Shoals Technologies Group (SHLS), mcap=$3370m

SHLS short pitch:
– Supplier of electrical wiring parts for utility-scale solar projects.
– Has significantly over-shipped end demand in 2022.
– Priced for perfection.
– Set to miss 2023 substantially.
– One innovative, but easily copyable, product drove SHLS’s success allowing it to reach 50% market shr in US.
– Extremely high margins (40%) for a relatively simple unpatentable electrical wiring product.
– Both market shr and margins can only go down.
– Since the 2021 IPO, insiders have sold 74% of today’s share count.
– Oaktree was a pre-IPO holder and sold its entire 51% stake.
– Management has fully turned over since IPO, including founder and key product innovator Dean Solon, who left in Feb’22

SHLS valuation:

– 16x Sales, 59x EBITDA, and 94x EPS on 2022 numbers.
– The company carries a full $5bn EV on $300m of 40% GM revenue.

Exp. gain: Not specified.

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