Conx: Charlie Ergen SPAC in Talks to Acquire DISH-Owned Boost Wireless

February 1, 2024 in Audio, Best Ideas 2024, Best Ideas 2024 Featured, Diary, Discover Great Ideas Podcast, Equities, Ideas, Member Podcasts

Nitin Sacheti of Papyrus Capital presented his investment thesis on Conx Corp. (US: CONX, CONXW) at Best Ideas 2024.

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About the instructor:

Nitin Sacheti runs Papyrus Capital GP LLC where is he the Portfolio Manager. He is also the author of Downside Protection: Process and Tenets for Short Selling in All Market Environments.

Prior to founding Papyrus Capital GP LLC, Nitin was a Senior Analyst/Principal at Charter Bridge Capital where he managed the firm’s investments in the technology, media and telecom sectors as well as select consumer investments.

Before Charter Bridge, Mr. Sacheti was a Senior Analyst at Cobalt Capital, managing the firm’s technology, media and telecom investments and a Senior Analyst at Tiger Europe Management. Mr. Sacheti began his investment career in 2006 at Ampere Capital Management, a consumer, media, telecom and technology focused investment firm, initially as a Junior Analyst, later becoming Assistant Portfolio Manager.

He graduated from the University of Chicago with a BA in Economics, was a visiting undergraduate student in Economics at Harvard University and attended the Loomis Chaffee School.

Hargreaves: Misunderstood Sum-of-the-Parts Bargain With Catalysts

February 1, 2024 in Audio, Best Ideas 2024, Diary, Discover Great Ideas Podcast, Equities, Ideas, Member Podcasts

Simon Caufield of SIM Limited presented his investment thesis on Hargreaves Services (UK: HSP) at Best Ideas 2024.

Thesis summary:

Hargreaves Services is a UK small-cap on the AIM exchange. It consists of three divisions: industrial services, land development, and commodities trading.

Price to book is 0.7, EV/EBIT ratio 4, PE ratio 5 and forward dividend yield ~9%. But it’s even cheaper than it looks as the services business are high quality — capital light with inflation-linked pricing — and the land assets are materially undervalued on the balance sheet.

Simon estimates intrinsic value at £10, compared to the recent price of £4.

Management is well-aligned, with the CEO owning 8% and chairman 2% of the stock. An activist investor owns 28% and has a board seat.

Management intends to sell the commodities division and selected assets within the Land division over the next two years, returning £6 per share via a stock buyback (provided the share price remains below intrinsic value). That will leave the Services division and a slimmed-down Land division worth £4.

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About the instructor:

Simon Caufield is Managing Director at SIM Limited, a UK-based investment firm. Simon founded the firm in 2007 after selling his stake in Nomis Solutions, a B2B enterprise software company he founded in 2002. His circle of competence is deep value, cyclicals and deceptively cheap compounders amongst the industrial and consumer discretionary sectors.

Previously, Simon was a management consultant for more than a decade, including at Mercer Management Consulting. Simon has an MA in Engineering from Cambridge University and an MBA from London Business School.

DSGR: High-ROIC Specialty Distributor With Consolidation Opportunity

February 1, 2024 in Audio, Best Ideas 2024, Best Ideas 2024 Featured, Diary, Discover Great Ideas Podcast, Equities, Ideas, Member Podcasts

Charles Hoeveler of Norwood Capital Partners presented his investment thesis on Distribution Solutions Group (US: DSGR) at Best Ideas 2024.

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Norwood Capital Partners, LP is a concentrated, fundamental value-based long/short investment fund. Norwood relies on primary research to build a portfolio of dominant businesses trading at a discount to intrinsic value. Norwood is managed by Charles Hoeveler, with 20 years of experience in institutional asset management.

LSB: Transformed, Competitively Advantaged Ammonia Producer

January 19, 2024 in Audio, Best Ideas 2024, Best Ideas 2024 Featured, Diary, Discover Great Ideas Podcast, Equities, Featured, Ideas, Member Podcasts, Transcripts

Bob Robotti of Robotti & Company Advisors discussed his investment thesis on LSB Industries (US: LXU) at Best Ideas 2024.

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About the instructor:

Bob Robotti is the Founder, President and CIO of Robotti & Company Advisors, a registered investment advisor based in New York City.

Guided by the classic tenets of value investing, VALUATION MATTERS. Robotti & Company Advisors uses a proprietary research approach to identify companies which trade for substantial discounts to their future free cash flows, yet are misunderstood, neglected, or just out-of-favor, so discounted by markets. Once identified, Robotti’s investment team focuses on deep primary industry and company research to select investment holdings through the lens of a long-term business owner.

In this capacity, Bob is currently on the boards of AMREP Corporation (NYSE:AXR), Pulse Seismic Data Inc. (TSX: PSD) for which he also serves as Chairman, and Tidewater, Inc. (NYSE:TDW). Bob previously was on the board BMC Building Materials Holding Corporation, now amalgamated into Builders FirstSource, the premier and differentiated distributor of building structural products to homebuilders.

Prior to founding Robotti & Company in 1983, he was the CFO of Gabelli & Company. Bob holds a BS in Accounting from Bucknell University and an MBA from Pace University.

CAB Payments: Bombed-Out Price Creates Asymmetrical Opportunity

January 19, 2024 in Audio, Best Ideas 2024, Best Ideas 2024 Featured, Diary, Discover Great Ideas Podcast, Equities, Ideas, Member Podcasts

Patrick Brennan of Brennan Asset Management presented his investment thesis on CAB Payments (UK: CABP) at Best Ideas 2024.

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About the instructor:

Patrick Brennan is the founder and portfolio manager of Brennan Asset Management, LLC (BAM), a Registered Investment Advisory firm based in Napa, CA, which utilizes a concentrated value investing strategy. Patrick has given presentations at multiple value investing conferences, including presentations to The New York Society of Security Analysts (NYSSA), The Nebraska Society of Securities Analysts and presentations on various names at the VALUEx Vail Conferences. Patrick co-authored an article on tracking stocks with Lawrence Cunningham for The Financial History Magazine and Patrick was featured in a write-up in The Private Investment Brief. Prior to founding Brennan Asset Management, Patrick managed portfolios and led research efforts at two value investing firms in California: Hutchinson Capital Management and RBO & Co.

Previously, Patrick worked at Mark Boyar & Company, where he led the firm’s research team and helped manage $800 million of assets across individual portfolios, institutional accounts and a mutual fund. Patrick also worked for six years in investment banking and equity research with Deutsche Bank, CIBC World Markets and William Blair & Company. Patrick graduated summa cum laude from the University of Notre Dame with a degree in economics and was inducted into Phi Beta Kappa. Patrick received the Chartered Financial Analyst (CFA) designation in 2002 and is a member of the CFA Institute (formerly AIMR). Patrick is originally from Omaha, Nebraska.

Cromwell Property: Real Estate Owner and Asset Manager at Deep Discount

January 19, 2024 in Audio, Best Ideas 2024, Best Ideas 2024 Featured, Diary, Discover Great Ideas Podcast, Equities, Ideas, Member Podcasts

Amit Wadhwaney of Moerus Capital Management presented his investment thesis on Cromwell Property Group (Australia: CMW) at Best Ideas 2024.

Thesis summary:

Cromwell is an Australian property company that owns high-quality office properties in Australia, has investments in real estate-related funds it controls, and manages a range of real estate assets, primarily in Europe. It also provides property asset and fund management for internal and external investors.

A lack of business and geographic focus, combined with an inflated cost structure, has led to a number of years of relatively indifferent financial and stock price performance, resulting in an undervalued stock.

Following multiple attempts, control of the company moved to ARA Asset Management (a large global real estate asset manager), which has since been bought by a larger real estate asset manager. The newly installed board and management are expected to narrow the focus of the business while crystallizing some of the latent value embedded in the shares, likely benefiting shareholders.

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About the instructor:

Amit Wadhwaney is a Portfolio Manager and Co-Founding Partner at Moerus Capital Management LLC, and the founding manager of the Moerus Worldwide Value Fund. Mr. Wadhwaney has over 30 years of experience researching and analyzing investment opportunities in developed, emerging, and frontier markets worldwide, and has managed global investment portfolios since 1996. Prior to founding Moerus, Mr. Wadhwaney was a Portfolio Manager and Partner at Third Avenue Management LLC. Mr. Wadhwaney founded the international business at Third Avenue and was the founding manager of the Third Avenue Global Value Fund, LP, the Third Avenue Emerging Markets Fund, LP, and the Third Avenue International Value Fund. Earlier in his career, Mr. Wadhwaney was first a securities analyst, and then Director of Research at M.J. Whitman LLC, a New York-based broker-dealer. Prior to joining M.J. Whitman, Mr. Wadhwaney was a paper and forest products analyst at Bunting Warburg, a Canadian brokerage firm. He began his career at Domtar, a Canadian forest products company. Mr. Wadhwaney holds an M.B.A. in Finance from The University of Chicago. He also holds a B.A. with honors and an M.A. in Economics from Concordia University; at Concordia, he was awarded the Sun Life Prize and the Concordia University Fellow in Economics, and he subsequently taught economics classes there. He also holds B.S. degrees in Chemical Engineering and Mathematics from the University of Minnesota.

Sartorius Stedim Biotech: Transitory Effects Overshadow Secular Growth

January 18, 2024 in Audio, Best Ideas 2024, Diary, Discover Great Ideas Podcast, Equities, Ideas, Member Podcasts

Frank Fischer of Shareholder Value Management presented his investment thesis on Sartorius Stedim Biotech (France: DIM) at Best Ideas 2024.

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About the instructor:

Frank Fischer, born in 1964, is the CEO of Shareholder Value Management AG, where he is Chief Investment Officer (CIO). Frank is also a board member of Shareholder Value Beteiligungen AG. Until the end of 2005, Frank was managing director of Standard & Poor’s Fund Services (formerly Micropal GmbH) and was responsible for investment fund information and ratings.

After completing his training as a banker (Bankkaufmann) at the Hessische Landesbank, he studied economics at the Goethe University of Frankfurt where he finished with his degree in business administration (Diplom Kaufman).

Frank is married and has two children. He and his wife Julia are the founders and directors of the non-profit foundation Stiftung Starke Lunge (www.starkelunge.de).

Fleetcor: Fast-Growing, Capital-Light, High-Margin Payments Business

January 18, 2024 in Audio, Best Ideas 2024, Best Ideas 2024 Featured, Diary, Discover Great Ideas Podcast, Equities, Ideas, Member Podcasts

Steve Gorelik of Firebird Management presented his in-depth investment thesis on Fleetcor Technologies (US: FLT) at Best Ideas 2024.

Thesis summary:

Fleetcor is a global payments company helping hundreds of thousands of SMEs manage their payment needs, from fuel and travel expenses to corporate payment automation. Steve thinks of the company as a collection of proprietary payment networks that benefit both customers and suppliers.

Fleetcor makes money by extracting volume discounts from merchants or collecting processing fees on the payments they facilitate. This is a capital-light, high-margin business growing at high-teen rates through a combination of organic growth of around 8-10% and value-added M&A that has generated an estimated 16% free cash flow yield on investments since 2011.

The stock recently traded at a 6% free cash flow yield due to concerns about the impact of the EV transition on their core business, which Steve believes are overblown. Through a combination of organic growth, M&A and share buybacks, Steve expects investment in Fleetcor to generate 20% IRRs over a medium-term holding period.

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About the instructor:

In addition to being Head of Research at Firebird Management, Steve Gorelik is the Lead Fund Manager of Firebird U.S. Value Fund as well as portfolio manager of Firebird’s Eastern Europe and Russia Funds. He joined Firebird in 2005 from Columbia University Graduate School of Business while completing education from a highly selective Value Investing Program. Prior to business school, Steve was an operational strategy consultant at Deloitte working with companies in various industries including banking, healthcare, and retail. He holds a BS degree from Carnegie Mellon University as well as a CFA (chartered financial analyst) charter and a membership in Beta Gamma Sigma honor society. Steve serves on the number of supervisory boards of listed and private companies in the Baltics. He speaks Russian, English and his native Belarussian.

Piaggio: Family-Controlled, Well-Run Owner of Iconic Two-Wheeler Brands

January 18, 2024 in Audio, Best Ideas 2024, Diary, Discover Great Ideas Podcast, Equities, Ideas, Member Podcasts

Javier Echevarria of Invexcel Patrimonio presented his in-depth investment thesis on Piaggio (Italy: PIA) at Best Ideas 2024.

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Javier Echevarria serves as Chief Investment Officer of Invexcel Patrimonio. He has specialized in Equity Investments and Wealth Management since 2007. He worked in Bestinver’s sales team from 2007-2009. He coordinated the Anatha charity project in Cambodia in 2009. He joined Excel Corporación as Markets Analyst in 2009 and Invexcel Patrimonio in 2010. He holds a Degree in Law from the Universidad Complutense de Madrid and a Master’s Degree in Stocks and Financial Markets from Instituto de Estudios Bursátiles.

DSGR: Transformed, Growing, Owner-Operated Specialty Distributor

January 18, 2024 in Audio, Best Ideas 2024, Best Ideas 2024 Featured, Diary, Discover Great Ideas Podcast, Equities, Ideas, Member Podcasts

Brad Hathaway of Far View Capital Management presented his investment thesis on Distribution Solutions Group (US: DSGR) at Best Ideas 2024.

Thesis summary:

In April 2022, Distribution Solutions Group (DSGR) undertook a significant transformation from a sleepy, illiquid sub-$500 million market cap company with limited avenues for capital redeployment to a $1.2+ billion diversified specialty distributor.

As a result of this transformation, DSGR has become a critical investment for its majority shareholder who intends to create a high-quality, buy-and-build compounder in the specialty distribution space. This plan involves more than tripling FCF over the next few years between organic growth and accretive M&A.

Because of the company’s limited trading volume ($1.5 million per day) and poor sell-side coverage (three small analysts who barely cover it), DSGR’s transformation remains misunderstood by the investor community. However, on September 28, 2023, DSGR held its first investor day, providing a roadmap for cash flow growth and which should be a catalyst to help investors better understand the business. The key takeaway was DGSR providing guidance for a >20% EBITDA CAGR over the next five years, taking EBITDA up to $450 million and >$5 of EPS. FCF should be higher than net income as D&A is greater than capex, so the company should generate ~$5 of FCF per share, suggesting an over $100 share price.

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About the instructor:

Brad Hathaway is the Managing Partner of Far View Capital Management, an investment firm based in Aspen, Colorado. Before founding Far View Capital Management in 2011, Mr. Hathaway worked for four years at J. Goldman & Company, a New York City-based hedge fund. At J. Goldman, Mr. Hathaway worked as an analyst and a portfolio manager on the firm’s value team. His role there included sourcing and analyzing investment opportunities and managing a portfolio of global securities from multiple asset classes with a focus on US publicly-traded equities. Prior to J. Goldman, Mr. Hathaway worked for three years as an analyst at Tocqueville Asset Management where he discovered and researched global long and short equity investments for the International Value mutual fund and the Global Partners hedge fund. Mr. Hathaway graduated with a B.A. in Political Science from Yale University. He is a board member of CDON AB, a Nordic 3P e-commerce marketplace listed on the Swedish stock exchange.

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