Seller of packaged food to grocery stores and restaurants, looks to be short. Core retail business faces secular challenges - volume is falling from the shift to healthier foods. New product introductions and pricing catch-up have masked underlying volume declines. However, these benefits should abate in the coming quarters. Company's 2024 earnings estimates assume margins return to pre-2021 food price spike levels, which is way too bullish.

Set to strongly benefit from the lifting of Title 42. Government may need 60-130% more beds for unaccompanied children, equivalent to several facilities the size of TH's 2k Pecos facility. Title 42 has been lifted and this will lead to a flood of refugee encounters, including unaccompanied children. Government lacks housing capacity for children awaiting immigration processing. Desperate situation expected to worsen by summer. TH is currently operating under a 1-year contract, likely to be extended for 10 years. Recent concerns about no unaccompanied children at TH's Pecos facility are overblown. Facility is temporarily warm stacked due to seasonal low volumes. Government is actively seeking new housing capacity for an anticipated surge later in the year. TH’s transformation from swing capacity to baseload capacity, and contract extension could see a structural re-rating in TH’s 5x EBITDA multiple.

Drilling company providing sample extraction services for gold miners in Africa and South America. Trades at 2.4x TTM EV/EBITDA despite highly recurring revenue, and positive FCF while growing both the revenues and earnings at a decent clip. The low trading multiple should expand as investors realize we are at the beginning of a long cycle of growth for the industry. The increasing free cash flow allows GEO to continue returning capital to shareholders through dividends and share buybacks. An attractive target to other drillers due to its long-term relationships with mining companies. CEO with 39% ownership of GEO said openly that he is open to sale at 5x EBITDA or more.

One of the largest clothing thrift shops online. At 0.5x sales trades significantly below industry transactions. 33% market cap and another ~40% is in unique PP&E. Minimal capex needs going forward and positive EBITDA expected for H2 2023. Company operates a “Ship it and forget it” model which resonates with a lot of women. TDUP has already tapped into a very significant source of supply without much effort. The demand side needs further scaling. 80% of customers are repeat buyers.

The bank is oversold on fears caused by the collapse of SVB and other banks. However, MTB is run by a conservative mgmt team in markets with stickier deposit bases. That does not make them immune to dumb ideas, but it greatly reduces the risk to shareholders. MTB has consistently earned mid-teens ROTE. Pays out a healthy dividend, and uses excess capital to buyback stock. Last year's merger with People's United provides significant scale benefits, which should become evident shortly.

E-commerce platform providing flowers and gifts across several brands. Everybody and their mother wants to bet against FLWS for the wrong reasons. Immediate catalyst for the stock to re-rate. FLWS is oversold as an ill-founded assessment of data from credit card panels points to weak Valentine’s Day sales. However, primary research shows a very positive picture for company's performance during the quarter. The bar is set especially low. Recent capex and gross margin headwinds are set to shift into meaningful tailwinds over the coming quarters. Expected to return to pre-Covid margins in the medium term. Margins and profitability consensus estimates are too low.

Manufacturer of snowmobiles. Huge COVID beneficiary with sales 25% above the previous peak. The business is already faltering but the decline is masked by dealer channel fill. This “Channel fill” opportunity has now burned up, creating challenging comparables in the back half of ’23 for volumes and margins. Dealer inventories now seem to be at 2019 levels, which in itself was a year of oversupply. A minimum of $600m revenue headwind for 2H23. Management's guidance is unachievable. Earnings quality is low with only 1/3 of 2022 net income converting to FCF.

Stagwell manages an integrated network of top-tier ad agencies and assets for blue-chip companies. The unfortunate timing of the secondary offering to PE owners pushed STGW shares down after a solid Q4 print, creating the current opportunity. High growth, high cash flow generative enterprise with best-of-class management. 57% of revenue and over 50% of EBITDA oriented toward digital transformation. 10-14% 2023E annual revenue growth, ~2x that of traditional advertising companies. Cheap on an absolute and relative basis with superior growth and margin characteristics. Trades at 7x fwd. EBITDA, 6x P/E and a 14% FCF yield. Higher growth-oriented marketing services / ad tech comps trade 10-13x EV / EBITDA.

Global operator of flexible working spaces with 4x the locations of their next-largest competitor. Currently in the early stages of transferring the majority of the current business into the franchised business. If successful, would result in the transfer of a significant part of lease liabilities and the cost base onto a third party. This would leave IWG with a far higher margin royalty stream likely to be valued by the market on a more generous multiple. The currently large operating lease liability (even if non-recourse and tied to individual properties) is a significant concern among investors.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

eHealth is a digital health insurance broker with secular tailwinds from the continued Medicare Advantage growth till 2040. EHTH was classified as an un-investable stock in an un-investable industry on top of a damning short report from Muddy Waters. Report pointed to low-quality earnings due to mandatory ASC606 adoption and abusing its constraints with aggressive growth tactics EHTH is in a turnaround mode with new mgmt, reversing bad growth policies and industry players behaving more disciplined. Churn is expected to stabilize back to normalized levels. 100% upside opportunity protected by a floor valuation. The liquidation value of the commissions receivables is higher than the current market cap.

Servicer of defaulted loans and foreclosed homes for US mortgage and real estate industries. Business was negatively affected by COVID-induced foreclosure and borrower relief measures that led to a ~90% peak-to-trough reduction in foreclosure starts. Residential mortgage delinquencies are starting to accelerate off of the record lows. Compelling opportunity to buy a countercyclical business with leverage to the upcoming foreclosure cycle. The stock is also oversold due to an ill-timed equity raise.

Churchill Downs is the owner of the Kentucky Derby and various regional gaming assets. The company is run by an aligned management team that has created a tremendous amount of shareholder value. Since 2014 total return CAGR of 28.9% vs. S&P 500’s 11.3%. Management has proven adept at acquiring and divesting assets opportunistically, expending capital on new-build projects at oftentimes very short payback periods, and buying back shares. Normalized earnings are well north of $20/share as we get past the current cap cycle and existing properties mature. Management is expected to continue creating value through additional acquisitions and divestments as they’ve done in the past.

Deliveroo is a food delivery business that operates in the UK, Ireland, France, Italy, and a few additional markets. The company is cheap with 2/3 of the market cap being a cash and a clear line-of-sight to FCF generation. Consensus estimates are too low. ROO has sold off with the tech/growth meltdown notwithstanding solid financial performance through the end of COVID and the subsequent UK consumer crisis. Despite not being the country-level GMV leader, ROO is leading in the most attractive sub-markets and has carved out a niche as the premium brand which yields higher average order values and better profitability despite the lower scale.

Opportunity to acquire a cheap profitable bank with a clear path to earnings growth. Beneficiary of the ECIP program having received funds equal to 55% of the bank's book value. Bank has the ability to grow earnings by 50% using the newly received funds. ECIP funds are structured as low-cost preferred equity, but should be considered as permanent low-cost equity. Common shareholders derive all the benefits (earnings) from these new funds.

Pair trade on credit card issuers – long DFS short SYF Both stocks trade at similar 7-8x earnings multiple despite SYF being a worse business with a worse track record. DFS is better positioned for a recessionary environment DFS is 85% prime vs 76% for SYF. Discover also has a lot of excess capital and has only recently restarted its buyback. SYF has already distributed most of its excess capital. SYF is also much more exposed to the likely cut in late fees (as pressured by Consumer Financial Protection Bureau) with an impact possibly in the order of 30-60% of EPS. This compares to the expected EPS impact of only 5-10% for DFS.

In Dec, Brookfield spun off 25% interest in BAM. The spin-off BAM trades at a 100% premium to peers while the remainco BN is significantly undervalued. Pair trade isolates BN’s other balance sheet investments for just ~$14bn. These investments have an intrinsic value of $51bn.

BankFirst is a growing, well-run bank that has made three material acquisitions over the past 16 months at no cost to shareholders thanks to ECIP funds grant. Trade at 6x forward PE - far too cheap for a bank that has nearly doubled EPS over the last 4 years. Proven to be adept at M&A, and has excess capital for further acquisitions. The bank has solid operating metrics with NIM of 4.09%, ROA of 1-1.2%, ROE around 10%, and a ~65% efficiency ratio. Serial acquirer over the years with good results for shareholders.

Acuity Brands is a very good business available at a very reasonable 14x PE. It is a market leader in the stable lighting and control industry. The company has shown consistent and growing profitability and FCF. AYI has excellent ROIC and a management that is returning substantial amounts of capital via buybacks. Above average company is available for below peer and historical multiples. A boring business routinely posting good numbers and beating their earnings estimates.

One of the world’s largest producers of fresh bananas and pineapples. 100% upside if DOLE rerates to peer multiples. Stock is cheap due to the drag by the loss-making vegetable division. This division was recently sold at a higher multiple than attributed to the whole business. At 5.3x EBITDA the company trades at a large discount to an extremely similar peer $FDP. Due to reduced leverage company is in the position to return cash to shareholders. With DOLE trading 13% below BV, the downside is well protected by hard assets on the balance sheet – productive land, ocean vessels and etc.

Live Nation Entertainment is the world's largest live entertainment ticket seller. Company is emerging from a very difficult 2 year period that resulted in its revenue being cut by half. As COVID restrictions ease, there seems to be sufficient pent-up demand both from the consumer and the artist to suggest that market is mispricing LYV. Despite this, stock still trades around 2019 levels with the expected 2023 sales and EBITDA being 50% higher.

Gaming content creator/manufacturer/distributor for land-based and digital casinos. Oligopoly with 75% recurring revenue and high switching costs. Has now assembled an all-star team after hiring around 50 high-level executives from rival Aristrocrat. Core business is expected to benefit from an increase in casino CAPEX following two years of negligible spending. Also, market is currently ascribing nearly 0 value to LNW’s two digital assets – digital casino games and mobile/social gaming. Digital assets are highly synergistic to its main business and are expected to benefit from digital casino legalization in the US and growing TAM for mobile/social gaming.

Casino operator with 43 properties + digital assets. Since pre-pandemic, sales grew by 20% and margins significantly improved. Despite these positives, PENN trades at the same EV as pre-covid. Core business comprises 85% of revenue and provides solid downside protection. On top of that, PENN's digital assets present a call option on OSB/iCasino industry. Both digital assets continue to grow and are at breakeven now. Sustainable margin improvement has been mainly achieved through cost savings. Management's compensation is heavily tied to share price appreciation over the next 3 years. The company has started buying back shares.

One of the largest home improvement retailers in the US with 11% market share, behind 17% for HD. Has been materially over-earning due to inflation (ticket +29% vs. pre-covid) and pull-forward of housing-related spend. Setup for 2023-24 EPS revisions is asymmetric as the impacts of slower housing turnover percolate and goods prices deflate. Attractive way to play goods deflation in a business with high operating leverage and with EPS revisions as high as 30-50%.

Relatively mediocre business, however, it is cheap on all metrics. Trades at 7x EBIT, slightly above net current assets. Well-protected downside and meaningful potential upside. The company manufactures/sells single-use protective apparel products and building supply products. Net cash balance sheet and rational capital allocation strategy. Uses all FCF to buy back stock, S/O declined from 27m in 2006 to 13m today. Shares might skyrocket on the next viral outbreak, as has already happened due to H1N1 in 2009 and COVID in 2020. Attractive M&A target for both financial and strategic buyers.

Sum-of-the-parts story with near term catalyst to unlock substantial value. A refiner with 4 refineries in the Gulf Cost area and 79% ownership of DLK midstream assets. The company is undervalued, gushing cash flow, and returning capital to shareholders through aggressive buybacks. New CEO is publicly stressing undervaluation and committing to unlocking sum of parts value of the assets. 79% ownership of DKL already accounts for almost the whole of DK's market cap. Earnings are expected to remain elevated for the near to medium term, resulting in a huge cash inflow.

Constellation Energy, a recent spinoff, operates 13 nuclear power plants in the US. As of the Inflation Reduction Act’s (IRA) subsidies, CEG thus offers a minimum FCF yield of around 8.5% while allowing for full upside potential at higher power prices. Furthermore, the downside looks somewhat protected as the company trades at <50% below replacement cost. The stock offers additional optionality if the company takes advantage of IRA-supported tax-credit opportunities in clean hydrogen.

An interesting special situation play with a very limited downside. Golden Energy and Resources is a holding company of two publicly listed coal subsidiaries. It is currently subject to a takeover proposal by the controlling shareholder. Original lowball offer was raised by 17% after Singaporean minority investor ‘watchdog’ called for an improved bid. The amended offer was not declared final and there is a decent chance it gets raised again. Buyer looks motivated to get the deal done.

RumbleOn is the largest power sports dealership group in the US. Currently, RMBL is misunderstood and being viewed as yet another COVID beneficiary. However, RMBL is sufficiently resilient during near-term macro bumpiness and has a compelling LT strategy for value creation. RMBL’s organic growth, with used volume growth being the key component, will allow the company to outperform peers this year. RMBL has multiple levels to create value including accretive M&A, opening their fulfillment/distribution centers to the public, and focusing on effective servicing at dealerships. Despite high leverage, the risk of breaching debt covenants is low.

Richly valued retailer of pet medications with accelerating profit decline led by an unproven CEO without a credible plan. Operates in an increasingly competitive market. Pandemic-juiced results are reversing due to a proliferation of new competition. Recent investments are expensive and desperate actions that are bound to fail. Newly appointed promotional CEO and CFO have zero experience in the pet healthcare industry and their actions have quickly pushed PETS into becoming a melting ice cube

Green Plains is transitioning from a legacy ethanol company into a diversified bio-refinery after the acquisition of Fluid Quip in 2020. The company is now at an inflection point where the market will start to see a meaningful increase in financial performance. Half of GPRE’s facilities have already been converted to include these AgTech enhancements while the remainder should be converted within 18 months. Q1’23 earnings will mark the beginning where half of GPRE’s platform runs at planned production capacity. Activist Ancora is now pushing for strategic alternatives, including a sale, suggesting a strategic acquirer could pay $50/share or more.

Long-term compounder with a great track record and strong capital allocator at the helm. Portfolio of public and private investments with $ANGI and $MTCH accounting for 60% of the assessed NAV. Stock trades at a 25% discount to its depressed NAV. This NAV is calculated on realistic liquidation values as opposed to long-term fair values. IAC's private holdings offer a decent NAV growth from the current levels, A confluence of transient overhangs has temporarily depressed IAC NAV. The largest private Dotdash Meredith business is expected to benefit from a recovery in digital ad demand. Another catalyst looks to be the upcoming IPO of Turo, a private peer-to-peer car-sharing marketplace, which is partially owned by IAC.

Gordon family controlled producer/seller of Tootsie Rolls at 41x earnings. No growth business and over time unit volumes will decline. It’s not a product that fits with health trends. Stock is up 30%+ since Oct’22 and trades at all-time highs. Owning TR made some sense in a zero interest rate environment. A 3.5% yield with some inflation protection was arguably better for investors than a 2% treasury yield. Math is now reversed (2.4% earnings yield vs 4.8% T-bills) and no longer makes sense.

Airport concessionaire that expedites the security screening process – traveler identity check. Subscription/membership-based business model. Priced for perfection at 9x TTM sales. Limited value of the service for customers. Has hit a penetration wall with net-adds set to fall of a cliff in 2023. Majority of the growth comes from a partnership with Amex which gives the service subscription for free to Amex card holders. Amex membership base now seems to be close to fully penetrated. Amex-fueled growth obfuscates the deceleration in organic bookings growth under the hood. Airports/airlines are working to offer biometric screening services themselves. Lack of disclosure and misleading unit economics challenge management’s credibility.

Business with one of the strongest economic moats trading at a meaningful discount to intrinsic value. Sotera provides sterilization solutions for the medical-device and pharmaceutical companies. Its services are necessary to satisfy government regulations. Average customer tenure of 10+ years with minimal concentration. 100% renewal rate among its top ten customers. Future litigation uncertainty due to emissions from sterilization facilities is greatly derisked after a major lawsuit settlement.

The hype around ChatGPT is providing a rare opportunity to purchase GOOG, a quality compounder, at a more than fair price. GOOG looks to be much better positioned for the future than anyone else due to its long and impressive history with AI. Public launch of BARD is expected to be a positive catalyst for the stock. Meanwhile, the temporary slowdown in the ad space is beneficial in the long term. GOOG is using this opportunity to optimize its costs, something it has never done before.

Danaos Corporation is an incredibly cheap charterer of container vessels to liner companies. It will earn its current market cap in cash over the next two years. CEO owns 39% of the stock. By end-2025 an undemanding 5.9x ex. cash P/E exit multiple on normalized earnings should yield a total return of 2.5x. Reasonable confidence in the outcome since 2/3rds of the revenue is already contracted to 2025 at the peak pandemic rates. Average contract length for DAC's 69 vessels is 25 months. This is a cyclical and low ROIC industry, however, there is tremendous value to be generated in the next few years from the current contracts that will produce large amounts of cash for $DAC.

An outsourced customer service provider that has de-rated due to a temporary slowdown in tech demand. The company now looks cheap both on an absolute and relative basis. Secular industry tailwinds as more businesses outsource over time. Business benefits from its scale (#2 worldwide) which lets CNXC compete for more/larger customers and generate higher margins than most peers. The company also boasts a sticky revenue base due to high switching costs associated with changing providers. Concentrix should be able to grow revenue at a 7% CAGR organically and EBITDA at 9% CAGR. Operating margins have rerated up from 8.3% in 2016 to 14.0% in 2022. Asset-light business with capex at only 2-3% of revenues.

Biotech company that halted any further development of their programs and announced exploration of strategic alternatives. Liquidation of the company is in the cards. The three main uncertainties between now and potential liquidation are the quarterly burn, winddown costs and the lease termination expense. Even assuming continued high cash burn rate for the next 2 quarters, there is 35% upside in liquidation scenario.