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

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%

(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…

    • Initiation Price: €48.95
    • Upside: 100%
    • Current Status: Closed
    • Result: +185%

(NAS:ITI) Iteris: A Niche Within A Niche

Iteris is a transportation company that is a vertically integrated provider of hardware, software, and consulting services to the signalized intersection industry. They have their hardware in nearly thirty percent of the signalized intersections in the USA and process petabytes of traffic data per day. ITI is leveraging its hardware footprint and long-term adviser relationships with thousands of municipal agencies to upsell its innovative SAAS offerings. ITI has recently positioned itself as a pure-play transportation company and is well poised to ride the USA’s needed infrastructure upgrade and the coming…

    • Initiation Price: $6.37
    • Upside: 70%
    • Current Status: No Position
    • Result: -14%

Channel Advisor ::UPDATE:: CLOSED

We sold ECOM for a gain of 22%. Our thesis was that channel managers would continue to be prevalent for retailers and DTC brands as it was in their interest to spread a “fishing net” as wide as possible. We believed the e-commerce trend had been accelerated due to COVID and as the leading channel manager, Channel Advisor would stand to benefit. However, recent data suggests that e-commerce has not accelerated ten years into the future, but instead only 1-2 years. Along with Shopify becoming a more existential threat and…

    • Current Status: Closed
    • Result: +22%

(NAS:AOUT) American Outdoor Brands: An Undervalued Spinoff

American Outdoor Brands spun off from Smith and Wesson in July of 2020. AOUT is composed of both outdoor and gun accessory brands. Due to COVID and the subsequently accelerated affinity for outdoor activities, about half of AOUT’s brands have experienced triple-digit growth yoy. Given AOUT’s strong brands and their success in e-commerce and DTC, we believe AOUT is in a terrific position to take advantage of the record number of hunters and campers that have recently entered the market. Background AOUT is composed of an assortment of brands that…

    • Initiation Price: $19.4
    • Upside: 70%
    • Current Status: Closed
    • Result: -50%