#27 ValueStream
$BKG.l-$SRC.l-$THO-$BLDR-$MCB.l-$NLOP-$PKST-$CBL-$LEN-$PHM-$UTG.l-$MRP-$WDB BB-$6951 JP-$SUI SJ-$JET2.l-$SEG-$WOSG.l-$ENDI-$CZR
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:
Berkeley Group - $BKG.l - March
By Kernow Asset Management
SigmaRoc - $SRC.l - Q1 2025
By Apis Global Discovery Fund
Thor Industries - $THO - April 11, 2025
By Alluvium Global Fund
Builders FirstSource - $BLDR - April 15, 2025
By Giverny Capital Asset Management
McBride plc - $MCB.l - April 23, 2025
By Alluvial Capital Management
Net Lease Office Properties - $NLOP - April 23, 2025
By Alluvial Capital Management
Peakstone Realty - $PKST - April 23, 2025
By Alluvial Capital Management
CBL Properties - $CBL - April 23, 2025
By Alluvial Capital Management
Lennar Corp - $LEN - April 12, 2025
By Third Avenue Real Estate Value Fund
PulteGroup - $PHM - April 12, 2025
By Third Avenue Real Estate Value Fund
Unite Group plc - $UTG.l - April 12, 2025
By Third Avenue Real Estate Value Fund
Millrose Propertie - $MRP - April 12, 2025
By Third Avenue Real Estate Value Fund
Warehouses De Pauw - $WDB BB - April 17, 2025
By Third Avenue International Real Estate Value Fund
JEOL Ltd - $6951 JP - April 02, 2025
By Third Avenue Value Fund
Sun International Limited - $SUI SJ - April 24, 2025
By Palm Harbour Capital
Jet2 - $JET2.l - April 23, 2025
By Plural Investing
Seaport Entertainment - $SEG - April 23, 2025
By Plural Investing
Watches of Switzerland - $WOSG.l - April 23, 2025
By Plural Investing
ENDI Corp - $ENDI - Q1 2025
By JDP Capital
Caesars Entertainment - $CZR - Q1 2025
By JDP Capital
Kernow Asset Management
https://kernowam.com/
March
Q1 2025
Berkeley Group - $BKG.l
Reaffirmed earnings forecast of at least £975m pre-tax profit for FY2025-2026.
Management shows strong discipline and focus.
Execution plan secured through 2035.
Targeting a 15% return on equity.
Valuation:
Market capitalisation: £3.6bn.
Net cash: £500m.
£7bn in forward free cash flow orders, with £1.5bn contractually secured.
Apis Global Discovery Fund
https://apiscapital.com/
https://twitter.com/dan1barker
Q1 2025
SigmaRoc - $SRC.l
SigmaRoc is a European producer of lime and aggregates, supplying essential materials for construction, industry, agriculture, and infrastructure projects.
Founded in 2016 by private equity investors to consolidate European construction materials companies.
Completed multiple acquisitions, culminating with CRH’s European lime assets in 2023.
Market leader in Finland, Sweden, Norway, the U.K., and Ireland; #2 in Germany, Poland, and the Czech Republic.
Core products (lime and aggregates) enjoy local monopoly characteristics with strong pricing power.
Revenue is diversified: ~50% construction, remainder from steel, agriculture, chemicals, and pulp/paper industries.
Well-positioned to benefit from European infrastructure and defense spending increases.
Germany, contributing 30% of revenue, is a major growth driver due to a €500bn infrastructure investment plan.
Valuation
Trades at 9x P/E versus U.S. peer USLM at 20x P/E.
Alluvium Global Fund
https://alluvium-am.com/
https://seekingalpha.com/article/4774434-conventum-alluvium-global-fund-march-2025-quarterly-report
https://twitter.com/AlluviumAM
April 11, 2025
Q1 2025
Thor Industries - $THO
Thor Industries, a recreational vehicle producer, initially saw rising optimism from dealers and consumers.
Confidence sharply declined by mid-March, expected to hurt full-year 2025 results.
The environment is highly uncertain, worsened by potential tariffs affecting costs.
Business remains cyclical, now facing a longer-than-expected downturn.
Continues to generate strong cash flow.
Valuation:
Trades at about 8× "through the cycle" earnings.
Giverny Capital Asset Management
https://www.givernycam.com/ourfirm
https://static1.squarespace.com/static/5e8f1f2a9432801293f6439e/t/6807db187af50c7dafe06a90/1745345305056/2025Q1D.pdf
April 15, 2025
Q1 2025
Builders FirstSource - $BLDR
Leading U.S. distributor of building products for homebuilders.
Offers value-added services like off-site wall framing to reduce labor needs.
Dominates the market with 590 branches, benefiting from scale and logistics.
Strong capital allocation history.
Long-term housing demand remains strong despite current headwinds (high rates, regulation, political issues).
Well-positioned to benefit significantly when construction activity picks up.
Reduced share count from 204M to 116M since 2021 (Maintains low debt.)
Valuation:
Acquired at ~$126 per share.
Forecasted to earn nearly $10 per share this year.
Previously earned ~$17 per share in 2022.
Alluvial Capital Management
https://alluvialcapital.com/
https://seekingalpha.com/article/4777131-alluvial-capital-management-q1-2025-letter-to-partners
https://twitter.com/alluvialcapital
April 23, 2025
Q1 2025
McBride plc - $MCB.l
McBride reported strong 2024 results with solid earnings and a positive outlook.
The company produces defensive goods (soaps and detergents).
Ongoing share price pressure due to steady selling by a large US university endowment.
Planned dividend reintroduction could boost interest among UK retail investors.
Valuation
Shares trade at ~6x operating income and <6x normalized earnings, seen as very cheap for the company's quality.
Net Lease Office Properties - $NLOP
Actively selling multiple buildings, including the "Binoculars Building" leased to Google until 2030.
Pursuing a liquidation strategy.
Nearly all recourse debt has been paid down.
Will soon begin distributing cash to shareholders.
Valuation
Shares trade at a 38% discount to estimated net asset value.
Peakstone Realty - $PKST
Transitioning from office buildings to niche industrial assets.
Aims for industrial properties to generate the majority of rental income.
Market has not yet recognized the strategic shift.
Valuation
Cash flow yield exceeds 20%.
High cash flow yield buffers against rising interest rate pressures.
CBL Properties - $CBL
Selling weaker assets.
Paying down debt.
Reinvesting in strongest malls.
Valuation:
Cash flow yield over 20%.
Third Avenue Real Estate Value Fund
https://thirdave.com/strategy-tarex/
https://www.thirdave.com/tarex-shareholder-letter
April 12, 2025
Q1 2025
Lennar Corp - $LEN
Transitioned to a "land-light" model using option agreements.
Strengthened financial position to near "net cash."
Generates strong free cash flow without heavy land reinvestment.
Captured significant U.S. homebuilding market share (with D.R. Horton and Pulte).
Completed spin-off of Millrose Properties to solidify strategy.
Positioned for sustained profitability, share repurchases, and improved cost of capital.
Valuation:
Lennar’s B shares trade at under 5x trailing operating profits.
Valuation is less than half that of certain peers.
Opportunity for medium-term upside through continued share repurchases and potential asset "split-off."
PulteGroup - $PHM
Leading U.S. homebuilder, delivering over 31,000 homes in 2024, mainly across the Sunbelt.
Diverse offerings for first-time and move-up buyers through Centex and Pulte brands.
Top developer of active adult communities via Del Webb brand.
High margins driven by scale, partial prefabrication, and pricing strength.
Strong financial position: net cash balance and nearly 50% reduction in share count under CEO Ryan Marshall.
Positive demographic trends: rising demand from 35–49 and 65+ age groups.
Shift to "land-light" model boosts free cash flow and reduces risk.
Gaining market share alongside Lennar and D.R. Horton, with one-third of U.S. new home sales.
Valuation
Trading at less than 6x trailing twelve months' operating profits.
Low valuation due to macro concerns (mortgage rates, inventory, material and labor costs).
Considered attractive given strong fundamentals and industry positioning.
Unite Group plc - $UTG.l
Largest owner of purpose-built student housing in the U.K. (150+ properties, 65,000 beds, 97%+ leased).
Focus on top-tier universities (90% aligned with Russell Group).
Strong balance sheet (loan-to-value under 25%).
Industry-leading operating margins among European REITs.
Growth drivers: rent escalations, new developments with universities, asset recycling through joint ventures.
Valuation
Acquired at cap rate over 6.0% and approximately £100k per bed.
Private market comps show 4.5% cap rates and £140k+ per bed.
Shares trading at over a 20% discount to stated NAV.
Potential for cash flow to grow at 7–8% per year, helping close valuation gap.
Millrose Propertie - $MRP
Fund retained a small position (<1.0% of capital) after Millrose's spin-off from Lennar.
Business model focuses on "land banking" rather than "land development."
Potential improvements: deploy excess capital, diversify customer base, maintain reliable dividend.
Valuation
Shares initially traded at a 40% discount to book value.
Company had $5 billion in unencumbered land assets and $1 billion in net cash.
Third Avenue International Real Estate Value Fund
https://thirdave.com/
https://www.thirdave.com/reifx-shareholder-letter
April 17, 2025
Q1 2025
Warehouses De Pauw $WDB BB
Logistics portfolio: 57 million sq. ft. across Belgium and the Netherlands.
Strategic location: Benefits from proximity to Rotterdam and Antwerp ports.
Market tailwinds: ~20% e-commerce penetration in core markets.
Geographic diversification: Exposure to Romania and ~10% stake in Sweden's Catena.
Strong governance: 20% family ownership; long-term oriented, aligned management.
Value creation: Proven development track record in supply-constrained markets.
Strategic fit: Complements fund’s broader European logistics exposure (CTP, Merlin).
Thematic driver: Positioned to benefit from reshoring and regionalization trends.
Valuation
P/E ratio: 13.5x (discounted).
Implied cap rate: 6%.
Dividend yield: Above 5%.
Third Avenue Value Fund
http://www.thirdave.com/
https://seekingalpha.com/article/4777221-third-avenue-value-fund-q1-2025-commentary
April 02, 2025
Q1 2025
JEOL Ltd - $6951 JP
Produces semiconductor equipment, electron microscopes, mass spectrometers.
One of two main players in multi-beam mask writers for EUV lithography.
Founded in 1949; expanded from electron microscopes to broader technology fields.
Consistent mid-to-high teens earnings growth; major EBITDA margin expansion.
Still underperforms global peers in profitability and efficiency; improvement expected.
New management targets for 2025–2027 aiming at higher growth and returns.
Strong prospects in electron microscopes (e.g., drug discovery, food safety).
A significant shareholder could push for operational and capital improvements.
Net cash balance sheet ensures flexibility and resilience.
Valuation
Acquired at a discount to NAV.
Cash Flow: Double-digit free cash flow yield.
Expected double-digit free cash flow growth.
Catalysts: Potential share buybacks and corporate actions to unlock shareholder value.
Palm Harbour Capital
https://www.palmharbourcapital.com/en/
https://seekingalpha.com/article/4777553-palm-harbour-capital-q1-2025-investor-letter
April 24, 2025
Q1 2025
Sun International Limited - $SUI SJ
Major South African operator in casinos, resorts/hotels, online betting, and pub slot machines.
Restructured after COVID crisis: cost cuts, equity raise, LatAm and Nigeria exit.
Business segments: Urban Casinos (core), Resorts & Hotels, SunSlots (pub LPMs), SunBet (online gaming).
Strong recovery in tourism and hotel business; online gaming growth accelerated, surpassing targets.
Solid operational cash flow used for shareholder returns and estate upgrades.
Potential acquisition of competitor Peermont underway.
Risks: energy crisis, proposed smoking bans, competition, economic volatility.
New CEO (Ulrik Bengtsson) with strong online gaming background; Value Capital Partners onboard as strategic investor.
Valuation
Trading at <7x earnings and <4x EV/EBITDA.
Expected >15% FCFE yield by 2026.
Dividend yield >10%.
Potential to double the stock price.
Plural Investing
https://www.pluralinvesting.com/
https://www.dropbox.com/scl/fi/ab8cndlcroaupoi6wnmwo/Plural_Partners_Fund_Letter_2025_Q1.pdf?rlkey=ndihhs0sgmappkfu7gl5ekltj&e=1&st=30i3crcn&dl=0
https://x.com/HiddenGemsInves
April 23, 2025
Q1 2025
Jet2 - $JET2.l
UK company with net cash.
Strong double-digit growth prospects.
Best competitive position and management team in its sector.
History of gaining market share during downturns.
No direct exposure to tariffs.
Valuation
Trading at 6.5x P/E.
Seaport Entertainment -$SEG
Spun off from Howard Hughes in July 2024 with $1.5B invested in Lower Manhattan properties.
Owns prime New York real estate previously mismanaged.
Turnaround depends on new management successfully transforming key properties into consumer destinations.
Significant operational changes already underway, including:
20-year lease signed with Meow Wolf at Pier 17 (over 1M visitors/year expected).
Expansion of rooftop concerts and leasing of restaurant spaces.
Cost cuts and closure of underperforming ventures at Tin Building.
Listing 250 Water St for sale.
Winning a bid to manage a prominent Bryant Park restaurant.
Positive management actions increased confidence; fund added to position.
Valuation:
Current market cap: $230 million with net cash.
Stock bought at $27; now trading at $18 (31% decline YTD).
Estimated intrinsic value in three years: ~$50.
Watches of Switzerland - $WOSG.l
Exclusive retailer for Rolex and other luxury brands.
Strong advantages: long customer waitlists, no online competition, no inventory risk.
CEO heavily invested personally (£30m in stock).
Sales of Rolex and Patek driven by supply, not demand.
Customer waitlists in the U.S. remain robust.
February trading update confirmed stable growth outlook.
Rolex has strong pricing power; industry engagement post-tariffs supports this.
Potential to gain market share by acquiring smaller competitors.
Long-term fundamentals remain solid despite short-term concerns.
31% U.S. tariff would reduce group profits by ~15%, 10% tariff by ~5%.
Still considered very attractively valued given structural strengths.
Valuation:
Shares trading at ~9x this year’s free cash flow.
Bought at £3.5, peaked at £6.0, now back to ~£3.5.
Expected intrinsic value to more than double in three years.
JDP Capital
https://jdpcap.com/
https://x.com/Jeremy_Deal
Q1 2025
ENDI Corp - $ENDI (otc)
Sold 25% of subsidiary CrossingBridge on April 6, 2025.
Sale likely aimed at raising growth capital without equity dilution.
CrossingBridge AUM grew from $3.6B (Feb) to $3.8B (Mar) 2025.
Strong institutional demand for CrossingBridge’s credit products.
ENDI had ~$20M in shareholder equity (mostly cash/investments) as of Dec 31, 2024.
Stock up 30%+ YTD but still undervalued relative to earnings potential.
Projected EBIT of $20M within 3 years.
Solid balance sheet supports growth.
Valuation
CrossingBridge valued at $100M+ based on partial sale.
Entire ENDI valued at ~$60M pre-deal.
Caesars Entertainment (CZR):
CZR is a top U.S. gaming and hotel operator, positioned to benefit from online gaming legalization.
Online platforms (Caesars Palace, Horseshoe) saw 20% revenue growth in 2024; Q4 iGaming revenue rose 65%.
Launching live iCasino products in Michigan and New Jersey to drive further growth.
CEO confident in digital segment reaching $500M EBITDA.
Governance strengthened with Carl Icahn-backed board additions.
Slight decline (1%) in traditional casino revenue in 2024; focus is on high-margin digital growth.
Projected 2025 free cash flow: $1B+, implying 20%+ equity yield.
Stock dropped over 25% in Q1 despite strong underlying value.
Valuation:
Stock trading around $25; breakup analysis suggests $80–$90 per share (200%–300%+ upside).
Digital business alone could be worth more than CZR’s current $5B market cap once $500M EBITDA is reached.