#19 ValueStream
$GLE $EVO $FEVR.l $BORR $BUR $BOL $ODET JZCP.l $BN $ZEG.l $FILA $QEPC $ALNT $MLG.AX
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:
Société Générale - $GLE - Jan 28, 2025 by Gator Capital Management
Evolution - $EVO - Feb 05, 2025 by Broyhill Asset Management
Fever-Tree Drinks PLC - $FEVR.l - Jan 15, 2025 by Highwood Value Partners
Borr Drilling - $BORR - Jan 15, 2025 by Highwood Value Partners
Burford Capital - $BUR - Jan 15, 2025 by Highwood Value Partners
Compagnie de L’Odet & Bolloré SE - $BOL $ODET - Jan 15, 2025 by Highwood Value Partners
JZ Capital Partners - JZCP.l - Jan 15, 2025 by Highwood Value Partners
Brookfield Corp - $BN - Feb 04, 2025 by Third Point Partners
Compagnie de l’Odet - $ODET - Feb 06, 2025 by Quercus Fund
Zegona - $ZEG.l - Jan 09, 2025 by Horos Asset Management
F.I.L.A. S.p.a. - MIL: $FILA - Feb 05, 2025 by Smoak Capital
QEP Co., Inc. - OTCQX: $QEPC - Feb 05, 2025 by Smoak Capital
Alantra Partners - $ALNT - feb 07, 2025 by Attitude Small Caps FI
$MLG.AX by Meridion Patrimonio
Société Générale - $GLE - Jan 28, 2025
CEO Krupa is enhancing shareholder returns through asset sales, cost-cutting, and fee-based revenue.
BoursoBank is expanding rapidly, with high valuation potential if separately listed.
De-risked trading business ensures more stable revenue.
Selling foreign subsidiaries improves capital allocation.
Strong French retail banking benefits from loan growth, lower deposit rates, and insurance inflows.
Public subsidiaries (20% of earnings) have further divestment potential.
Continued cost-cutting and higher ROE targets expected.
Valuation
Trades at 45% of tangible book value and 4.2x 2026 EPS.
Public subsidiaries worth 40% of market cap despite contributing only 20% of earnings.
ROE target increase and additional share buybacks in 2025.
Stock down 4% vs. European bank index up 55% in three years.
SOURCES:
Gator Capital Management
https://gatorcapital.com/
https://info.gatorcapital.com/hubfs/20250128%20GFP%20Q4%20Letter-1.pdf
https://twitter.com/gatorcapital
Jan 28, 2025
Q4 2024
Evolution - $EVO - Feb 05, 2025
Industry Leader: Evolution is the dominant provider of live casino games, serving major operators like FanDuel, DraftKings, and BetMGM.
Scalable Model: Revenue is commission-based, with labor as the largest expense, allowing high scalability and efficiency.
Exceptional Profitability: One of the most profitable businesses in the sector, maintaining ~70% EBITDA margins.
Strong Growth Potential: iGaming remains a small part of the casino market, with live casino being its fastest-growing segment.
Challenges Addressed: Managing regulatory risks (UK accounts for only 3% of sales), mitigating cyberattacks, and expanding into Brazil & the Philippines.
Valuation
Deep Discount: Trades at a single-digit multiple of operating profit, down from 50x.
Capital Returns: Management increasing dividends and share buybacks to enhance shareholder value.
Attractive Upside: Strong cash flow, industry leadership, and expansion efforts suggest significant long-term revaluation potential.
SOURCES:
Broyhill Asset Management
https://www.broyhillasset.com/
https://twitter.com/ChrisPavese
Feb 05, 2025
Q4 2024
Fever-Tree Drinks PLC - $FEVR.l - Jan 15, 2025
Founded in 2004, Fever-Tree created the premium mixer category using natural ingredients.
Dominates tonic water and ginger beer in key markets (UK, USA, Canada, Europe, Australia, New Zealand).
Benefits consumers, bars, restaurants, and retailers, driving higher margins and sales.
Despite cost pressures, continues to expand market share across 90+ countries.
We believe that the higher cost of goods sold over the past three years is transitory, driven by glass and transatlantic shipping rates.
Moving production closer to key markets to reduce logistics costs and margin pressure.
Pre-pandemic revenue growth of 50% annually, with historically high gross and operating margins.
Strong Management Alignment: Founders and executives own ~$100 million in stock, ensuring shareholder interests are prioritized.
Stock Down 75%: Multiple compression from ~8x revenue to 1.8x revenue.
Potential to regain 600bps in gross margin.
Valuation
Trading at ~7–8x unlevered earnings, Assuming this margin recovery. With no debt.
Comparable transactions suggest a potential buyout at 6x revenue (~£20/share), over 3x current price.
SOURCES:
Highwood Value Partners
https://highwoodvaluepartners.com/
Jan 15, 2025
Q4 2024
Borr Drilling - $BORR - Jan 15, 2025
Offshore drilling services company leasing shallow-water rigs.
Supply-demand dynamic: Rig supply remains stable or declines, while demand grows.
Modern fleet advantage: One of the youngest and highest-quality rig fleets, commanding premium contract rates. +$40,000/day
Contract rates: $161K/day (2023) → $183.8K/day (2024), consistently above market averages.
Market constraint: New rigs unlikely to be built until market day rates exceed $175,000/day, limiting competition.
Favorable industry backdrop: Strong pricing power due to constrained supply and rising demand.
Borr's stock declined in H2 due to Aramco's contract suspensions and reduced production targets.
Founder and Chairman increase stake in November to 17.7 mn shares or $65mm invested. And the company repurchae 4.7mn shares in November and Dicember.
Replacement cost discrepancy: $275M builds 1 new rig, but same amount buys 6.6 rigs worth of Borr stock.
Valuation
Expected free cash flow: $500M - $600M per year.
Market capitalization: $1B (including convertible bond), implying a 50-60% free cash flow yield.
Equity value at lower of newbuildparity or 8xFCF @$175,000 dayrate implie potencial 5.3X vs current price.
SOURCES:
Highwood Value Partners
https://highwoodvaluepartners.com/
https://highwoodvaluepartners.com/wp-content/uploads/2025/01/Highwood-Value-Partners-H2-2024-Letter-to-Investorsx.pdf
Jan 15, 2025
Q4 2024
Burford Capital - $BUR - Jan 15, 2025
UK-listed global leader in litigation finance.
Generates revenue by funding commercial litigation for a share of settlements/judgments and fees from third-party capital.
Maintains a >90% success rate on funded cases.
$1.7B deployed → $3.1B cash proceeds, showing strong investment returns.
Realized $380M from cases, received $498M in cash, and reinvested $349M in 2024.
Competitive advantages: market leadership, cost control, operating leverage, and barriers to entry.
26% unlevered cash-on-cash IRR historically.
Enforcement strategy in the YPF case against Argentina aims to push for a negotiated settlement.
Valuation
YPF claim share: $6.8B (~$31/share pre-tax), with $1.64/share annual interest accrual. vs Stock price: $12.50/share
Trades at 10x earnings, below the run-off value of claims (excluding YPF).
SOURCES:
Highwood Value Partners
https://highwoodvaluepartners.com/
https://highwoodvaluepartners.com/wp-content/uploads/2025/01/Highwood-Value-Partners-H2-2024-Letter-to-Investorsx.pdf
Jan 15, 2025
Q4 2024
Compagnie de L’Odet & Bolloré SE - $BOL $ODET - Jan 15, 2025
Holding companies controlled by the Bolloré family with stakes in Vivendi, Universal Music Group (UMG), and other assets.
Recent restructuring efforts simplify the complex ownership structure, increasing transparency and potential value realization.
Breakup of Vivendi aims to reduce the conglomerate discount and unlock shareholder value.
Bolloré family's history of value-enhancing corporate maneuvers supports the long-term investment case.
Valuation
Shares acquired at a 70% discount
Estimated fair value is ~3x the current price, suggesting substantial upside.
Corporate restructuring could help narrow the discount, improving market price realization.
SOURCES:
Highwood Value Partners
https://highwoodvaluepartners.com/
https://highwoodvaluepartners.com/wp-content/uploads/2025/01/Highwood-Value-Partners-H2-2024-Letter-to-Investorsx.pdf
Jan 15, 2025
Q4 2024
JZ Capital Partners - JZCP.l - Jan 15, 2025
UK-listed small-cap private equity fund in liquidation.
Management is actively selling assets and returning capital to shareholders.
Share repurchases are part of the strategy to optimize shareholder value.
Valuation
NAV: $280M (~£3.30 per share).
Market Value: Trading at 60 cents on the dollar of NAV (~$170M).
Capital Returns: Repurchased 12.65% of shares at a 58% premium; additional $30M return planned in Q1 2025.
Potential Upside: Expected high IRR as liquidation progresses.
SOURCES:
Highwood Value Partners
https://highwoodvaluepartners.com/
https://highwoodvaluepartners.com/wp-content/uploads/2025/01/Highwood-Value-Partners-H2-2024-Letter-to-Investorsx.pdf
Jan 15, 2025
Q4 2024
Brookfield Corp - $BN - Feb 04, 2025
Leading global asset manager with $500B+ in fee-earning AUM.
Strong positioning in infrastructure & private credit, both fast-growing sectors.
Infrastructure demand surging due to a $100T global funding gap and rising digital infrastructure needs.
Proven track record in infrastructure with top-quartile returns and successful large-scale fundraises ($13B in 2022, $28B in 2023).
Private credit strength via Oaktree acquisition, real estate, and $20B+ annual insurance originations.
Underappreciated equity story, with management improving transparency and communication.
Valuation
Trades at ~13x next year’s earnings, well below alternative asset peers (20-30x earnings).
SOURCES:
Third Point Partners
https://www.thirdpointlimited.com/resources/portfolio-updates/
https://twitter.com/DanielSLoeb1
Feb 04, 2025
Q4 2024
Compagnie de l’Odet - $ODET - Feb 06, 2025
Holding of Bolloré SE, controlling UMG, Canal+, Havas, Lagardère, and Vivendi.
Vivendi split in 2024, but no market re-rating occurred.
Major past deals: UMG stake sales, logistics asset sales, Multichoice & Lagardère acquisitions.
With over €6 billion in net cash, they are well-positioned for new investments or to take advantage of the low prices of the holdings they already control.
Frequent share buybacks at Bolloré SE.
Valuation
Vivendi traded at a discount, post-split valuations remain low.
€6B+ net cash for future investments.
SOURCES:
Quercus Fund
https://www.quercusfund.com/
https://twitter.com/diegobmilano
Feb 06, 2025
Q4 2024
Zegona - $ZEG.l - Jan 09, 2025
Investment Strategy: Zegona acquires, restructures, and sells telecom companies.
After successfully invested in TeleCable and Euskaltel, generating strong shareholder returns. Now they target Vodafone Spain.
Acquisition of Vodafone Spain (May 2024): Purchased for €5B, financed with €300M equity, €900M preferred shares to Vodafone PLC, and nearly €4B debt.
Shareholding Structure: Vodafone holds 75% (via preferred shares), minority investors 25%. If €900M preferred shares are repaid, minority investors' stake rises to 100%.
Cash Generation Strategy:
Restructuring Vodafone Spain to improve profitability.
Monetizing fiber assets through joint ventures with Telefónica and MásOrange, selling stakes to financial investors.
Management Alignment: Compensation is tied to stock performance, ensuring strategic execution.
Valuation
Stock up 80% since May 2024, yet still 70%+ upside potential.
Fiber assets valued at 15x+ EBITDA
Sale of joint venture stakes expected to generate enough cash to repay Vodafone’s preferred shares, unlock hidden value, and reduce debt.
SOURCES:
Horos Asset Management
https://horosam.com/
https://cdn.horosam.com/wp-content/uploads/sites/67/2025/01/Letter-to-our-co-investors-4T24.pdf
https://x.com/alemartintoledo
https://x.com/JRuizRuiz
https://x.com/R_Quesada
Jan 09, 2025
Q4 2024
F.I.L.A. S.p.a. - MIL: $FILA - Feb 05, 2025
FILA owns leading global brands in fine arts, school, and hobby products.
IPO of fast-growing Indian subsidiary DOMS (Q1 2024).
Core FILA generated €105M adj EBITDA per year.
Strong profitability: 10%+ operating margin every year since 2010.
Valuation disconnect due to European/Italian listing, DOMS deconsolidation, and investor mismatch.
Rapid debt reduction (€220M+ since 2018), could be debt-free by 2027.
Dividend payout increased (20-40% of adjusted earnings).
Valuation
FILA trades at €9.50, while its DOMS stake alone is worth €9+ per share—core business nearly ignored.
If we slash the valuation of DOMS from 35x fwd EBITDA to 12x, Core FILA trade at 3.2x EV/EBITDA, 5-6x 2025 FCF, vs. U.S. peers trading at much higher multiples (3 or 4x that)
Even with a conservative DOMS valuation, FILA remains highly undervalued.
Potential 100%+ upside with improved earnings, FCF, and debt reduction in 2025 acting as catalysts.
SOURCES:
Smoak Capital
https://www.smoakcapital.com/
https://drive.google.com/file/d/1O1PrUSoM9XVPyeo_kUdepStFaoGEuWye/view
https://x.com/dsmoak98
Q4 2024
Feb 05, 2025
QEP Co., Inc. - OTCQX: $QEPC - Feb 05, 2025
Business Focus: Designs and distributes flooring installation tools under brands like QEP, Roberts, and Capitol.
Strategic Shift: Exited underperforming flooring acquisitions after a CEO change in 2023, refocusing on the core, more profitable tools business.
Financial Transformation: Divestitures significantly improved profitability, revealing the strength of the tools segment. Operating margins expanded from 3% to over 10% post-divestitures.
Key Customer Relationship: Long-standing partnership with Home Depot (~⅔ of revenue) since the company’s early days.
Industry Landscape: The tools industry has seen consistent M&A, with brand value being a key driver of deals.
Capital Allocation: Recent actions include divestitures, special dividends, stock buybacks, and a new recurring dividend, with a continued focus on shareholder value.
Comparable Transactions: Industry acquisitions typically happen at 12-15x EV/EBITDA (e.g., Level5 Tools at 13x EV/EBITDA).
Capital Returns: Recently initiated a $0.20 per share quarterly dividend (~2% yield) and is considering further shareholder-friendly actions like buybacks.
Valuation
Current Valuation: Trades at 4.5x EV/2025 EBIT.
Fair Value Estimate: Expected range of 8-10x EV/EBIT, implying a price target of $67-$80, or 60-90% upside.
Debt-to-Cash Turnaround: Moved from $30M net debt (FY 2023) to $30M+ net cash in under two years (~$60M improvement).
SOURCES:
Smoak Capital
https://www.smoakcapital.com/
https://drive.google.com/file/d/1O1PrUSoM9XVPyeo_kUdepStFaoGEuWye/view
https://x.com/dsmoak98
Q4 2024
Feb 05, 2025
Alantra Partners - $ALNT - feb 07, 2025
Business Overview
Spanish financial services firm with four segments: Investment Banking (IB), Asset Management (AM), Credit Portfolio Advisory (CPA), and Minority Investments.
Strong balance sheet with significant net cash and investments in its own funds and other asset managers.
Current Challenges (Financial services, at the bottom of the cycle)
Investment Banking slowdown due to weak M&A activity, undervaluation of small-mid caps, and costly expansion into high-salary regions.
Asset Management under pressure from weak European equities and delayed exits in Private Equity.
Credit Portfolio Advisory (CPA) struggling due to high liquidity levels preventing an increase in distressed asset transactions.
Employee cost adjustments ongoing, with layoffs of senior staff and a planned 13% workforce reduction.
Revenue & Profitability Outlook (Normalized margins)
Expected revenue normalization at €243M across IB, AM, and CPA.
Projected net profit: €35.5M after adjusting for costs and restructuring.
Valuation
Market Cap: €330M
Enterprise Value: €89.9M (EV/Net Profit = 2.53x)
Fair Value Estimate: €737M (2x upside) based on a 14x P/E multiple.
Potential investor returns:
100% in 1 year if recovery is quick.
23% annualized over 2-3 years if moderate.
15% annualized over 5 years in a slow recovery.
SOURCES:
Attitude Small Caps FI
https://www.attitudegestion.com/es/pages/products/9/attitude-small-caps-fi/
Rodrigo Villanueva Substack Thesis in Spanish, but he usually translates it into English, so stay tuned
https://x.com/HolyFinance
feb 07, 2025
$MLG.AX:
Industry & Business Model: Integrated mining services provider in Western Australia, 85% exposure to gold miners.
Growth & Expansion: Scaled from a single BHP contract to ~$500M revenue, 1,300 employees, and 34 sites.
Services & Assets: Transport, crushing, civil engineering, construction materials; 500+ trailers, 4 owned quarries.
Financial Performance: Revenue nearly 4x since 2018, growing >25% annually. EBITDA recovered to $55M, targeting 15% margin.
Market Tailwind: WA gold mining tripled in 10 years, but mining services lagged, creating demand.
Investment & Debt: $160M capex in 5 years; low leverage at 1x EBITDA, 90% equipment financing at 6-7%.
Future Outlook: Strong backlog, record gold prices, reinvestment driving further growth.
Valuation:
Trades at 40% discount to tangible net assets, <3x EBITDA, <10x earnings.
Potential to reach $100M EBITDA in 2-3 years.
Shares down >50% from post-IPO highs, despite strong fundamentals.
Market re-rating to 5x EBITDA possible when capital shifts from growth capex to shareholder returns.
Buybacks highly attractive at current multiples, with potential for substantial near-term returns.
SOURCES:
Meridion Patrimonio
https://x.com/alvarogomezolea
https://x.com/alvarogomezolea/status/1889453196512264568
Feb 12, 2025
Q4 2024