#30 ValueStream
$BAX-$XYZ-$PDD-$VRTS-$MCY
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:
Baxter - $BAX - May 14, 2025 By Broyhill Asset Management
Block, Inc. - $XYZ - March 31, 2025 By Baron Global Advantage Fund
PDD Holdings Inc. - $PDD - March 31, 2025 By Baron Global Advantage Fund
Virtus Investment Partners - $VRTS - May 5, 2025 By Gator Capital Management
Mercury General - $MCY - May 3, 2025 By Springview Capital Management
Broyhill Asset Management
https://www.broyhillasset.com/
https://22324760.fs1.hubspotusercontent-na1.net/hubfs/22324760/Broyhill%20Letters/The%20Broyhill%20Letter%202025.Q1.pdf
https://twitter.com/ChrisPavese
May 14, 2025
Q1 2025
Baxter - $BAX
Strong Q1 performance despite tariff-related disruptions.
Improved execution and clearer outlook boosted confidence.
Management targets 4–5% operational sales growth.
Long-term sustainability of this growth remains to be seen.
Valuation
Stock rose 18% in Q1.
Trades at 12x earnings (~half the market multiple).
Market is skeptical; fund sees this as a mispricing.
Baron Global Advantage Fund
https://www.baroncapitalgroup.com/article/quarterly-letter-baron-global-advantage-fund-q1-2025#section-performance
https://twitter.com/baroncapital
March 31, 2025
Q1 2025
Block, Inc. - $XYZ
Free-Cash-Flow Yield: 12%
Commentary: Attractive risk/reward
PDD Holdings Inc. - $PDD
P/E Ratio: 8x (based on FactSet consensus next-12-months EPS)
Commentary: Attractive valuation with positive skew on risk/reward
Gator Capital Management
https://gatorcapital.com/
https://www.gatorcapital.com/research-request-access
https://twitter.com/gatorcapital
May 5, 2025
Q1 2025
Virtus Investment Partners - $VRTS
Operates as a multi-boutique asset manager with centralized support services.
Grows by acquiring new investment firms while retaining their teams and strategies.
Generates stable, recurring revenues through asset-based fees.
Strong free cash flow enables reinvestment, acquisitions, and shareholder returns.
Maintains low debt, allowing financial flexibility.
Well-positioned for earnings-accretive acquisitions in a low-valuation M&A environment.
Consistently returns capital via dividends and share repurchases.
Risks include industry shift away from active management and some underperforming past acquisitions.
Currently in a holding pattern, awaiting improved flows or proactive management action.
Valuation
Trades at 6.5x P/E and 3.0x EV/EBITDA (adjusted for $280M in seed/CLO investments).
Adjusted EV/EBITDA would be 4.0x if seed/CLO investments are considered core.
Net debt is only $100M (0.3x EBITDA).
Dividend yield: 5.6%.
Repurchased ~2% of shares in Q1; potential for 30% buyback if leverage increases by 1.0x EBITDA.
Considered significantly undervalued compared to peers.
Springview Capital Management
https://springviewcap.com/
https://x.com/Gbaronscout
May 3, 2025
Q1 2025
Mercury General - $MCY
Mid-sized auto and homeowners insurer focused on California.
Recent wildfire losses likely short-term; not expected to impair capital.
Signs of favorable pricing and regulatory trends.
Benefited from major rate approvals and strong late-2024 performance
Operating environment improving due to tighter market capacity.
Valuation:
Shares bought at ~$50; fair value estimated at $80–$120.
Normalized EPS projected at ~$9.00.
Stock rose ~50% in 2024 from cost basis.
Investors overly focused on recent catastrophe; long-term upside remains significant.