Global Blue Group (GB), mcap=$1000m

A less visible and safer bet on China reopening.
Provider of VAT tax refund services for international travelers, ~70% market share.
Essentially a small royalty on travelers purchasing luxury goods abroad.
As China re-opens profits will inflect above pre-COVID.
Some re-opened regions are spending 3x on like for like basis through GB vs what they were pre-COVID.
This business has 80% incremental margins from any new revenue, >40% EBITDA margins, and 85% FCF conversion.

Helen of Troy (HELE) short, mcap=$2370m

Levered roll-up of undifferentiated brands.
The roll-up story is now unwinding.
Collapsing/declining revenues are seen across all of the business segments.
Accelerating organic revenue declines (-20% last quarter) and higher cost of capital leave no capacity to continue the roll-up story.
There is no platform value – acquisitions are used to plug holes in ex-growth businesses and have no synergies.

Commonwealth Bank of Australia (CBA.AX) short, mcap=$167619m

Australian bank with the largest mortgage book and at 2.5x TBV.
Opportunity to bet on an overheated Australian housing market.
Over 5% of Australians now rent investment properties for less than their interest payments.
Housing prices are down nationally around 10% from their April 2022 peak, since the RBA started raising rates.
During COVID, RBA lent major banks cheap fixed-rate debt for 3 years which allowed the banks to temporarily offer fixed rates at <2%. 2/3rds of that debt is due to expire this year and mortgage rates on those loans are expected to re-price from less than 2% to 6%. Causing massive stress for households leading to distressed RE sales pressuring prices and banking system.

Aehr Test Systems (AEHR) short, mcap=$685m

Supplier of semiconductor capital equipment.
A good short opportunity as the market incorrectly expects the recent growth to continue.
The growth was mainly driven by a single customer $ON, which is expected to substantially reduce purchases next year.
Over the last two years AEHR revenues increased 4x and the stock up by 1000%.
Even assuming substantial growth from new customers, AEHR will be unable to hit the street’s aggressive FY24-FY25 rev estimates.

Easterly Government Properties (DEA), mcap=$2476m

Cheap low-risk REIT that leases class A office properties to US govt agencies.
The highest quality tenant in the world.
Low renewal risk and vacancy of only 1.2%.
8% dividend is sustainable.
Much higher return than treasuries, but with similar risk.
Strong balance sheet with low-cost fixed-rate debt with no significant near-term maturities.
Debt/EV at 46%.
Solid management with longstanding relationships with various government agencies.

The Charles Schwab (SCHW), mcap=$92000m

SCHW unfairly sold off following the SVB fallout.
Market’s concerns are misplaced.
SCHW is unlikely to be required to raise cheap equity for regulatory reasons.
81% of deposits are FDIC insured while the remaining 19% are easily covered by SCHW’s liquid securities portfolio. Depositors are unlikely to flee.
SCHW does not have a negative TBV after adjusting for taxation on unrealized HTM losses and YTD gains.

Regis (RGS), mcap=$47m

Hair salon franchisor with 5,000 units.
Covid-driven headwinds masked the fact that RGS has wrapped up a major business model transition to the franchised model.
The business has bottomed out and is on the path to recovery.
Worth $7, representing a 6x return.
A recession-proof, asset-light business that is generating 30%+ EBITDA.
The new CEO joined in 2022 and is successfully turning the business around.
Both the business model transition and liquidity profile improvement have gone unnoticed by the street.
RGS doesn’t screen well as it looks massively levered due to leases, but these leases are held in the franchisee’s name.
Franchising model makes sense: asset-light business model, higher FCF generation, and 10-20% higher revenues in franchised units.

OneSpaWorld (OSW), mcap=1111m

Provider of spa services on cruise ships.
Quasi-monopoly with over 90% of the cruise ship market.
Long-term 7-10% topline growth.
Trades at 10-12x 2024 FCF.
Capital returns coming.
100% upside.
Onshore spa competitors face difficulty replicating OSW’s global breadth and scale.
Due to relatively minimal expense, cruise ship operators have no incentives to switch or in-house services.
Historically, churn has been almost nonexistent.
Expected to initiate a dividend this year or next at the latest.
Due to minimal capex needs, set to become a cash-flow return machine.

Bank of Georgia Group (BGEO.L), mcap=$1303m

BGEO is a London-listed leading retail and commercial bank in the country of Georgia.
The bank operates in an attractive duopoly market with strong and improving country-level fundamentals.
Should benefit from the recent influx of Russian immigrants.
BGEO trades at just 1x book value and 4x earnings whilst continuing to return capital through buybacks and dividends.
Its Western-trained management is excellent and has been able to return consistent 20%+ ROEs over the last 15 years.

National HealthCare (NHC) short, mcap=$886m

Operator of skilled nursing facilities
Multiple secular challenges with an imminent earnings cliff.
Short thesis boils down to patient volume shift from SNFs to home healthcare.
Home healthcare is materially cheaper than SNFs with similar patient outcomes.
The major insurers have spent billions of dollars and are explicit about their desire to shift volumes towards home health at the expense of SNFs.
Current dividend levels are unsustainable.
The shareholder base is not paying attention to the rapidly deteriorating fundamentals of the business and long-term challenges.