Weekly Snack #20
Leisure clubs catching fire and fitness gyms representing good investment opportunites
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Recently, GlassHouse Research posted their short report on Soho House SHCO 0.00%↑, a global operator of membership-only clubs. GlassHouse beleives that there are many red flags that exist in the company, both on a structural level and also accounting level, that makes them believe that the company is a zero. The author highlights issues with mounting debt, made up adjusted EBITDA numbers, the failure to publish retention figures after they started going the other way, and a pull forward of earnings. This short report led to the CEO even suggesting that he’ll take the company private.
We hadon here back in October when he published his thoughts on InPost (INPST), which I thought was an excellent pitch. Since then, that stock is up over 35%. Today, we’re going to talk about a new pitch of his, Basic-FIT BFIT 0.00%↑. The company is an operator of fitness centers in 6 countries around Europe. Jake believes that BFIT is a world-class owner/operator that has, by choice, stayed away from a franchise model which allows them to have greater control over their locations, strategy, and exectution. He suggests that the company isn’t being rewarded as much as it should given to a reinvestment cycle that takes time to materialize. Just like his INPST post, this one is definitely worth a read.
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