Weekly Snack #21
Supplements, Chinese sportswear, food distributors and timeshare giants on deck
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Investment Pitches
TL;DR:
I hate workout supplements as a business. Seriously hate the entire thing because it’s so satruated and competetive, where’s the edge?
wrote a post on FITLIFE Brands FTLF 0.00%↑, a leading provider of premium supplements. In his post, he walks you through the story behind the business since 2017 (it’s not long, trust me) and what’s going for it now. Most of the sttory change has been deviating from GNC wholesale to online sales for higher margin and less customer concentration risk. While he doesn’t breakdown the full math for his potential “10-bagger” claim, the stock is up >24% in the last 6M and almost 15% YTD. This is a name that I might have to look at myself.
TL;DR:
posted their part 1 of the Chinese sportwear market. Part 1 goes over the evolution of China’s sportwear industry while part 2 will talk about Anta (which is important because we wrote about Amer Sports going public) and Li-Ning. Part 1 is interesting because the author goes into detail about the structural changes that occured in China since before the GFC and with the rise of Chinese disposable income and government involvement, the industry has really taken off. I would read this if you’re looking for Chinese exposure and in the clothing industry for new ideas.
TL;DR:
over at Treasure Hunting recently posted his thoughts on a micro-cap called Innovation Food Holdings ($IVFH), a specialty foods distributor. The company has come under new management and through restructuring efforts, have moved to discontinue and divest their DTC e-commerce side of the business and soley focus on their B2B side. With that, the company will have ~$10 million in net cash and better margins. Sebastian thinks that with the new management team in place, aligned with the right incentives that are performance based (not easy to obtain ones), the company could be in for a brighter future from the troubled past they used to have.
TL;DR:
over at shared a note on Hilton Grand Vacations HGV 0.00%↑, a timeshare business. Dan was just like me, assuming that timeshares suck and once you get in them, it’s tough to get out. However, he highlights all the good things that are happening over at HGV such as an aggressive buyback program of 9% annually (target), a non-cyclical business (aside from GCC), acquisition of Bluegreen (another timeshare company) that will be able to boost it’s run-rate EBITDA and propel further cost synergies if executed well. Dan believes that should the story pan out (buybacks + integration + counter-cyclicality), the stock is looking pretty cheap on a FCF yield basis. Check it out.
Tweets of the Week
General Research
Podcasts & Interviews
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Until next week,
Paul Cerro
Thank you for featuring our recent collaboration article "Why does Margin expansion often lead to multiple expansion?".