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
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…
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…
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…
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…
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…
(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…
Iteris ::UPDATE:: CLOSED
(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…
(PAR:SESL) SES Imagotag: The Dominant Player Digitizing Retailers
The global retail sector is gargantuan, with about $30 Trillion in sales, the US makes up about 15% of this. The retail sector has been facing both revenue and margin compression as it is squeezed by rapidly growing e-commerce players. The future looks bleak unless the retail experience fundamentally changes. The digitization of retailers is looking to be the solution. It has the potential to increase revenues and margins for retailers while bettering the customer experience, a win-win. As this industry evolves, there will be a blurring between the retail…