Research Vault

  • About 80% of Pernas Research's Initiation Reports are “buy” and the rest are "neutral"
  • All Initiation Reports have the price at initiation and upside potential listed
  • Bias towards small and mid capitalizations; Sector agnostic; About 90% U.S. & 10% Foreign names
  • Each "buy" will have a position size between 5%-15% in the Pernas Portfolio

SES imagotag ::UPDATE:: HOLD

SES is up more than 40% since our update to add to the position. We believed there were numerous fallacies in the first report, and it was corroborated by management and auditors. Their responses to the short reports are available on SES imagotag’s IR page. The response of the company was empirical and emphatic. The short seller wrote a second report and we wrote a response to some of the points below. SES imagotag also responded yesterday to the short report in the same manner as the first and it can viewed here...

(NYSE:TITN) Titan Machinery: A Giant Amongst Dealerships

Titan Machinery ("TITN") is the leading dealer of CNH Industrial equipment ("CNHI"), boasting a network of approximately 120 dealerships spanning the globe. CNHI is the second largest agricultural original equipment manufacturer (OEM) worldwide, ranking behind industry giant John Deere. Titan Machinery operates its dealerships predominantly within the United States, offering a comprehensive range of CNHI equipment complemented by dedicated parts and service provisions. These dealerships function on a semi-exclusive basis with CNHI equipment. TITN has undergone significant operational changes over the...
    • Initiation Price: $29.50
    • Upside: 30% [[**Closed 3/22/2024**]]

SES Imagotag ::UPDATE:: ADD

There was a short report issued on SES imagotag on June 22nd, causing the share price to plummet 60%. We think this presents a good buying opportunity and are long SES imagotag. For background, SES imagotag has both Deloitte and KPMG auditing their books over the last 6 years (France requires that public companies are jointly audited). This is not to say that makes SES infallible, but we think it’s relevant as companies with misleading financial statements/fraudulent generally are audited by no-name firms coupled with frequent auditor changes...

(NAS:ZUMZ) Zumiez: Old School Retail

Zumiez is a lifestyle retailer that has sold off 70% from 2021 highs due to recessionary fears surrounding discretionary companies and small caps. Despite facing several short-term macro and micro challenges, such as recessionary pressures and competition aggressively discounting bloated inventories, Zumiez has a proven track record of surviving and thriving through business cycles. They achieve this by selling exclusive apparel that customers want, managing inventory effectively, employing minimal to no leverage, and negotiating intelligent leases. The company has successfully executed these strategies for over 40...
    • Initiation Price: $16.07
    • Upside: 70% [[**Closed 1/29/2024**]]

(NYSE:CPRI) Capri Holdings: Luxury in Limbo

Capri Holdings is a fashion company that owns brands Michael Kors, Versace, and Jimmy Choo. Capri Holdings began as Michael Kors which exploded onto the accessible luxury scene in the early 2000s, rapidly taking share from incumbents such as Coach. However, Michael Kors expanded into retail and wholesale channels too rapidly resulting in brand dilution. Long-time CEO John Idol is committed to restoring Michael Kors to a more premium brand by using a similar playbook executed by peer fashion brand Coach: increasing quality and marketing spend, reducing store footprints, and subsequently...
    • Initiation Price: $41.50
    • Upside: Neutral

(NYSE:GIL) Gildan Activewear: Printwear Leader But Waiting for Better Entry

Gildan is the largest manufacturer of low-cost basic apparel for the Printwear industry (see appendix below for industry primer), producing roughly 1.2 billion shirts per year. This is a company with a durable manufacturing advantage that we will own if the opportunity presents itself, but we are holding off for now and assigning Gildan a neutral rating. We believe their Printwear segment is vulnerable to a slowdown in unit sales within the next 12-24 months and their Branded Products segment, sold through brick-and-mortar retailers, is in a secular downtrend. Gildan’s culture is optimized for manufacturing...

(NYSE:NRP) Natural Resource Partners: Royalties With Protected Downside

Natural Resource Partners is an MLP that owns the mineral rights to roughly 13mm acres in the Appalachia Basin and Wyoming. Currently, their primary natural resources are thermal and metallurgical coal. Given the low-cost business of collecting royalties with a protected downside, an ownership stake in a low-cost producer of soda ash, and potential upside in carbon capture, we believe NRP is undervalued by at least 30%. Although coal is a dying industry, there are pockets of resilience that should prove durable for the near term, namely metallurgical coal production...
    • Initiation Price: $57.01
    • Upside: 30%

Peloton ::UPDATE:: CLOSED

We have closed our PTON position, realizing a 60% gain. While the PTON brand remains strong, the momentum behind the much-needed cost-cutting measures appears to be slowing. Our original investment thesis was based on the belief that the new CEO, Barry McCarthy, would execute prudent cost discipline and right-sizing initiatives, which would enable PTON to survive and ultimately grow. This view was reinforced by several judicious divestments and headcount reductions that helped instill confidence in the financial viability of the company. Within approximately one year, the total costs declined from...

(MU:E2N) Endor: A Dominant Brand In The Sim Racing Space

Investment thesis Endor (E2N:MU) is a premium simulation racing brand that has been growing revenues at a 30% CAGR over the last five years. As the dominant premium brand with about 40% market share, Endor stands to capitalize on the rising demand for sim racing. The industry is poised to expand as sim racing gains legitimacy with motorcar sports organizations coupled with the continued immersion of games. We believe Endor is trading at a discount to intrinsic value of at least 30%. Business Background Simulation racing (sim racing) is an…

    • Initiation Price: €13.00
    • Upside: 30% [[**Closed 10/10/2023**]]

SES Imagotag ::UPDATE:: TRIM

SES Imagotag was up 62% in 2022. We have trimmed SES Imagotag as the margin of safety has decreased and the percentage it constitutes of our portfolio has reached above-healthy levels. SES saw an inflection in demand for their offerings as inflationary worries caused retailers to lean more heavily into electronic shelf labels as a means to increase productivity and profitability. To summarize some events of note in 2022:    – SES is on track to have revenues of greater than €600mm in 2022-a growth rate of 45%.    – SES signed…