TerraWulf (NAS:WULF) — mrkt cap $1.5B; Price $4.51; EV/EBITDA NA
PASS. Following the heels of Core Scientific signing a long-term agreement with Core Scientific for a decade long $3.5 Billion AI computing contract, we began looking at other crypto miners. WULF appeared to have good prospects given the power availability at their data centers. However, all data centers are not equal. AI data centers first and foremost need a power supply that cannot be curtailed by utilities. Many crypto miners (WULF included) have curtailment agreements as it allows them to secure lower cost power. Secondly, AI data centers need fiber connections to be able to handle high data bandwidth, another feature that most crypto miners lack. We will continue looking for a well-positioned crypto miner that can take advantage of AI compute demand.
National Resource Corp (NAS:NRC) — mrkt cap $599mm; Price $25.12; EV/EBITDA 14
PASS. Since 1981, NRC Health has generated revenue by providing patient feedback solutions for hospitals. Insurance companies and government agencies like the Centers for Medicare & Medicaid Services (CMS) incentivize hospitals to collect and submit patient feedback, influencing reimbursements and other financial incentives. Patient feedback has grown in importance as payers align financial incentives with patient outcomes. Despite the increased need for patient data, NRC Health faces secular challenges from lower-priced, digitally native competitors like Qualtrics and Medallia. NRC’s retention rate hovers around 90%, lower than expected given hospitals’ slow pace in adopting internal tech changes. Additionally, hospitals increasingly desire greater control over patient feedback processes, driving them to opt for solutions they can set up and manage internally.
FreightCar America (NAS:RAIL) — mrkt cap $67mm; Price $3.60; EV/EBITDA 9
MORE RESEARCH NEEDED. One screen we typically run is for CEO changes in small to mid-sized companies– the smaller the company, the more impact a CEO can have. And with the right mix, this combination could mark an inflection. RAIL potentially is one of these companies, a manufacturer and servicer of railcars in an oligopolistic industry. The company went through operational mishaps by expanding capacity too rapidly and is now emphasizing a more lean and variable production operation. CEO Randall seems like a great fit having previously been a GM at Precision Castparts, a very well-run lean organization. Although the company’s cap structure has some hair on it with dilutive warrants, RAIL’s future could be very different than its past if the CEO can install the right operational discipline.