The author is optimistic about Spotify's future, highlighting its best-in-class product, ubiquity, per user engagement, and continued evolution. Spotify holds about 30.5% of the global music streaming market and has 515 million MAUs, along with 210 million premium subscribers. The company's annual streaming hours increased significantly from ~55 billion in 2018 to ~132 billion in 2022. The author points out that if Spotify can negotiate better terms with record labels, it would greatly benefit gross profits. They also indicate untapped pricing power for Spotify and an opportunity to reduce headcount to control operating expenses. Despite ongoing negotiations with labels and challenges in monetizing user growth, the author believes Spotify is in a good position for future growth and profitability. If Spotify can achieve its targets, it could lead to $1.5 billion of operating income in FY22. Currently, Spotify is trading at just 19.2x EV/EBIT, which is considered cheap compared to the U.S. market and other music companies. With a long-term investment horizon in mind, the author sees potential for Spotify to become a much better business in 5 years, bringing significant rewards to shareholders over the next 5-10 years.

CS Disco is a top-tier vertical software company that provides e-discovery, document review, and case solution software to enterprises, law firms, and service providers. They had a strong Q1 2023 performance, surpassing revenue expectations and exceeding adjusted EBITDA forecasts. They introduced a generative AI chatbot for the E-discovery process and plan to roll it out as a general availability feature later in the year. Disco's cloud platform offers a more efficient solution compared to on-premise software, with cost-effective compute capacity and swift data ingestion. Disco has a total addressable market of $42 billion and is viewed as a long-term buy despite the risks of rapid sales hiring and low switching costs for customers.

The article discusses the investment potential of ORLEN, a Polish oil and gas producer with a strong relationship with the government. ORLEN owns a large network of gas stations in Poland and has a focus on renewable energy sources. The company has a low valuation and a strong financial position, with a new dividend policy that pays out 40% of free cash flow. The author is bullish on ORLEN as an investment comparable to Warren Buffet's success with investing in PetroChina. The article highlights ORLEN's potential for upside due to the underlying commodity (oil) and its low valuation.

Stellantis reported strong Q1 2023 results, beating market expectations in both shipments and revenues, achieving a >10% EBIT margin, and reaffirming FY 2023 guidance of double-digit operating income margin and positive free cash flow. The company's strong Q1 performance was supported by favorable pricing and volume expansion, with consolidated shipments experiencing a 7% increase compared to the first quarter of 2022. Stellantis' luxury brand Maserati reported a 95% YoY jump in shipments and a 65% YoY expansion in revenue. The company distributed about EUR 4.2 billion in dividends and plans to complete about EUR 1.5 billion of buybacks for FY 2023. However, investors are concerned that high inventory coupled with weakened demand may lead to targeted price adjustments and lower margins. Stellantis is less dependent than peers on macro pressure due to merger synergies and extensive scale/cost advantages. The author sees no major risk updates since their last coverage of Stellantis stock but highlights several downside risks that apply to Stellantis, including slowing consumer confidence, geopolitical risks, supply-chain challenges, higher than expected investments, timid EV adoption, and macroeconomic uncertainty. Despite a very competitive industry position, Stellantis has a super cheap valuation of close to x1.3 EV/EBIT. The author reiterates a "Strong Buy" rating for Stellantis and raises their TP to $37.66/share (currently $16).

The article discusses Lowe's, a home improvement retailer that is undergoing a multi-year transition and is expected to become a higher quality business in the future. The company is the second largest home improvement retailer in the world, operating over 1,700 stores, and has major scale advantages over smaller competitors. Lowe's is focused on growing its Pro business to align with the industry's 50/50 split and has a target of driving revenue growth at twice the market rate. The company has historically trailed behind Home Depot but is making progress in narrowing the gap. The author proposes a method of backtracking to a shareholder yield that produces an average return over time and suggests a 20x fair multiple is reasonable given Lowe's prospects. The stock trades for around 15x forward earnings, which is a reasonable discount to the author's assessment of fair value. If the stock re-rates to its historical ~20x multiple over the next five-ish years, investors could add another 5-6% of annual returns to the already solid business returns.

Vodafone missed its full-year targets and is facing challenges in the European telecommunications sector. Several Vodafone divisions, such as the U.K., Italy, and Spain, have sub-WACC returns on capital employed, and Spain and Italy are value-destructive divisions for Vodafone due to tough competitive dynamics. Vodafone intends to lay off 11,000 employees during the next three years to maintain margins, and the strategic review of its Spanish business means a potential divestment. Bulls argue that if Vodafone divests noncore businesses and simplifies its corporate structure, it could highlight the value of its assets and result in share price appreciation. Bears argue that Vodafone's position in Italy is precarious due to a structurally challenging competitive environment. Vodafone spun off its tower business into Vantage Towers, which has a market capitalization of around EUR 15 billion. The author sees Vodafone's dividend as maintainable, given its current cash flow generation, but suggests that management prioritize deleveraging and selling noncore operations over dividend growth.

National Instruments Corporation (NATI) is expected to close an acquisition agreement with Emerson Electric for $60 per share in cash. The author believes the transaction will likely close due to precedent conditions, undervaluation of the target, and the number of interested parties. Even if the merger fails, the author is not worried because NATI delivers substantial FCF and FCF growth and could be worth more than $60 per share. NATI has underperformed in the stock market before the acquisition, trading at $30-$40 per share. The author values NATI at $69-$81 per share, higher than the $60 per share cash offer for shareholders, and believes that other parties may launch new bids if the merger falls through. However, NATI faces operating risks from shortages of certain components, lack of supply, or price increases, which could lead to lower production levels and lower free cash flow margins. The company may also suffer from new tariffs and trade barriers imposed by the United States and other countries, potentially leading to higher costs and lower EBITDA generation. Despite the small spread between the current share price and the cash offer, the author sees little risk in the merger and believes that the company could be worth more than $60 per share, so they would keep the shares if the merger falls through.

The author holds shares in Legal & General Group, a 13.8bn GBP market cap company that is organized into four business areas, with LGRI being the core of the company as the UK market leader in Pension Risk Transfer. L&G has about 25% of the UK PRT market and is the longest-standing player, with main competitors including Aviva, Phoenix, and Pension Insurance Corporation. L&G's financial track record is impressive, with earnings, dividends, and book value growing nicely over the last decade. The implementation of IFRS 17 will reduce L&G's accounting equity by roughly 50%, but the Solvency position remains the same, and L&G can still comfortably write more new business. L&G is a difficult company to invest in due to various reasons, but there are positive aspects to like about L&G, including a clear and reasonable strategy, expectation for UK PRT market growth, strong track record, and cheap valuation.

Hedge fund manager David Einhorn's Greenlight Capital exited its holdings in Victoria's Secret & Co. in Q1 2023 after building its position in Q4 2021. The company's stock has gone down 45% from a year ago and now trades at a stressed valuation of $24.1 per share at a P/E ratio of 5.05x and a P/S ratio of 0.32x. The company's underperformance in 2022, with a decline in revenue, gross margin, and operating income, is attributed to its poor stock performance. VSCO failed to raise prices to counter weaknesses, and management anticipated heightened promotional activity in Q1 due to the highly competitive market. Despite challenges, there is still fundamental demand for VSCO's products in the United States, with loyal customers who have been using their products for 2-5 years. VSCO is pursuing inclusivity while still focusing on its core business, and expects single-digit revenue growth in 2023. Despite headwinds for VSCO's U.S. business, the company still has multiple ways to stabilize its business, and management's guidance of a return to growth in 2023 makes for an attractive entry point for investors.

Brookfield Corporation (BN) spun off its asset management business into an independent company called Brookfield Asset Management (BAM). BAM is an asset-light business that earns fees for managing money and pays out all of its profits as a dividend, while BN focuses on maximizing returns on its capital as an asset-heavy business. Investors in BN get a 75% stake in BAM, stakes in Brookfield's publicly listed affiliates, various stakes in BAM's funds, Brookfield Property Group, an insurance business, and a share of the net carried interest charged on existing and new BAM funds. The common bull case for BN shares is that the sum of all its assets minus debt and preferred shares is substantially higher than the current market price of the stock, even after accounting for its large exposure to commercial real estate. BN's leadership team has a long track record of growing the asset management business while shrewdly investing both third-party and its own capital. BAM manages $834 billion and has leading positions in global infrastructure, real estate, renewable power, and credit, which are attractive industries that will require substantial capital investments going into the future. BN has a strong track record of investing in undervalued assets in bad times and realizing gains after improving operations and in better market conditions. With BN generating significant cash flow from its investments and net carried interest, and a capital allocation policy that reinvests earnings rather than dividends, the author expects BN to continue making profitable investment decisions and shares to compound correspondingly.