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
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(NAS:ALRM) Alarm.com: Quietly Powering the Smart Security Boom

The U.S. residential security market is evolving from basic intrusion detection toward integrated smart home ecosystems that offer enhanced convenience, control, and proactive safety features. The residential security industry landscape is also in a state of flux, with numerous incumbents and new entrants at varying stages of integration and product offerings. We have identified Alarm.com (NAS:ALRM) as a long-term winner in this space; it currently dominates the high-end market segment. Alarm.com is considered ...

    • Initiation Price: $53.09
    • Upside: 50%
    • Current Status: Open

Paysafe ::UPDATE:: ADD

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...

(NAS:PSFE) Paysafe: The Payment Powerhouse Capitalizing on iGaming Growth

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...

    • Initiation Price: $19.64
    • Upside: 50%
    • Current Status: Open

Burberry ::UPDATE:: ADD

We added to our Burberry position (LSE:BRBY). Burberry is down roughly 45% since our initiation report in February, with today marking a 16% drawdown on the news that the CEO is stepping down on the heels of another bad quarter (same store comps were down 20% yoy and the dividend was cut). When Akeroyd came to Burberry, the strategy was to go upscale to take advantage of the brand heat generated by the new creative director Daniel Lee. The strategy proved aggressive- their core customer was squeezed by both deteriorating financial conditions and higher priced items. Under the new CEO Joshua Schulman...

(NAS:XMTR) Xometry: The Future Digital Manufacturing Leviathan

Xometry (NAS:XMTR) is the leading disruptor in digital manufacturing, connecting businesses needing custom parts with a global network of manufacturers capable of producing those parts. Their platform reduces high search costs, long lead times, and quoting frictions typically associated with hiring smaller (non-contract) manufacturers. Like most class of ’21 IPOs, Xometry came to market too early and at too high a price, which has contributed to a near 85% sell-off since highs. Sentiment has soured, and the market is being overly punitive regarding Xometry’s business fluctuations and even mischaracterizing its...

    • Initiation Price: $11.33
    • Upside: 60%
    • Current Status: Open

Remitly ::UPDATE:: ADD

We had added to our Remitly position (NAS:RELY). Remitly reported its earnings yesterday after the market closed. Despite posting a solid earnings report, the market responded negatively, sending the stock down as much as 23% in after-hours trading. As I write, RELY is trading at $15.35, marking a new 52-week low. Some analysts have pointed out a slight/tiny revenue miss, but all metrics were within the range management had anticipated. The management team continues to execute on their growth strategy, and the business is scaling as expected. Critics may point to high stock-based

(LSE:CARD) Card Factory: Unwrapping the Potential

Card Factory, a leading UK-based, vertically integrated retailer of greeting cards and a significant seller of celebration essentials and gifts (balloons, party supplies, picture frames, stuffed toys, etc.), has cultivated a strong brand identity by excelling in value, quality, and selection. Despite competitors possibly matching them on two of these dimensions, it's highly unlikely any can surpass Card Factory across all three. Card Factory is in a position to earn high returns on capital for many years to come. Volumes of the greeting card market are set to remain flat or be in slight decline, and the market is viewing Card Factory as a ...

    • Initiation Price: £1.08
    • Upside: 50%
    • Current Status: Open

Doc Martens ::UPDATE:: ADD

One of our core positions, Doc Martens (LSE:DOCS), dropped 34% today before slightly recovering a few percentage points to close down 29% on the day. The market responded to two significant announcements:

1. DOCS issued a trading update forecasting a challenging year ahead for wholesale revenue in FY 2025, continuing the difficulties faced in FY 2024. The market had anticipated better news on the wholesale front. Additionally, the company has experienced single-digit inflation in its cost base, which will not be passed on to consumers in the form of higher prices.

META ::UPDATE:: TRIM

We have trimmed META (NAS:META). It is up 175% since our initiation report in March 2022 (report here). We added to our position in November 2022 as a myriad of fears drove META down 50% from initiation (here).

META is a compelling reminder of how inefficient markets can be. In the span of a little over a year, narratives have reversed for META in almost all domains: Contrary to earlier apprehensions, META has weathered the Apple Ad Tracking Transparency storm and now has record engagement and ad revenues; TikTok fears have diminished as the platform has increasingly become a focal point of geopolitical tension;

(LSE:DOCS) Dr. Martens: Timeless Appeal

Doc Martens (DOCS) is a UK-based boot brand that has sold off 80% from its overpriced IPO in January, 2021. The brand has experienced a recent revenue decline driven by several short-term operational and inventory mishaps along with general cyclical challenges in the footwear category. The operational and inventory challenges are now fixed, and it is more likely than not that the footwear category will improve within the next 12 to 24 months. The market is attributing this revenue decline as a possible impairment to the Doc Martens brand but we think this couldn’t be further from the truth. DOCS is a strong...

    • Initiation Price: £.93
    • Upside: 60%
    • Current Status: Open

Remitly ::Update:: ADD

Despite a revenue beat, the market is hammering the stock (NAS:RELY). Oftentimes, management can present earnings and be in shock when they gaze back at the price action on their screens and this is one of those times. The stock is down ~35% on the day. Growth traders, momentum buyers, and Johnny-come-latelys are washing out. We believe this is a great opportunity to buy an incredibly attractive business after an unjustifiable sell-off. We added a significant amount at around $20 a share and the position is now close to 6% of our portfolio..

(NAS:RELY) Remitly: X-Border Digital Remittance Winner

Remitly is poised to become the global leader in cross-border digital remittances. While consistently gaining market share from traditional players like Western Union and MoneyGram, the ongoing shift from cash-to-cash remittances to digital transactions provides a significant tailwind. Although the company is only recently projecting positive cash flows, scale economics for digital remittances are attractive. As their volumes grow, they will continue to renegotiate lower variable costs and spread their fixed costs over a much larger customer base.  Their digital solution, infrastructure, and fraud detection capabilities are...

    • Initiation Price: $25.22
    • Upside: 100%
    • Current Status: Open

(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%
    • Current Status: Open

META ::UPDATE:: ADD

We added to META as a myriad of fears from regulation to TikTok to Zuckerberg having gone AWOL has reached an all-time high. Here is what the market thinks of Zuckerberg’s capital allocation (keeping in mind Zuckerberg has a phenomenal track record with monetizing the core business to purchasing Instagram and WhatsApp). The core business earns about 32B (using about 15B for maintenance capex). Between RL and growth capex, META is spending roughly 27B.  Using a conservative 10x multiple on 2022 EBIT, one arrives at $320B. META currently trades at…

(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

Donnelley Financial ::UPDATE:: CLOSED

Given the current climate, we expect significant apprehension regarding IPO and M&A activity, both of which are critical for Donnelley Financial (NYSE: DFIN), as DFIN’s business model is tied to capital markets activity. We believe DFIN is fairly valued and are exiting the position. The stock is down ~38% YTD but up over 390% since our initial purchase (see initiation report here), and we’ve trimmed at attractive levels along the way. Portfolio Positioning Note: Never in our careers have we seen a presidential policy action introduce such profound uncertainty. Is…

    • Initiation Price: $8.11
    • Current Status: Closed
    • Result: 393%

(LSE:WISE) Wise: Disrupting Cross-Border Payments, But Not Remitly

This Initiation Report will read differently than most — as more of a contrast piece against one of our core positions: Remitly. Remitly consistently generates the most investor questions among our holdings, nearly all of which revolve around Wise — specifically, how Remitly can compete with a company that appears to offer significantly lower fees (Wise’s blended take rate is ~64bps vs. Remitly’s ~2.3%), and whether Wise’s infrastructure is superior. This confusion stems from a misunderstanding of the differences in addressable markets and infrastructure strategy between the two companies. In our view...

(NAS:HNRG) Hallador Energy: A Diamond or Lump of Coal?

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....

    • Initiation Price: $9.66
    • Upside: Neutral
    • Current Status: No Position

Upwork ::UPDATE:: CLOSED

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.

(NAS:EGAN) eGain: The Rise of Knowledge Management Systems

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...

    • Initiation Price: $5.33
    • Upside: Neutral
    • Current Status: No Position

Vusion Group ::UPDATE:: CLOSED

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, ...

    • Current Status: Closed
    • Result: +185%

Richardson Electronics ::UPDATE:: CLOSED

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...

    • Current Status: Closed
    • Result: +10%

(NAS:UPWK) Upwork: The Undervalued Giant in Freelancing

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...

    • Initiation Price: $9.64
    • Upside: 70%
    • Current Status: Closed
    • Result: 66%

(NAS:AGX) Argan Inc: Powering America

Argan, Inc. is a prominent engineering, procurement, and construction (EPC) company, primarily operating through its subsidiary, Gemma Power Systems, which specializes in designing and constructing natural gas power plants. Clients engage Argan, Inc. to deliver turnkey services, encompassing the entire process from design to procurement and construction of these plants. Currently, natural gas plants account for approximately 43% of the United States' energy production, a significant increase from 30% a decade ago. Despite the growth in natural gas usage, its future in the U.S. remains uncertain due to the rising adoption ...

    • Initiation Price: $70.63
    • Upside: Neutral
    • Current Status: No Position

Rex American ::UPDATE:: CLOSED

We have exited out of Rex American (NYSE:REX). REX is up 50% since our initiation report (here). We stated that there was ~50% upside in the report. REX is one of the best-run ethanol producers in the US. REX has never lost money in the last decade despite volatile commodity cycles and generated record profits in 2023 due to high crush spreads. Contrast this to other publicly listed competitors such as Alto and GPRE that floundered despite a favorable environment. Although we believe the management team is superb, our reason…

    • Current Status: Closed
    • Result: +50%

(LSE:AWE) Alphawave Semi: Surfing the AI Wave?

We believe two factors are driving the AI megatrend: Higher computation and higher networking needs. AI applications demand high bandwidth and low latency, crucial factors for both training and inference workloads.  We believe that AI technology is still in its nascent stages, and are actively seeking companies poised to benefit from this trend. AWE emerged as a compelling prospect, positioned to leverage these evolving networking trends. However, we found evaluating their competitive positioning challenging, especially considering the integration risks associated with their recent acquisitions...

    • Initiation Price: £1.75
    • Upside: Neutral
    • Current Status: No Position

Titan Machinery ::UPDATE:: CLOSED

We have exited out of Titan Machinery (NAS:TITN). It is down about 15% from the time we initiated our position in July 2023 (report here). We stated that TITN had upside potential of 30% and since then, the below factor has influenced our decision to sell. The complexity within their business operations has proven to be more significant than we initially anticipated. We believed that TITN’s operational changes over the last several years, which aimed to increase efficiencies and cashflows, were more sustainable. However, the environment from rapidly...

    • Current Status: Closed
    • Result: -15%

(LSE:BRBY) Burberry: The Dark Knight

There are only a few luxury brands globally recognized for their enduring appeal: Burberry is one of these select few, having existed for over 168 years. Instances where such brands trade at a significant discount to their intrinsic value are rare. This occurs when the brand has some design mishaps or is undergoing some controversy. Fortunately, luxury heritage brands are very durable and can survive mismanagement. Burberry has been in the midst of a seven-year transformation aimed at elevating the brand and revamping its product offerings. These restructurings started with the previous CEO Marco Gobbetti in 2017..

    • Initiation Price: £13.43
    • Upside: 50%
    • Current Status: No Position

Zumiez ::UPDATE:: CLOSED

We believe Zumiez has made significant missteps in their buyback programs. While the current low stock price mitigates the issue, the absence of public or private acknowledgment of these mistakes by management leads us to anticipate a repeat in the future. We discussed this thoroughly in our activist letter on 7/7/2023 (link here). Before the submission of this open letter to Zumiez board we had previously maintained email and video exchanges with management. Regrettably, after the letter, management ceased all communications with us. In the realm of small-cap...

(NYSE:REX) Rex American: An Ethanol Producer Poised for Growth

Rex American (‘REX’) is an ethanol producer with about 3% market share in the USA. REX is run by sound operators, having never lost money in the last decade despite volatile commodity cycles. This is in contrast to other publicly traded ethanol producers who have money-losing years frequently. REX is also one of the few ethanol producers that can take advantage of subsidies from the Inflation Reduction Act (‘IRA’), potentially making their earnings power significantly greater in the future. We estimate REX has about 50% upside...

    • Initiation Price: $38.01
    • Upside: 50%
    • Current Status: Closed
    • Result: +50%

Endor ::UPDATE:: CLOSED

We have exited Endor (E2N:MU). It is down about 60% from the time when we initiated our position in February 2023. It detracted from portfolio returns by 350 basis points —making it our worst performer YTD. Endor is a premium DTC sim racing brand. They manufacture an ecosystem of sim racing equipment from pedals to wheels to brakes. It has been the dominant sim racing brand for over a decade. Although they produce hardware, there is significant lock-in with their ecosystem— Endor’s products only work with other Endor products...

    • Current Status: Closed
    • Result: -60%

(NAS:RELL) Richardson Electronics: A Niche Specialist

Richardson Electronics (‘RELL’) is a distributor that provides engineering solutions through systems integration, prototype design, and manufacturing. It is a distributor that acts as an extension of both a company’s salesforce and engineering force. In the last couple of years, RELL has seen rapid success with its new Green Energy solutions with offerings such as power management for ultracapacitors and electric train batteries. This segment has gone from $10mm to $50mm in the span of 3 years, representing 20% of revenues. The long-term trends of green energy should continue to benefit RELL as the number of...

    • Initiation Price: $12.59
    • Upside: 50%
    • Current Status: Closed
    • Result: +10%

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...

    • Current Status: Closed
    • Result: +185%

(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% /
    • Current Status: Closed
    • Result: -15%

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...

    • Current Status: Closed
    • Result: +185%

(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%
    • Current Status: Closed
    • Result: +11%

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...

    • Current Status: Closed
    • Result: +60%

(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%
    • Current Status: Closed
    • Result: -60%

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…

    • Current Status: Closed
    • Result: +185%

American Outdoor ::UPDATE:: CLOSED

American Outdoors was our largest detractor in 2022 being down 50% YTD. To recap some of the factors when we took a position in January 2021: Although revenues were predicted accurately coming out of COVID, operating expenses were not. AOUT has seen an uplift in expenses driven by increased freight costs, standalone expenses, and an expanded distribution footprint. This amount added up to roughly an extra $10mm/ year in costs; an estimated $25mm in earnings became $15mm. The lesson learned here is to be especially cautious about forecasting expenses on…

    • Current Status: Closed
    • Result: -50%

(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%

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%

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%

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%

(NAS:ECOM) ChannelAdvisor: The De Facto Channel Manager

Due to COVID, the e-commerce environment has accelerated about ten years into the future. We believe that with the reduced churn rate and more relevant offerings, ChannelAdvisor (ECOM) is poised to take advantage of the more competitive e-commerce environment. Background ChannelAdvisor is a market-leading channel manager that enables brands and retailers to integrate, manage and optimize their merchandise sales across a hundred plus online channels including Amazon, Etsy, Shopify, Google, eBay, Walmart, Facebook, and many more. ECOM offers solutions such as marketplace integration, analytics, digital marketing, inventory management, and drop…

    • Initiation Price: $18.57
    • Upside: 60%
    • Current Status: Closed
    • Result: +22%

(NAS:FREE) Whole Earth: A Sweet Company To Buy

Whole Earth (NASDAQ:FREE) is a consumer package company with multiple market-leading brands trading at around 10x 2021 earnings. Given its dominance in the artificial sweetener and licorice industries along with a rapidly growing natural sweetener segment, we believe FREE has a 50 to 100 percent upside from here. Background Whole Earth became public via the ACT II SPAC in June 2020. This acquisition bought two subsidiaries – Merisant and MAFCO – from Ron Perelman’s conglomerate into the public light. Under the conglomerate, these two companies languished in obscurity and funneled…

    • Initiation Price: $11.47
    • Upside: 50%
    • Current Status: Closed
    • Result: -30%

(NYSE:LEU) Centrus Energy: A Low Risk High Reward Play On Uranium

Centrus is a compelling risk-reward play on the future of US uranium enrichment. It is the sole US-owned uranium enrichment manufacturer, representing billions of dollars of IP and centrifugal technology. Combined with their recent price reset on their long-term contracts making them considerably more profitable, there are multiple ways to win with Centrus. Background Centrus Energy (LEU) represents the efforts of the American government’s uranium enrichment program that was spun off in 1999 for roughly 3B dollars. It was heavily reliant on government backing to support its facilities and after…

    • Initiation Price: $10.04
    • Upside: 200%
    • Current Status: Closed
    • Result: +350%

(NYSE:DFIN) Donnelley Financial: A Tale of 2 Companies

Donnelley Financial (NYSE:DFIN) has seen declining revenues since its spinoff and investors have written it off as a dying print business. It is easy to overlook its incredible brand strength in certain business segments along with the successful transitioning of a growing share of its revenue to SaaS with this overhang. For a few key reasons discussed in this article, we believe their fundamentals are now poised to improve and there is 100% upside for investors from current levels. Background DFIN spun off from RR Donnelley in 2016. The company…

    • Initiation Price: $8.11
    • Current Status: Closed
    • Result: 393%

(NYSE:FC) Franklin Covey: An Undervalued Brand With An Overlooked SAAS Segment

The market has punished Franklin Covey’s (NYSE:FC) stock price, sending it tumbling 50% YTD. Given its solvency and growing SAAS segment, FC has about 100% upside to its valuation today. Background Franklin Covey is a leader in the highly fragmented L&D (Leadership and Development) corporate training industry. It is best known for content such as The 7 Habits of Highly Effective People. On average, roughly $100 billion is spent on external providers such as FC per year. This is set to grow by 13% CAGR for the next four years.…

    • Initiation Price: $23.44
    • Upside: 100%
    • Current Status: Closed
    • Result: +120%