Weekly Snack #30
Should we bail on yoga pants? A tax-shielded investment vehicle and a special situation arb play
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.
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I also post my own thoughts on various equities, generally in the consumer and retail space via Cedar Grove Capital. Positions are generally L/S, Arb, IPOs, and Special Situations should you be interested.
Investment Pitches
TL;DR:
Returning author
shared their thoughts on Lululemon (LULU) after its stunning 30% drawdown post earnings. Many were spooked that lulu’s topline growth had decelerated massively from previous years and Jefferies cited that its profitability could hit a wall and inflect negatively. Stock Opine goes into detail about the company and its recent earnings release and highlights some interesting visuals. One of these visuals comes from MS where investors are getting worried about competition from Alo/Vuori yet LULU still sees, at times, better store traffic after an Alo store opening 3M and 6M after. It’s an interesting case becuase of how well the company has done since COVID but given the authors model, they still believe there’s upside in the stock post earnings.
TL;DR:
This pitch is a rather interesting one because it is different and to be completely frank, I’m not sure if I fully understand the trade but the thought behind it is there for someone who’s willing to dive into the weeds for it.
published their thoughts on Pinetree Capital (PNP.TO) who essentially is an investment facility for the Leonard Family (Constellation Software). The play here is that Pinetree has had so many cumulated losses which serve as a tax shield for future capital gains. He goes in DEEP with the math on current holdings, how to value them and what the future price could be based on various financial metrics and inputs. Again, it’s a long read, arguably a simple yet complex trade to understand but if he’s right, the upside is massive.
TL;DR:
shared their thoughts on a special situation on AdTheorent Holding Company (ADTH), a leading supplier of cable and satellite DTH communications equipment. ADTH announced a merger to be acquired at the beginning of the month for $3.21/share with a “go-shop” clause as a part of the deal. The author believes that there is a pretty good chance the company could get another offer and an overbid price from the current $3.21 being offered. There’s reasons to believe that the company might get another bid, espeically after a great ER and how it has traded above the $3.21 price for much of March. The author breaks down the deal further and provides reasoning as to why he believes a higher bid could likely come in.
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.
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Until next week,
Paul Cerro
Thank you for mentioning our LULU article Paul 🙏