5N Plus: Transforming to High-Value Materials Technology Company

Shawn Kravetz of Esplanade Capital presented his in-depth investment thesis on 5N Plus (Canada: VNP) at Wide-Moat Investing Summit 2018.

Thesis summary:

5N Plus is the leading global supplier of niche specialty metals, chemicals, and engineered materials to the diverse end-markets in which it competes. Following the departure of the founding CEO in 2015, a new management team is transforming VNP from a struggling low-value-add metals pass-through business (high revenue with low margins) to a high-value-add (lower revenue with high margin) materials technology company. Based in Canada, this under-the-radar company is rich with catalysts, including imminent revenue inflection due to 3x growth at its largest customer (First Solar) and strong but masked top-line trends. The shares trade at ~7x/6x 2018/2019 consensus EBITDA, as compared to specialty metals peers at ~10x, with upward pressure on 2019 consensus estimates. Shawn sees 50/75% stock price appreciation potential in his base/upside case.

Listen to this session:

slide presentation audio recording

About the instructor:

Shawn Kravetz is President and Chief Investment Officer of Esplanade Capital LLC, an investment management company he founded in 1999. Esplanade Capital LLC manages capital for a small number of like-minded families, private investors, and institutions. Esplanade’s value orientation, driven by patient capital and proprietary research/analysis, has generated substantial outperformance versus benchmarks since inception. The firm specializes in smaller companies, out of favor & below the radar companies, special situations, and turnarounds. Prior to founding Esplanade, Shawn was a corporate executive and strategic advisor, including: Principal at The Parthenon Group, a leading strategy consulting boutique, where he advised chief executives on corporate strategy; Director of Strategic Planning and Corporate Development at The CML Group (NYSE traded), where he oversaw activities at subsidiaries including NordicTrack, The Nature Company, and Smith & Hawken; Consultant with Monitor Company, a leading strategy consulting firm. Shawn received an MBA with High Distinction from Harvard Business School in 1995, where he was awarded: The Thomas M. and Edna E. Wolfe Award; The Henry Ford II Scholar Award; and a Baker Scholarship. Shawn received an A.B. in Economics from Harvard University, magna cum laude, in 1991. Shawn has also been active in his community, having served as: Steering Committee Vice Chairman of The Museum of Fine Arts Council at The Museum of Fine Arts Boston and Member of the Steering Committee of The Vilna Center for Jewish Heritage. Shawn currently serves as Chairman of the Investment Committee at Temple Israel, Boston. Shawn currently serves on the board of directors of Nevada Gold & Casinos, Inc. where he is Chairman of the Corporate Governance and Nominating Committee and a member of the Compensation Committee.