#18 ValueStream
$MEG $GOGO $XPOF $DNTL.to $ELV $BWM $HEIN $BERA $FNCH $LQDA $NTPIF $WILD.to $CTT $AHT.l $IBP $DAC $IMPP $5753.T $GRVY $327 $JFIN $ONEW
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:
MEG Energy - $MEG - Jan 25, 2025 by Open Insights Capital
GOGO Inc - $GOGO - Jan 27, 2025 by Buckley Capital
Xponential Fitness - $XPOF - Jan 27, 2025 by Buckley Capital
Dentalcorp - $DNTL.to - Jan 27, 2025 by Buckley Capital
Elevance Health - $ELV - Jan 24, 2025 by Sequoia Fund
BMW - $BWM - Jan 28, 2025 by Third Avenue Value Fund
Heineken - $HEIN - Dec 31, 2024 by FPA Crescent Fund
Bermaz Auto - $BERA - Dec 31, 2024 by Pangolin Asia Fund
Finch Therapeutics - $FNCH - Jan 26, 2025 by Arquitos Capital Management
Liquidia Therapeutics - LQDA - Jan 26, 2025 by Arquitos Capital Management
Nam Tai Property - $NTPIF - Jan 26, 2025 by Arquitos Capital Management
WildBrain Ltd. - $WILD.to - Jan 29, 2025 by Old West Capital Management
Correios de Portugal, S.A. - $CTT - Jan 28, 2025 by Maran Capital Management
Ashtead Group - $AHT.l - Jan 24, 2025 by Giverny Capital Asset Management
Installed Building Products - $IBP - Jan 24, 2025 by Giverny Capital Asset Management
Danaos - $ DAC (Shippers) - Jan 03, 2025 by Van Der Mandele Arar Fund
Imperial Petroleum -$IMPP (Shippers) - Jan 03, 2025 by Van Der Mandele Arar Fund
Nippon Shindo - $5753.T - - Jan 03, 2025 by Van Der Mandele Arar Fund
Gravity Co - $GRVY- - Jan 03, 2025 by Van Der Mandele Arar Fund
PAX Global – $327.HK - - Jan 03, 2025 by Van Der Mandele Arar Fund
Jiayin Group - $JFIN- - Jan 03, 2025 by Van Der Mandele Arar Fund
OneWater - $ONEW- - Jan 03, 2025 by Van Der Mandele Arar Fund
MEG Energy - $MEG - Jan 25, 2025
Debt & Shareholder Returns: Debt targets met; 100% of free cash flow returned via dividends and buybacks.
Production Growth: Expanding from 110K bpd to 135K bpd by 2027; ~105K bpd expected in 2025.
Industry Discount: Trades at a discount to U.S. peers; ongoing share buybacks.
Tariff Risk: Potential U.S. tariffs could impact cash flow, but costs likely passed to consumers.
Political Shift: Trudeau’s exit may reduce regulatory pressure; elections could re-rate sector.
Acquisition Target: Likely takeover candidate, with Suncor as a potential buyer.
Valuation
Discount vs. U.S. Peers: Undervalued despite strong free cash flow.
Cash Flow: ~$1B FCF at $80 WTI.
Buybacks: Continues reducing share count, supporting valuation.
Acquisition Price Target: Estimated at $40-$50 per share.
Re-rating Potential: Valuation could rise significantly if tariffs are avoided.
SOURCES:
Open Insights Capital
https://www.opensquarecapital.com/
Jan 25, 2025
Q4 2024
GOGO Inc - $GOGO - Jan 27, 2025
Business Model: Sells antennas for private jets (20-30% margin) and earns recurring service fees (70-80% margin) with 15-20 year contracts.
Industry Growth: Broadband penetration in business aviation is only 35% in North America, <10% internationally, expected to reach nearly 100% over 10-20 years.
Competitive Position: Forms a duopoly with Starlink after acquiring Satcom Direct (adds salesforce, Gulfstream partnership, 1,300 jets for upselling, and military contracts).
Key Catalysts:
Galileo (LEO satellite) – Fast, global, low-latency internet for business jets (HDX for small jets, FDX for large jets launching May 2025).
5G ATG Network – Expected H2 2025, provides superior broadband over land with no direct competitors.
Scalability: Existing network can triple broadband usage without major capital expenditure.
Valuation
Current Valuation: Trades at <9x FCF.
FCF Growth: Expected to generate $1.00/share in 2025, $2.00+ in 2028.
Stock Price Target: If valued at 15x FCF, stock could double in 2025 and reach $30 by 2028 (300% upside).
SOURCES:
Buckley Capital
https://buckleycapitalpartners.com/
https://www.dropbox.com/scl/fi/htn8mypoadlcy43vsu6ik/Buckley-2024_Annual_Letter.06.pdf?rlkey=wa2d9fzib3ldfd7w5358whaoc&e=1&st=i7yt05kn&dl=0
https://twitter.com/buckleycapital
Jan 27, 2025
q4 2024
Xponential Fitness - $XPOF - Jan 27, 2025
Largest global franchisor of boutique fitness brands across 8 verticals.
Over twice the U.S. studios of closest competitor, Orange Theory.
Strong operational momentum under new CEO.
Government investigations resolving; company positioned for a valuation re-rating.
Conservative EBITDA forecast for 2026: $160M (company guidance: $190M).
Low execution risk, strong growth outlook, and undervaluation suggest significant re-rating potential.
Valuation
Price target: $30+ in 2025 (100%+ upside), $40+ in 2026 (200%+ upside).
Trades at <10x 2025 FCF, while peers trade at 30x+.
Closest peer, Planet Fitness (PLNT), trades at a ~60% premium
Club Pilates alone may be worth more than the entire company’s current EV
SOURCES:
Buckley Capital
https://buckleycapitalpartners.com/
https://www.dropbox.com/scl/fi/htn8mypoadlcy43vsu6ik/Buckley-2024_Annual_Letter.06.pdf?rlkey=wa2d9fzib3ldfd7w5358whaoc&e=1&st=i7yt05kn&dl=0
https://twitter.com/buckleycapital
Jan 27, 2025
q4 2024
Dentalcorp - $DNTL.to - Jan 27, 2025
Largest player in its category, over twice the size of its nearest competitor.
Operates a scalable and stable business model with minimal economic sensitivity.
Organic sales growth of ~4% annually.
Margins expected to expand, driving ~5% organic EBITDA growth.
Acquisitions contribute to overall pre-tax profit growth in the low double digits.
Free cash flow per share projected to grow 15-20% annually.
IPO valuation was 15x EBITDA, with a peer acquired at 17x EBITDA (2022).
Valuation
Currently trades at 8-9x 2025 FCF, while peers trade at 20x+.
SOURCES:
Buckley Capital
https://buckleycapitalpartners.com/
https://www.dropbox.com/scl/fi/htn8mypoadlcy43vsu6ik/Buckley-2024_Annual_Letter.06.pdf?rlkey=wa2d9fzib3ldfd7w5358whaoc&e=1&st=i7yt05kn&dl=0
https://twitter.com/buckleycapital
Jan 27, 2025
q4 2024
Elevance Health - $ELV - Jan 24, 2025
Major U.S. Health Insurer: Largest for-profit operator of Blue Cross Blue Shield plans, covering 45 million lives across 14 states.
Expanding Non-Insurance Capabilities: Growth focus on CarelonRx (pharmacy benefit manager) and Carelon Services (care delivery & technology).
Medicaid Challenges: Post-pandemic eligibility adjustments led to higher-acuity members, near break-even margins, and slow state reimbursement rate adjustments.
Medicare Headwinds: Issues with Medicare Star Ratings expected to impact Medicare Advantage revenue and margins in coming years.
Long-Term Strength: Well-positioned in the U.S. healthcare system, with care delivery & technology expansion supporting future growth.
Valuation
Low Valuation: Trading at <11x forward earnings, currently depressed.
Earnings Recovery Expected: Margins in Medicaid expected to normalize, supporting earnings growth.
Strategic Buy: Increased investment in Q4 due to share price weakness.
SOURCES:
Sequoia Fund
https://www.sequoiafund.com/home
Jan 24, 2025
Q4 2024
BMW - $BWM - Jan 28, 2025
Industry Challenges: Navigating higher interest rates, BEV transition, Chinese competition, and potential U.S. tariffs.
Strong Financial Performance: Maintained 13.7% ROE over the past decade despite challenges.
BEV Growth & Strategy: Outperforming competitors in BEV market share; investing in Neue Klasse BEV platform.
Operational Resilience: U.S. sales grew 6.5% in 2024, outpacing the market despite a major recall.
Chinese Market Exposure: About 30% of auto profit comes from China; premium brand helps mitigate local competition.
Strategic Adaptation: Effective inventory management, evolving product mix, and capital allocation focus.
Earnings & Shareholder Returns:
EUR 80.74 per share in cumulative earnings over 5 years.
EUR 24.70 per share in dividends paid.
5% of shares repurchased in the last 2 years.
EBIT Growth: Expected to rise ~70% since 2019.
Valuation
P/E Ratio: Dropped ~30% to 6.4x forward earnings.
Price-to-Book Ratio: 0.54x book value, despite strong profitability.
Total Shareholder Return: 6.02% annualized over 5 years despite valuation multiple decline.
SOURCES:
Third Avenue Value Fund
http://www.thirdave.com/
https://seekingalpha.com/article/4752566-third-avenue-value-fund-q4-2024-commentary
Jan 28, 2025
Q4 2024
Heineken - $HEIN - Dec 31, 2024
Global beer company with 150 years of history.
Market leader in key regions.
55% of revenue comes from fast-growing developing markets.
Consistent mid-single-digit revenue and EBITDA growth over the last decade.
Strong balance sheet, dividends, and potential for share buybacks.
Valuation
Stock trades at 11x earnings, reflecting a valuation adjustment.
SOURCES:
FPA Crescent Fund
https://fpa.com/funds/overview/crescent
https://fpa.com/docs/default-source/funds/fpa-crescent-fund/literature/quarterly-commentaries/fpa-crescent-fund-commentary-2024-12.pdf?sfvrsn=74d69e9d_3
Dec 31, 2024
Bermaz Auto - $BERA - Dec 31, 2024
Sales decline due to competition from cheaper Chinese imports.
Expanding with new Chinese car franchises and Kia partnership.
Anticipates strong performance from the Kia Sportage.
Business fundamentals remain solid despite challenges.
Valuation
Dividend yield of ~10% on shares.
SOURCES:
Pangolin Asia Fund
https://www.pangolinfund.com/funds/pangolin-asia-fund/
Dec 31, 2024
q4 2024
Finch Therapeutics - $FNCH - Jan 26, 2025
Won a patent lawsuit against Ferring Pharmaceuticals, awarded ~$30M plus future royalties.
Willful infringement ruling could lead to enhanced damages (potentially 2.2x the award).
Awaiting judge’s decision on royalties, enhanced damages, and attorney’s fees.
Potential settlement possible, but an appeal is likely, extending resolution time.
Focuses solely on patent defense; ceased product development.
Valuation
Market cap below $20M.
Possible valuation range: $25 to $75 per share.
Post-trial decision should push shares closer to fair value.
Expectation of at least a 2x increase in share price, more if enhanced damages granted.
SOURCES:
Arquitos Capital Management
https://www.arquitos.com/
https://www.dropbox.com/scl/fi/1cs7by63vo84rcni6b3r2/Arquitos-Investor-Letter-Q4-2024-Public.pdf?rlkey=0n7heunx2ejru8npva2jf35yp&e=1&st=7ygnga6t&dl=0
https://twitter.com/Steven_Kiel
Jan 26, 2025
Q4 2024
Liquidia Therapeutics - LQDA - Jan 26, 2025
Liquidia has won multiple patent disputes against United Therapeutics (UTHR).
FDA approval for Yutrepia was delayed until May 23, 2025, due to a backdated exclusivity granted to UTHR.
Yutrepia has significant advantages over competitors, with superior lung deposition and ease of use.
Clinical trial results suggest Yutrepia could capture 80%-90% of the PAH and PH-ILD market.
The total market opportunity is substantial, with Tyvaso and Tyvaso DPI generating ~$1.7 billion in annual revenue.
Valuation:
Liquidia’s market cap is ~$1 billion.
Once Yutrepia launches and gains market share, the company could be worth multiple times its current valuation.
SOURCES:
Arquitos Capital Management
https://www.arquitos.com/
https://twitter.com/Steven_Kiel
Jan 26, 2025
Q4 2024
Nam Tai Property - $NTPIF - Jan 26, 2025
Regained full control of onshore assets, corporate seals, and business licenses in China.
Settled disputes with former controlling shareholders (Greater Sail & Kaisa Group), removing operational obstacles.
Gained access to funding sources and began repairing banking relationships.
Resolved issues with Credit Suisse/UBS and West Ridge from past investments.
Needs to update financials and complete an audit.
Valuation
Real estate was valued at $30-$40 per share four years ago.
Recent comp analysis suggests a $32 per share valuation.
Significant margin of safety compared to current stock price.
SOURCES:
Arquitos Capital Management
https://www.arquitos.com/
https://twitter.com/Steven_Kiel
Jan 26, 2025
Q4 2024
WildBrain Ltd. - $WILD.to - Jan 29, 2025
Leading IP Owner: Owns nearly 500 children’s entertainment brands, including Peanuts, making it the largest independent kids' IP company outside major Hollywood studios.
Content & Licensing Revenue: Produces and distributes content across streaming, AVOD, and FAST platforms; generates significant income from consumer product licensing.
Recent Strategic Moves:
July 2024: Refinanced debt, extending maturities to 2029.
December 2024: Sold majority stake in TV broadcast business, focusing on high-margin IP and content.
Peanuts Franchise Strength: Generates $2.5B+ in annual consumer product sales; exclusive Apple TV+ content deal has driven global brand expansion.
Brand Revitalization Success: Relaunched Strawberry Shortcake, Teletubbies, and Yo Gabba Gabba, driving engagement, licensing growth, and retail sales increases.
IP Expansion & Partnerships: Works with major global brands like Sega, Lego, Hasbro, Mattel, and The Pokémon Company for content and licensing deals.
Acquisition Potential: Now positioned as a pure-play content and IP company, making it an attractive takeover target for major media and consumer product firms.
Valuation
Undervalued Stock: Trades at under 8x EBITDA with a double-digit free cash flow yield.
High-Value IP Assets: Peanuts franchise alone generates $2.5B in annual consumer product sales.
Comparable IP Transactions: Peppa Pig and Cocomelon were acquired at 25–30x multiples, highlighting WildBrain's potential upside.
Significant Upside Potential: Intrinsic value estimated to be several multiples higher than the current stock price.
SOURCES:
Old West Capital Management
https://www.oldwestim.com/
https://twitter.com/boskovic64
Jan 29, 2025
Q4 2024
Correios de Portugal, S.A. - $CTT - Jan 28, 2025
CTT is Portugal’s privatized postal operator, with businesses in mail, express and parcels (E&P), financial services, Banco CTT, and real estate.
The E&P business has expanded market share, cut costs, and improved margins, with Q3 2024 parcel revenue exceeding Q4 2023.
Strategic moves include selling parts of Banco CTT, real estate sales, and a 10% share buyback.
In December 2024, CTT acquired Cacesa (customs, warehousing) at 5x EBIT and sold 25% of E&P to DHL at 12x EBIT.
These transactions were cash neutral but strategically valuable, enhancing operational synergies.
Management is aligned with shareholders, and a capital markets day is expected to outline the next three-year plan.
Further catalysts include additional real estate monetization and a potential full sale of Banco CTT.
Valuation
Sum-of-the-parts valuation: €1.3-1.8 billion, implying a €10-14 per share value vs. recent €5-6 trading range.
Breakdown:
Banco CTT: €300M
Real estate: €200M
Mail & financial services: €200-300M
E&P (post-DHL JV): €600M-1B
SOURCES:
Maran Capital Management
https://marancapital.com/
https://twitter.com/Dan_Roller
Jan 28, 2025
Q4 2024
Ashtead Group - $AHT.l - Jan 24, 2025
Industry Leader: UK-based equipment rental company, operating primarily in the U.S. as Sunbelt Rentals (85% of revenue).
Structural Tailwinds: U.S. labor shortages in skilled trades drive demand for rentals over ownership.
Cost Efficiency: Renting eliminates maintenance and storage costs for customers.
Growth Potential: Alongside United Rentals, holds only ~25% market share, allowing room for expansion.
Industry Outperformance: Historically grows at nearly 2x the rate of U.S. construction spending.
Valuation
Trades at ~17x earnings, based on cyclically weak profits
SOURCES:
Giverny Capital Asset Management
https://www.givernycam.com/ourfirm
Jan 24, 2025
Q4 2024
Installed Building Products - $IBP - Jan 24, 2025
Market Leader: Installs insulation in 30% of newly built U.S. homes.
Cost Advantage: Buys fiberglass ~20% cheaper than smaller competitors due to continuous manufacturing constraints.
Service Expansion: Acquiring businesses in gutters, garage doors, and shelving to streamline subcontracting for homebuilders.
Strong Leadership: CEO Jeff Edwards and family own 16% of shares, ensuring shareholder alignment.
Resilient Strategy: Well-positioned despite weak home construction, leveraging scale, efficiency, and procurement power.
Valuation
P/E Ratio: Trades at ~17x earnings. based on mildly depressed earnings.
Market Cap: $5.5 billion.
SOURCES:
Giverny Capital Asset Management
https://www.givernycam.com/ourfirm
Jan 24, 2025
Q4 2024
Danaos - $ DAC (Shippers) - Jan 03, 2025
Debt-free shipping company.
Pays a 5% dividend.
Actively buying back shares.
Nearly all ships contracted for the next three years.
Valuation:
Trades at a P/E of 2.7 or lower.
Expected to earn its market cap within three years
SOURCES:
Van Der Mandele Arar Fund
http://www.ararfund.com/
https://ararfund.com/wp-content/uploads/2022/05/new-years-letter-arar-fund-jan-2025public.pdf
https://twitter.com/vdmandele
Jan 03, 2025
Imperial Petroleum -$IMPP (Shippers) - Jan 03, 2025
CEO actively consolidating ownership, already controls 80%.
Further acquisitions of remaining shares seem unnecessary.
Valuation
Trades at less than 2 times earnings.
Stock valued far below the fleet's worth.
SOURCES:
Van Der Mandele Arar Fund
http://www.ararfund.com/
https://ararfund.com/wp-content/uploads/2022/05/new-years-letter-arar-fund-jan-2025public.pdf
https://twitter.com/vdmandele
Jan 03, 2025
Asian Net-Net’s and low P/E companies
Nippon Shindo - $5753
Japanese net-net company with net cash double its market cap.
Valuation: P/E of 5, deep discount to intrinsic value.
Gravity Co - $GRVY
Strong ownership ties to Gungho, potential consolidation target.
Valuation: 300% upside to fair value.
PAX Global – $327
9% dividend yield (50% of profits)
Assets exceed market cap.
Valuation: P/E of 5.5
Jiayin Group - $JFIN
Well-established Chinese payment provider.
Valuation: P/E just over 2, 15% dividend yield.
Discretionary Cyclicals
OneWater - $ONEW
Cyclical marine company, currently at bottom of the cycle.
Valuation: If historical margins return, could trade at P/E of 3 with 15% annual growth.
SOURCES:
Van Der Mandele Arar Fund
http://www.ararfund.com/
https://ararfund.com/wp-content/uploads/2022/05/new-years-letter-arar-fund-jan-2025public.pdf
https://twitter.com/vdmandele
Jan 03, 2025