#15 ValueStream
$JET2.L $VTY.l $LFCR $NN $THRY $7270 JT $KOS $SDRL $RPRX $NCMI $DAR $LMNR $HQI
Disclaimer
This content is for informational purposes only and does not constitute financial advice; we recommend always verifying the ideas presented here and conducting your own research, as there may be errors in interpretation and translation.
Today we have compiled the following theses:
Thesis on Jet2 - $JET2.L - Jan 16, 2025 by Plural Investing
Thesis on Vistry Group PLC - $VTY.l - Jan 16, 2025 by Laughing Water Capital
Thesis on Lifecore Biomedical - $LFCR - Jan 16, 2025 by Laughing Water Capital
Thesis on NextNav Inc. - $NN - Jan 16, 2025 by Laughing Water Capital
Thesis on Thryv Inc. - $THRY - Jan 16, 2025 by Laughing Water Capital
Thesis on Subaru - $7270 JT - Jan 14, 2025 by Smead International Value Fund
Kosmos Energy | Seadrill | Royalty Pharma by Patient Capital Management
Thesis on National CineMedia - $NCMI - Jan 10, 2025 by Riverwater Partners Small Cap Strategy
Thesis on Darling Ingredients Inc. - $DAR - Dec 31, 2024 by Riverwater Sustainable Value Strategy
Thesis on Limoneira - $LMNR - Dec 31, 2024 by Riverwater Sustainable Value Strategy
Thesis on HireQuest Inc. - $HQI - Jan 14, 2025 by Liberty Park Capital Management
Thesis on Jet2 - $JET2.L - Jan 16, 2025
It is a British holiday package company that offers flights and accommodation with a focus on customer service and quality.
Differential business model: Complete holiday packages with high customer retention (60% vs. 40% of TUI).
Market share growth: Increased from 2% to 22% in 10 years thanks to its focus on customer service.
Sustainable competitive advantage: Excellent management and strengthened reputation during the pandemic.
Solid fundamentals: Net cash position and double-digit growth projection.
Catalysts: Recovery of tourism in Europe and strategy focused on quality and trust.
When the macroeconomic environment worsens, the stock tends to fall because investors treat the company as if it were an airline, although that is not the company's business model.
Valuation
Target price: £30 per share in 3 years (current: £14).
Low multiple: Trades at 7x P/FCF, considered attractive.
Earnings growth: Projection of £2/share this year versus £0.9/share in 2019.
Revaluation potential: More than double the current price.
SOURCES:
Plural Investing
https://www.pluralinvesting.com/
Jan 16, 2025
Q4 2024
Thesis on Vistry Group PLC - $VTY.l - Jan 16, 2025
It is a British company dedicated to home construction and a business model based on partnerships to develop residential projects with a light asset approach.
Shift from the traditional homebuilding model to the partnership model, which is more efficient and offers higher margins.
Recent challenges such as legacy costs and accounting issues are considered transitory and manageable. Temporary expenses will disappear by 2026, boosting value.
Significant insider share purchases support the recovery.
Valuation
Shares are trading below tangible book value (historically >1.5x).
Trades at less than 3x projected EBIT (>£500M in 2025), compared to low double-digit sector multiples.
SOURCES:
Laughing Water Capital
https://www.laughingwatercapital.com/
https://twitter.com/LaughingH20Cap
Jan 16, 2025
Q4 2024
Thesis on Lifecore Biomedical - $LFCR - Jan 16, 2025
It is a CDMO specialized in manufacturing injectable drugs, focused on high-quality products and long-term guaranteed contracts.
Specialized business: CDMO of injectable drugs with high entry barriers.
Strategic shift: New management team with a clear plan to reach $300M in annual revenue.
Financial stability: Significant increase in guaranteed revenue by 2027.
Operational leverage: Higher margins thanks to revenue growth.
Attractive sector: Last small public CDMO, with high acquisition activity.
Management confidence: Share purchases reinforce the positive vision for the future.
Valuation
Revaluation potential: Over 100% according to comparables.
Change of control: 80% probability before 2028, with potential acquisition premiums.
SOURCES:
Laughing Water Capital
https://www.laughingwatercapital.com/
https://twitter.com/LaughingH20Cap
Jan 16, 2025
Q4 2024
Thesis on NextNav Inc. - $NN - Jan 16, 2025
Development of next-generation terrestrial GPS technology and wireless spectrum (900 MHz and 5G).
Strategic advantage in priority sectors such as national security and rural coverage.
Political and regulatory support from the FCC with a high probability of approval.
The market undervalues the stock due to regulatory uncertainty and forced sales, which are transitory factors.
Valuation:
Target price: ~40 $ per share, based on recent transactions.
Potential upside: Over 100% from current levels.
Current discount: Shares trade below intrinsic value due to perception of binary risk.
Risk management: Regulatory approval is not binary and negotiable with the FCC.
SOURCES:
Laughing Water Capital
https://www.laughingwatercapital.com/
https://twitter.com/LaughingH20Cap
Jan 16, 2025
Q4 2024
Thesis on Thryv Inc. - $THRY - Jan 16, 2025
It is a software company that offers SaaS solutions to manage and automate operations for small and medium-sized businesses.
SaaS company focused on SMBs with management and automation tools.
Solid growth in 2024:
+46% in customers year-over-year (Q3 2024).
Net revenue retention >100%.
Compliance with the "Rule of 40".
Strategic execution: Favorable debt refinancing and acquisition to expand channels and automation.
Outstanding competitiveness compared to HubSpot and ServiceTitan with better growth and efficiency metrics.
Valuation
Trades at ~2x estimated SaaS revenue for 2025, compared to HubSpot (~12x) and ServiceTitan (~10x).
Significant revaluation potential: possibility of multiplying its current value if aligned with comparable valuations.
Great investment opportunity due to its undervaluation and solid execution.
SOURCES:
Laughing Water Capital
https://www.laughingwatercapital.com/
https://twitter.com/LaughingH20Cap
Jan 16, 2025
Q4 2024
Thesis on Subaru - $7270 JT - Jan 14, 2025
It is a Japanese company that manufactures automobiles, excelling in off-road vehicles and crossover SUVs, with a loyal customer base.
Free cash flow generates >30% return on book value and the ability to return capital to shareholders.
Long-term debt can be paid off with just over a year of free cash flow.
Subaru has begun to purchase shares back
Share buybacks: Acquisition of 1.82% of shares in a quarter
Valuation
Currently trades for roughly the net cash, ignoring operational capability.
SOURCES:
Smead International Value Fund
https://smeadcap.com/smead-international-value-fund/
https://twitter.com/Cole_Smead
Jan 14, 2025
Q4 2024
Kosmos Energy (KOS, $3.75): Estimated intrinsic value is 3 times the current price. Free cash flow growth due to capex reduction.
Seadrill (SDRL, $37.80): Estimated intrinsic value is double the current price. Potential acquisition target.
Royalty Pharma (RPRX, $26.20): Trades at 5.9x earnings with a 3.3% dividend. Potential for share buybacks and earnings per share growth.
SOURCES:
Patient Capital Management
https://patientcapitalmanagement.com/
https://patientcapitalmanagement.com/articles/there_is_nothing_so_stable_as_change._bob_dylan
Jan 13, 2025
Q4 2024
Thesis on National CineMedia - $NCMI - Jan 10, 2025
National CineMedia (NCMI) is dedicated to cinema advertising, showing ads from major brands before movies.
Financial restructuring: Elimination of over $1,000M in debt, now with a net cash position.
Sector recovery: Cinema attendance is projected to reach 85% of pre-COVID levels by 2025, with full recovery expected in 2026 thanks to a strong release schedule.
Return of advertisers: Major brands like Coca-Cola and Amazon could increase their advertising investment in cinemas.
Competitive advantages: Unique model based on advertising revenue and technological improvements that optimize advertising return.
Valuation
Projected revenues: ~$350M in 2026 (vs. $445M in 2019).
Estimated EBITDA: $105M in 2026, with a 30% margin.
EV/EBITDA multiple: ~5.3x (attractive).
Free cash flow: ~$100M/year, FCFy yield of 17%.
SOURCES:
Riverwater Partners Small Cap Strategy
https://riverwaterpartners.com/
https://riverwaterpartners.com/2025/01/10/q4-2024-small-cap-market-update-shock-and-awe/
Jan 10, 2025
Q4 2024
Thesis on Darling Ingredients Inc. - $DAR - Dec 31, 2024
It is a global leader in sustainable ingredients from organic waste.
Three segments: Feed, Food, and Fuel.
Strong presence in renewable energy through Diamond Green Diesel (JV with Valero).
Significant growth expected in 2025 with biofuels and circular economy.
Valuation
Trades at 11x estimated earnings for 2025.
Thesis on Limoneira - $LMNR - Dec 31, 2024
Company supported by water rights and planned land sales.
Valuation
Current price: <25 USD/share.
Estimated net value: >40 USD/share, based on key assets.
Asset monetization expected in 2025.
SOURCES:
Riverwater Sustainable Value Strategy
https://riverwaterpartners.com/
Dec 31, 2024
Q4 2024
Thesis on HireQuest Inc. - $HQI - Jan 14, 2025
Operates a franchise model for temporary employment services, providing administrative, financial, and technological support to its franchisees, who manage daily operations.
Franchise model reduces operational risks, improves margins, and minimizes turnover of key employees.
Growth driven by strategic acquisitions and their transformation into franchises (e.g., Command Center, 2019).
Solid cash flow generation even in adverse economic environments.
Benefits from a favorable context for expansion and economic recovery.
Valuation:
Current price: ~13 USD/share.
Target price: 19.5 - 26 USD/share (50-100% potential upside).
Multiplier: Trades at less than 10x normalized earnings.
Discount: Significant compared to comparable companies.
Catalysts: Additional acquisitions, economic recovery, and greater recognition of its efficient model.
SOURCES:
Liberty Park Capital Management
http://www.libertyparkcapital.com/
https://seekingalpha.com/article/4749832-liberty-park-capital-q4-2024-letter-to-partners
Jan 14, 2025
Q4 2024