Paysafe released earnings today and is down ~20%. We have added to our position, with the stock now trading at 7.6x EV/EBITDA. We were surprised at the market reaction since results were pre-released on 2/11, with no new surprises. The price action is likely driven by flat revenue guidance for 2024, but this was anticipated. Paysafe divested a low quality ~$100mm revenue business and is guiding for 8% organic growth to offset the lost revenue...
Hallador Energy Company (NASDAQ: HNRG) is a U.S.-based coal producer focused on supplying coal for power generation. With the strategic acquisition of a coal power plant in 2022, Hallador became a vertically integrated power provider, with nearly 50% of its 2024 revenue derived from electricity sales. While coal was expected to be phased out, a shift in power demand—driven by AI—and a more favorable EPA stance have created new opportunities. Its location is particularly advantageous; Indiana faces a supply-demand imbalance in the power grid and offers substantial....
We have sold our Core Position in Upwork (NAS:UPWK)—we are up 66% in the name since initiation. We believe Upwork is trading close to fair value and are taking profits. Upwork released full-year 2024 earnings yesterday after market close. Below are the earnings highlights. The stock reaction was slightly positive (+3%). We believed Upwork had multiple revenue levers the market was overlooking, allowing it to generate additional revenue without directly increasing the platform take rate.
Paysafe is a global payments provider specializing in high-risk verticals such as iGaming (primarily online casino and sports betting), digital wallets, and alternative payment solutions. The company is positioned to benefit from secular growth in online payments and the rapid expansion of iGaming in the U.S., where legalization continues to unlock new opportunities. Paysafe is successfully transitioning into a cohesive, growth-oriented payments platform after years of fragmented operations borne from its heavy M&A history. With exposure to high-growth markets, a proven regulatory track record, and a focus on...
EGAN provides workflow solutions for contact centers, known as Knowledge Management Systems (KMS). These systems aggregate up-to-date information enabling customer service agents to deliver high-quality responses to customers. With the rise of generative AI, enterprises increasingly recognize the value of such solutions, leveraging AI agents to provide superior customer interactions at reduced costs—a technological sea change. While eGain has strong offerings in this space, its ability to capitalize on...
We have exited our position in Vusion (PA:VU), achieving a 185% gain. Our initial position was established in 2021 (link here), with significant additions made in 2023 after an unfounded short report caused the stock to decline by 60%, followed by a strong recovery. Vusion is a market leader in electronic shelf labels (ESLs), digital price tags that enable retailers to automate price changes across thousands of SKUs. The company is led by highly capable management. that has established a dominant position in the industry, securing notable retail clients such as Walmart. ESL adoption is still in its early stages, ...
We have exited our position in Richardson Electronics (NAS:RELL) for a 10% gain since our initiation report. In our report, we believed that RELL had about 50% upside. While the company benefits from competent management, we have revised our outlook due to greater-than-expected market cyclicality and the challenges posed by the company's diversification across multiple sectors. For background, RELL is a distributor that providing engineering solutions through systems integration, prototype design, and manufacturing. It operates in industries ranging from semiconductors and...
We were initially excited to research Akamai due to its strong positioning at the nexus of several, tech-driven trends we have been studying: edge computing, cybersecurity, cloud services, IoT/5G, and AI. Over the years, Akamai has transitioned from a leading content delivery provider (“CDN”) to an integrated player offering content delivery, advanced cybersecurity, and edge compute services. While Akamai’s strategic moves and broad technological reach make it intriguing, we find the company's reliance on heavy capital expenditures and acquisitions make it difficult to determine whether its growth strategy will...
Smart Global Holdings is made up of three subsidiaries and although the company’s past shows a diversified holding company, it is now evolving to an operating one. SGH is in the early innings of their turnaround, namely focusing the company on High Performance Computing (HPC) around their brand Penguin Solutions (this will also be the name of the company in the near future). While we are optimistic about the company's prospects, we require further evidence of execution of their HPC segment along with increased enterprise adoption of AI solutions, either on-premise or at the edge, before considering
Upwork (UPWK) is a global leader in the online freelance marketplace, offering a platform for businesses and independent professionals (aka freelancers) to connect and collaborate. The stock has declined by ~85% from its highs, due to concerns over slowing growth and fears of AI disruption. However, our analysis shows that these concerns are misplaced. The slowdown in growth is driven by temporary cyclical factors, and the long-term trend of businesses increasingly relying on skilled freelancers is set to continue. The market perception is that the business case for Upwork is weakening when in fact it is strengthening...
