Weekly Snack #40
New Investment Pitches, General Research, and Tweets of the Week
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Investment Pitches
TL;DR:
released updated thoughts on Build-A-Bear (BBW) workshop after their initial post two years ago. Despite the run-up in the stock to the tune of >150% since then, there’s still more juice left to squeeze. If growth works out in the asset-light side of the business, the company could be worth another double in just a few years.
TL;DR:
David Einhorn published last month his take on Green Brick Partners (GRBK). GRBK’s focus on owning its land and maintaining a low-leverage balance sheet has led to superior gross margins and return on equity, positioning the company for continued outperformance in homebuilding.
The company continues to lead the industry in gross margins and has distinguished itself from its peers, who increasingly focus on being “land light.” GRBK owns most of its land while maintaining a low-leveraged, investment-grade balance sheet. As a result, it earns all of the development profits in addition to the homebuilding profits. Despite being “land heavy,” the result is a return on equity near the top of the industry. GRBK has had a very successful period of land acquisition, and prospects for delivering industry-leading margins remain promising.
As a point of reference, this was first shown here (credit where credit is due).
TL;DR:
This one isn’t so much a pitch but more so to post on a writer who quickly turned around his thoughts on a pitch that he not long ago was very optimistic about. He originally shared his turnaround thoughts on PetMed Express (PETS) a month ago, making the case that the company could be turning around, albiet, in time. However, after it’s most recent earnings and a conference presentation, he wasn’t so optimistic anymore which I think is important for investors to learn from and have humility. If you’re interested, you can reference the updated post above or the linked post for the original.
Tweets of the Week
Related News
Amazon introduces low upfront pricing for a telehealth visit
This matters because now it’s officially entered the fray with Hims and Hers Health (HIMS) in directly the same categories that HIMS currently operates within. This initial news sent the stock down >25% in a single day on worries that Amazon will come for their lunch.
Coach parent Tapestry pulls $8.5 bln bid for Capri
While TPR had to appeal the judge's decision last month as part of the merger agreement, the likelihood of them continuing with the claim was very low. Speculation surrounded the idea that with a Trump presidency, the numbered days of Lina Khan might change things, however, this was not to be the case.
Matt Gaetz for AG Bullish for Cannabis
In a U-turn from Donald Trump’s first term in the White House, the president-elect’s pick for attorney general is a friend of pro-cannabis policies. However, after resigning amidst impending reports of his misconduct with a minor and his own party speaking out that confirmation would be a hail mary, the cannabis industry is becoming very volatile on the speculative nature of Gaetz getting appointed.
General Research
Podcasts
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