Research Vault

  • 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 "Open" position will be sized between 5%-15% in the Pernas Portfolio
  • All closed positions will have the performance result listed
  • About 40% of Pernas Research's Initiation Reports receive a "neutral" rating. Read about why we publish neutrals here

(NAS:PTON) Peloton: The Fitness Appliance

Peloton is one of the more polarizing companies we have come across. The two investing camps are of the opinion that PTON is either: a) a $2k coat rack or b) the best thing since sliced bread and will make all gyms obsolete. We find polarization to be a signal into the potential strength of a brand, it is not hate//love but indifference that kills a brand. Other polarizing brands are Tesla, Apple, etc. If nothing else it contributes to share of mind. The fitness industry has seen a myriad…

    • Initiation Price: $9.58
    • Upside: 130%
    • Current Status: Closed
    • Result: +60%

(NAS:META) Facebook: The Next Verse

FB has almost half the planet in aggregate on its platforms (Facebook, Instagram, and WhatsApp). Although FB has compounded negative goodwill with endless scandals relating to privacy and manipulation of elections, and Zuckerberg is probably one of the more disliked people on the planet, we think FB is trading at bargain levels given the quality of the business. Q1 2022 earnings has shaken investors’ confidence due to low growth, and fear over ATT and TikTok. Can FB overcome short-term problems and continue to leverage its platform? There are primarily three factors to address with FB...
    • Initiation Price: $190.29
    • Upside: 50%
    • Current Status: Open

Centrus Energy ::UPDATE:: CLOSED

We exited LEU for a gain of 350%. Given the Russia-Ukraine war and the resulting sanctions, there is a risk LEU is restricted from obtaining separative work units (SWUs ) from Russia. This would effectively demolish its business. Given this uncertainty, we have exited the position. INVESTMENT DISCLAIMERS & INVESTMENT RISKSPast performance is not necessarily indicative of future results. All investments carry significant risk, and it’s important to note that we are not in the business of providing investment advice. All investment decisions of an individual remain the specific responsibility…

    • Current Status: Closed
    • Result: +350%

Delta Apparel ::UPDATE:: CLOSED

We closed DLA for a gain of 5%. Relative to other positions, DLA is more illiquid and not as well positioned in an inflationary environment. DLA sells a commodity and with its heavy manufacturing footprint in a sustained inflationary environment, its margins would deteriorate significantly. Even if it can pass increased operating expenses onto the customer, its maintenance capital expenditures would go up considerably. Coupled with management’s recent caginess about its Direct to Garment (DTG) segment – which we believed was the primary value driver in DLA – and reluctance…

    • Current Status: Closed
    • Result: +5%

Whole Earth Brands ::UPDATE:: CLOSED

We closed out FREE at a loss of 30%. Although its licorice business is as dominant as ever, we have lost conviction in management’s ability to roll up brands. One-time expenses continue to exist (it has been almost 18 months since the acquisitions of Swerve and Wholesome brands) under the label “supply chain reinvention” accounting for $8mm in 2021 with other miscellaneous expenses accounting for another $8mm. For a company generating around $40mm in EBIT, these are not small expenses. These expenses are likely an artifact of the legacy brands…

    • Current Status: Closed
    • Result: -30%

Franklin Covey ::UPDATE:: CLOSED

We closed out FC for a gain of 120%. FC is trading slightly above fair value and given the need to raise cash, we have decided to exit. The fundamentals of the business are still intact and their B2B software offerings will continue to do well.   INVESTMENT DISCLAIMERS & INVESTMENT RISKSPast performance is not necessarily indicative of future results. All investments carry significant risk, and it’s important to note that we are not in the business of providing investment advice. All investment decisions of an individual remain the specific…

    • Current Status: Closed
    • Result: +120%

Paysign ::UPDATE:: CLOSED

Paysign (PAYS) was our most disappointing pick in 2021 with a 31% drawdown from our cost basis. We believed PAYS was undervalued as the share price had gotten hammered due to the deluge of stimulus along with COVID inhibiting donors from giving plasma. However the long-term fundamentals were still intact, plasma demand along with plasma centers was still growing even though supply had slowed. PAYS is a payment processor for the prepaid cards plasma donors get. It acts as a toll booth on the money donors receive/spend; the less money that…

    • Current Status: Closed
    • Result: -31%

(NAS:SMED) Sharps Compliance: An Operator In The Medical Waste Industry

Sharps Compliance (NYSE:SMED) collects and disposes of medical waste; this includes everything from unused medication to used syringes. SMED has received tailwinds from COVID as the vaccines have effectively doubled their medical waste from its two biggest clients, Rite Aid and CVS. We believe SMED is an interesting and simple candidate to research as part of our dive into the waste industry as there are only two medical waste players- Stericycle and SMED. This duopoly is dominated by Stericycle, the 1000 lb gorilla which has revenues 20x greater than that…

    • Initiation Price: $6.85
    • Upside: Neutral
    • Current Status: No Position

Iteris ::UPDATE:: CLOSED

We have closed out ITI for a loss of 14%. The thesis for ITI was that due to their business footprint with thousands of government transportation offices across the country, they would directly benefit from the upcoming infrastructure bill. Our estimates turned out to be too optimistic about the size of the infrastructure bill and the subsequent uplift in demand that would result. Forecasting regulation is always an opaque exercise. In the taxonomy of investing errors, ITI would fall under "overpaying".
    • Current Status: Closed
    • Result: -14%

(NYSE:DLA) Delta Apparel: Printing Apparel And FCF

Delta Apparel (DLA) is a vertically integrated apparel company that is composed of three segments: a manufacturer of basic and private labels, apparel brands, and most recently a Direct to Garment (DTG) fulfiller for brands and retailers. DLA has leveraged its competitive advantages from being a vertically integrated apparel company towards DTG so that it can supply printed custom shirts to brands and retailers in a faster and cheaper fashion than competitors. Given the rapid rise of DTG and DLA’s competitive position in this industry, DLA has about one hundred…

    • Initiation Price: $29.51
    • Upside: 70%
    • Current Status: Closed
    • Result: +5%