#25 ValueStream
$TAVHL TI $AMR - $HCC - $0975 HK $EDEL IN $ABG - $AN - $LAD - $GPI $RYSAS TI $CLH $BSET $MNRO $FORR $REYN $FLO
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:
TAV Airports (Turkiye) - $TAVHL TI - April by Pabrai Wagons Fund
Edelweiss Financial (India) - $EDEL IN - April by Pabrai Wagons Fund
Select Coal Business (Global) - $AMR - $HCC - $0975 HK - April by Pabrai Wagons Fund
Select Homebuilders - April by Pabrai Wagons Fund
Select Car Dealerships (USA) - $ABG - $AN - $LAD - $GPI - April by Pabrai Wagons Fund
Reysas (Turkiye) - $RYSAS TI - April by Pabrai Wagons Fund
Clean Harbors - $CLH - April by Merion Road Capital
Bassett Furniture - $BSET - April by Merion Road Capital
Monro - $MNRO - April by Palm Valley Capital Management
Forrester Research - $FORR - April by Palm Valley Capital Management
Reynolds Consumer Products - $REYN - April by Palm Valley Capital Management
Flowers Foods - $FLO - April by Palm Valley Capital Management
Top Holdings (as of Dec 31, 2024):
Approximate weights:
TAV Airports (Turkey) – 16%
TAV Airports is a growing operator with strong passenger recovery, valuable international assets, and expansion potential driven by rising traffic..Select Coal Businesses (Global) – 15%
Invested in low-cost, cash-generative U.S. metallurgical coal businesses with strong management and long-term demand despite industry negativity.Edelweiss Financial (India) – 15%
Edelweiss is a high-growth, capital-light financial company led by strong management and positioned early in emerging sectors with plans to unlock value through spin-offs.Select Car Dealerships (USA) – 12%
Wagons Fund sees select U.S. car dealerships as misunderstood, high-margin businesses with durable recurring revenues despite market fears over EV disruption.Select Homebuilders (USA) – 8%
Wagons Fund backs efficient, scaled U.S. homebuilders positioned to benefit from a multi-million home supply deficit.Reysas (Turkey) – 3%
Reysas is a dominant Turkish logistics and infrastructure company with market-leading positions and recurring revenues, led by a proven management team continuously expanding into high-potential adjacent sectors.
Sources:
Pabrai Wagons Fund
https://www.wagonsfund.com/
https://wagonsfund.b-cdn.net/Pabrai%20Wagons%20Fund%20Investor%20Presentation.pdf
https://x.com/MohnishPabrai
April
Q1 2025
TAV Airports (Turkiye) - $TAVHL TI - April
Operates 15 airports in 8 countries.
Handled 96M passengers in 2023 (vs. 89M in 2019).
Forecasts 110–120M passengers by 2025.
Benefiting from strong passenger traffic trends.
Acquired 85% of Almaty Airport (Kazakhstan) in 2021 for $120M.
Almaty is one of several strong assets (others include Havas and Antalya).
Valuation
Almaty EBITDA: $116M in 2024; expected >$129M in 2025.
75% of 2024 revenues in or linked to hard currencies (EUR/USD).
Considered very cheap vs. global airport peers.
Sources:
Pabrai Wagons Fund
https://www.wagonsfund.com/
https://wagonsfund.b-cdn.net/Pabrai%20Wagons%20Fund%20Investor%20Presentation.pdf
https://x.com/MohnishPabrai
April
Q1 2025
Edelweiss Financial (India) - $EDEL IN - April
Long-term compounder with strong tailwinds in India.
Early entrant in high-growth sectors (alt. asset mgmt, wealth mgmt, insurance, etc.).
Businesses are capital-light, high ROE, and high growth.
Plans to spin off multiple units.
Led by a top-tier owner-operator with strong management team.
Valuation:
Trading well below intrinsic value.
Largest position (>20% of assets).
Estimated to be worth over 3× current valuation.
Sources:
Pabrai Wagons Fund
https://www.wagonsfund.com/
https://wagonsfund.b-cdn.net/Pabrai%20Wagons%20Fund%20Investor%20Presentation.pdf
https://x.com/MohnishPabrai
April
Q1 2025
Select Coal Business (Global) - $AMR - $HCC - $0975 HK - April
Invested in a few U.S.-based metallurgical coal companies.
Targets cash-generative, debt-free businesses.
Focus on firms returning cash via buybacks/dividends.
Prefers low-cost producers led by top-tier managers.
Industry is out of favor, but long-term demand expected.
Valuation
Valuations seen as irrationally below intrinsic value
Sources:
Pabrai Wagons Fund
https://www.wagonsfund.com/
https://wagonsfund.b-cdn.net/Pabrai%20Wagons%20Fund%20Investor%20Presentation.pdf
https://x.com/MohnishPabrai
April
Q1 2025
Select Car Dealerships (USA) - $ABG - $AN - $LAD - $GPI - April
Wagons Fund holds positions in a few U.S. car dealerships.
Market sentiment is negative due to EV-related concerns.
Fund believes these concerns are exaggerated and invalid.
Dealerships have strong, high-margin, recurring revenue models expected to last for decades.
Valuation
Shares are trading at low multiples.
Companies are actively buying back their own stock.
Sources:
Pabrai Wagons Fund
https://www.wagonsfund.com/
https://wagonsfund.b-cdn.net/Pabrai%20Wagons%20Fund%20Investor%20Presentation.pdf
https://x.com/MohnishPabrai
April
Q1 2025
Reysas (Turkiye) - $RYSAS TI - April
Owns 62% of Reysas REIT with 12M+ sq. ft. of Grade A warehouses in Türkiye
Run by a highly regarded father-son team
Strong recurring revenues across business lines
Market leader in:
Warehouse ownership in Türkiye
Rooftop solar generation in Türkiye
Vehicle inspections (long-term government concession)
Continuously builds adjacent, high-potential businesses
Valuation
Reysas REIT market value: ~$975 million
Real estate appraised value (as of 12/31/24): $1.6 billion
Sources:
Pabrai Wagons Fund
https://www.wagonsfund.com/
https://wagonsfund.b-cdn.net/Pabrai%20Wagons%20Fund%20Investor%20Presentation.pdf
https://x.com/MohnishPabrai
April
Q1 2025
Clean Harbors - $CLH - April
Largest U.S. hazardous waste manager with hard-to-replicate assets (incinerators, landfills).
Vertically integrated with over 500 specialized permits.
Strong market position with efficiency and service breadth from scale.
Two segments:
Environmental Services: resilient demand from industrial sectors, supported by reshoring and regulation.
Safety-Kleen Oil: smaller, volatile, but targeted for margin improvement via premium product focus.
Margin expansion potential supported by industry trends (e.g., consolidation, rational pricing).
Valuation:
Trades at 10.6x 2025E EBITDA, or 10.8x excluding Safety-Kleen (valued at 3.0x).
Below peers, despite similar strategic advantages.
No valuation credit given for potential margin gains.
A 500bps margin lift would put EBITDA 20% above consensus, reducing multiple to <9x.
Republic Services acquired a peer at ~14x EBITDA, highlighting relative undervaluation.
SOURCES:
Merion Road Capital
https://www.merionroadcapital.com/
https://seekingalpha.com/article/4773699-merion-road-capital-q1-2025-investor-letter
https://twitter.com/aaronjsallen
April
Q1 2025
Bassett Furniture - $BSET - April
120-year-old premium furniture manufacturer, wholesaler, and retailer.
Operates own manufacturing plants, warehouses, and retail stores.
Asset-heavy model with vertically integrated operations.
Sold its trucking unit to J.B. Hunt in 2022 for $87M.
Historically achieves 4–5% EBIT margins; currently loss-making due to industry oversupply.
LTM revenue ~$390M, in line with pre-COVID levels.
Management is focused on margin recovery via cost reductions in warehousing and delivery.
Plans to grow wholesale sales by highlighting top products in streamlined in-store displays.
Valuation
Trades at ~$13.50/share vs. tangible book value >$19/share.
$70M in cash (~$8/share); real estate significantly undervalued.
Retail properties likely worth $36M more than book value (+$4.19/share).
At $25M EBIT and 5x multiple: implied market value = $195M, or >$22/share.
Potential upside of 66%.
SOURCES:
Merion Road Capital
https://www.merionroadcapital.com/
https://seekingalpha.com/article/4773699-merion-road-capital-q1-2025-investor-letter
https://twitter.com/aaronjsallen
April
Q1 2025
Monro - $MNRO - April
Operates 1,288 auto repair and tire stores across 32 U.S. states.
Benefits from aging vehicle fleet and high car usage.
Faces pressure from cost-conscious consumers delaying repairs and opting for cheaper tires.
Same-store sales have declined recently.
Profit recovery depends on return of higher-margin product sales and improved store performance.
Core services are essential, supporting long-term recovery potential.
Continues generating solid free cash flow.
Actively buying back shares and reducing debt.
Recovery in margins and sales could unlock significant upside.
Valuation
Stock at multi-year lows.
Dividend yield: 7.6%.
SOURCES:
Palm Valley Capital Management
https://www.palmvalleycapital.com/
https://www.palmvalleycapital.com/fundletter
April
Q1 2025
Forrester Research - $FORR - April
Provides business and tech advisory services, mainly to marketing and front-office roles.
Founded in 1983; CEO George Colony owns over 40%.
Core business is prepaid subscriptions with 90% renewal rates and strong cash flow.
Second to Gartner but focused on different areas.
Operational issues due to frequent strategic shifts.
Performance peaked during COVID; since then, consulting has weakened and research growth has stalled.
Valuation:
Profit margins are at multi-year lows.
Stock has fallen from $60 to under $10 in four years.
Holds substantial net cash.
If operations recover, current valuation appears very compelling.
SOURCES:
Palm Valley Capital Management
https://www.palmvalleycapital.com/
https://www.palmvalleycapital.com/fundletter
April
Q1 2025
Reynolds Consumer Products - $REYN - April
Owns top-tier brands like Reynolds Wrap and Hefty.
Products are used in ~95% of U.S. households.
Operates in stable, essential categories (cooking, cleaning, storage).
Consistently strong market share (#1 or #2 in most categories).
Business known for reliability and operational stability.
Rarely trades at attractive valuations due to its quality.
Company’s debt is seen as very manageable relative to its strong cash flow.
Valuation
Currently available at a valuation considered reasonable by historical standards.
SOURCES:
Palm Valley Capital Management
https://www.palmvalleycapital.com/
https://www.palmvalleycapital.com/fundletter
April
Q1 2025
Flowers Foods - $FLO - April
Second-largest U.S. bakery company with strong brands (Nature’s Own, Dave’s Killer Bread, Wonder).
Long-standing record of steady sales and profit growth.
Currently integrating Simple Mills; earnings expected to remain flat in 2025.
Continues to generate strong free cash flow.
Using cash flow to reduce debt.
Valuation:
Stock trading at a 5-year low.
Dividend yield of 5.0%.
Free cash flow supports both dividend payments and debt reduction.
SOURCES:
Palm Valley Capital Management
https://www.palmvalleycapital.com/
https://www.palmvalleycapital.com/fundletter
April
Q1 2025