Weekly Snack #25
Recession resistant ideas, short plays, two turnarounds and a seriously special situation
Welcome to Weekly Snacks! This newsletter is home to a weekly compilation of new investment ideas, Twitter posts/threads, general research, and podcasts to help all investors generate ideas that they may have otherwise not been exposed to.
If you find our posts helpful, please click the subscribe button below (it’s free), and if you yourself have an idea you’d like to share with us to possibly be featured, comment below.
Additionally, I also launched a new Substack that’s exclusively on the cannabis industry. I covered it widely in 2021 and parts of 2022 but didn’t want to incorporate that into my core notebook for people who don’t want that type of research.
If you’re interested, just click the button below. It’s also free!
Investment Pitches
TL;DR:
This one isn’t exactly a pitch but
over at On The Street, shared some quick thoughts on Savers Value Village SVV 0.00%↑ and how the thought of it being ‘Recession Resistant’ isn’t necessarily accurate in his opinion. He wrote about it more in depth on March 3rd, which you can find here but given the nature of the business (largest for profit thrift-store operator), having consumers be more concious about discretionary spending should greatly benefit Savers when in reality, based on their recent ER, it’s not quite happening. Quick, short, and with a link to the core research and thoughts above.
TL;DR:
The other day, Spruce Point Capital Management came out with a short report on Enfusion Inc ENFN 0.00%↑, a technology provider for the investment management industry. Spruce Point beleives that the ‘high quality’ nature of its SaaS contracts are anything but. With increasing competition in the space, growth has been lackluster and retention of exisitng clients are not making up for the delta. On top of that, they believe there are some missteps in accounting of receivables which could contribute to revenue overstatements. The fund sees a 40-60% downside in the stock.
TL;DR:
The other week, Michael at
sent me his pitch on Ambase Corp (ABCP) as he believes the stock is severily mispriced. Currently, the company is in litigation right now for contract violations from a 2013 purchase of the former Stienway Hall building and ground lease. Long story short, the project was scrapped and ABCP lost all its equity. However, ABCP believes that there were breaches of contract and the company sued to get back what was owed to them. Should this ligitation work in favor for ABCP, the company could rake in up to $160 million (before tax and litigation funding agreements) relative to Ambase’s market cap today at only $9m. The net payment could exceed $1.99/share vs the current $.20/share at the moment. He does run a paid substack, which you can find here, but has included the PDF version of this idea above. Would suggest giving him a follow and support his work if you like his idea along with reaching out to him on LinkedIn.
TL;DR:
shared their thoughts on HelloFresh (ETR.HFG), the meal kit company based in Germany. Many of us have probably seen a lot of their advertisements for meal kits being delievered to your door but are unfamiliar with it being a publibly traded stock. While I personally hate this type of business (meal kits), the author thinks that the company is getting the shit end of the stick given it's market share dominance, profitability, and growth in the ready-to-eat (RTE) category. He includes his modeling assumptions in the post and believes that the company could be generating significant FCF by 2033 while starting to be positive in 2025. It’s an interesting case if you’re looking at meal kit ideas.
TL;DR:
Pernas Research shared their notes on Dr. Martens (LSE.DOCS), the maker of fashionale footwear based out of the UK. After a disatrous 2021 IPO, the brand has experienced a recent revenue decline driven by several short-term operational and inventory mishaps along with general cyclical challenges in the footwear category. With the market discountng the strong brand, various growth opportunities, Pernas believes that the company’s mismanagement are now fixed and the company has a brighter future over the next 1 - 2 years. Given their quick math, they believe there could be upside of ~60% from today’s levels.
Tweets of the Week
General Research
Podcasts & Interviews
Appreciate you taking the time to read Weekly Snacks. I hope you have found at least some of these links to be interesting enough to dive into yourself.
If you haven’t already, consider hitting the subscribe button below and sharing this Substack with someone you know.
Until next week,
Paul Cerro