Cast Investment Advisors presented his in-depth investment thesis on Intelligent Systems (US: INS) at Best Ideas 2019.

Thesis summary:

Intelligent Systems is a micro-cap company ($120 million market cap, $100 million EV) that traditionally licenses card issuer processing software and is on the verge of selling its largest license to date (to an undisclosed customer, but “scuttlebutt” is Goldman Sachs / Marcus).

Concurrently, the company is moving into the processing-as-a-service side of the business, which has substantially higher recurring revenue and incremental margin component, and where it has been gaining traction.

Revenue doubled from 2015 to 2016 on the processing business and will double again from 2017 to 2018 to $20 million on processing + customization around the pending license sale. Management is guiding to continued growth next year as it expects to book the license and backfill that with continued growth in processing revenue. The company has a history as a “holdco” but is down to one operating segment. The founder and long-time CEO owns 25% of the stock.

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About the instructor:

Avram Fisher is the portfolio manager and founder of Long Cast Advisers. Previously, he worked for 12 years in institutional equity research (Private Equity, CSFB and BMO Capital Markets) covering the technology, consumer goods, business services, and industrial goods and services sectors. Avi began investing in the mid-1990’s, working as a reporter by day and researching stocks at night, applying the same reporter’s due diligence, creativity and commitment to integrity to his burgeoning interest in investing. This led to a career transition from the news room to investment banking, with the idea that he would eventually help manage wealth for himself and clients. Long Cast is the culmination of that vision. Given Avi’s unusual background (which includes work as a private investigator, in corporate governance research, and an MBA) as well as his 20 years of experience as a private investor, he knows he’s not smarter than the market. Instead, he realizes that patience, fundamental research, and imagination are the key ingredients to investing towards results that are apart from the overall market.

Carmax: FCF-Rich Used Car Retailer with Friendly Capital Allocation

January 12, 2019 in Audio, Best Ideas 2019, Equities, Ideas

John Heldman and David Hutchison of Triad Investment Management presented their in-depth investment thesis on Carmax (US: KMX) at Best Ideas 2019.

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About the instructors:

John Heldman brings over 30 years of experience to the management of investment portfolios. Prior to founding Triad, he was a Senior Vice President and Portfolio Manager with Neuberger Berman. John has also managed institutional and individual investment portfolios for Deutsche Bank, Scudder Investments and Bank of America, including managing equity funds and serving on the Equity Strategy Committee. He obtained his Bachelor of Science degree in Finance and Master of Business Administration from California State University, Long Beach. John is a CFA charterholder, and a member of CFA Institute and CFA Society Orange County.

Dave Hutchison has 24 years of experience in investment management. Prior to joining Triad, he served as Investment Strategist for Chamberlain Group, directing investment manager research. Dave also founded and managed Hutchison Capital, a registered investment advisor. He holds a Bachelor’s degree in Political Science from Macalester College and a Master of Business Administration from the University of Southern California’s Marshall School of Business. Dave is a CFA charterholder, and a member of CFA Institute and CFA Society Orange County.