Weekly Snack #20

Leisure clubs catching fire and fitness gyms representing good investment opportunites

Feb 11, 2024

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Investment Pitches

TL;DR:
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.

Source: Ashville Capital’s Annual Letter.

TL;DR:
We had
Jake's Substack
on 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.

Tweets of the Week

Platform Aeronaut

Airline Loyalty Program Economics & Enterprise Value

In the UAL Q4 Earnings call, CFO Mike Leskinen had a comment about United MileagePlus program: “MileagePlus is a crown jewel in the businesses we have here at United Airlines. We've made some significant progress towards growing that business. We have a new leader in…

10 months ago · 7 likes · Thomas Reiner

Behavioral Value Investor

The Benefits of Dynamic Value Investing

Recently I had an “aha” moment that made me realize a consistent mistake that is hurting the results of many value investors. I was talking to a friend about how it would have been near-impossible to predict the long-term success of some of the companies that have produced the best 20- and 30-year stock market returns in advance. Then it hit me: that st…

10 months ago · 22 likes · 3 comments · Gary Mishuris, CFA

Generative Value

A Primer on Data Centers

This is my third article in a series of primers I’ll be writing over the next 6-12 months. You can find the other two here: Data Industry Primer Semiconductor Industry Primer My goal for these primers is to develop a foundational understanding of the major industries in tech, understand the major trends in each industry, and identify potential investment o…

10 months ago · 18 likes · Eric Flaningam

A Peek Behind the Numbers

EBITDA: Overused and Abused

The market loves non-GAAP numbers that promise to make simple, standard, adjustments to GAAP results that easily make results give an accurate picture of a company's “real” performance that is readil…

10 months ago · 10 likes · 3 comments · Behind the Numbers

Investment Talk

S&P Addiction

As I reflected on my performance in 2023, I was reminded that benchmarking can be a brutal process. But it keeps you humble. I don’t spend a lot of time thinking about my chosen benchmark, the S&P 500. I occasionally think as an international investor I should change it. But then again, I find the process somewhat arbitrary and if I am going to pick one, it may as well be the…

10 months ago · 34 likes · 11 comments · Conor Mac

Podcasts & Interviews

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Until next week,

Paul Cerro

Weekly Snacks Twitter: @weeklysnacks

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