Top stock pitches (Fri, Aug 2)

Connor Van Ooyen
August 02, 2024

About // Sponsor YBR // Yellowbrick Website // Twitter

*This newsletter is for entertainment purposes only. Nothing in this newsletter is financial advice or recommendations.

👋 Good Morning!

Thanks for reading the Yellowbrick Road where I share the best stock pitches from fund letters, analyst reports, blogs, and more!

The three stock pitches you’ll read about in today’s email are:

Mereo BioPharma (MREO)

Barnes & Noble Education (BNED)

IAC Inc. (IAC)

Feel free to share this email with any other investors that may like it.

Connor (follow the Yellowbrick Twitter account - @joinyellowbrick)

* If you missed yesterday’s email, don’t forget to read it here

YBR PORTFOLIO

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*All investments in the YBR Portfolio will be for ~3% of the portfolio value (which allows us to hold a maximum of 33 stocks at a time).

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YB Premium Portfolio Returns (started mid-May)

STOCK PITCHES

Author Returns

The below stock pitch is from Raging Bull Investments.

We have 20 stock pitches from them in our database and their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author.

BLOG POST - Raging Bull Investments

Mereo BioPharma Group plc - $MREO

Mereo BioPharma Group plc, a biopharmaceutical company, develops and commercializes therapeutics for the treatment of oncology and rare diseases in the United Kingdom, the United States, and internationally.

Ticker: MREO | Price: $4.00 | Price Target: $7.80 (+95%)
Market Cap: $600M | Timeframe: 6-8 months

🧪 Biopharma | 📈 Bullish Idea

Mereo BioPharma (MREO) is a late-stage biotech company with two promising assets: setrusumab for osteogenesis imperfecta (OI) and alvelestat for alpha-1 antitrypsin deficiency (AATD). Setrusumab has shown strong Phase 2 data, including a 67% reduction in annualized fracture rate and a 22% increase in bone mineral density. Phase 3 trials are ongoing, with potential interim readouts in late 2024/early 2025. Alvelestat has completed Phase 2 trials and is expected to enter Phase 3 by year-end, pending a partnership or non-dilutive financing deal. With a market cap of $600M and enterprise value of $510M, MREO appears undervalued, as setrusumab alone could be worth over $6/share based on conservative estimates. The company has sufficient cash through 2027, and activist investor Rubric Capital controls four board seats. Recent developments in the AATD space, including Sanofi's $2B acquisition of Inhibrx's candidate and Insmed's positive Phase 3 data for brensocatib, have increased alvelestat's potential value. Risks include clinical trial failure and partnership delays, but the near-term setup offers a potentially asymmetric opportunity with 50-100%+ upside in the next 6-8 months.

Read the full article here. Read time: 20 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7246/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from 1 Main Capital Partners.

We have 35 stock pitches from them in our database and their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author.

FUND LETTER - 1 Main Capital Partners

1 Main Capital Partners New Position: Barnes & Noble Education, Inc.

Barnes & Noble Education, Inc. operates bookstores for college and university campuses, and K-12 institutions primarily in the United States.

Ticker: BNED | Price: $11.19 | Price Target: N/A
Market Cap: $287M | Timeframe: N/A

📕 College Bookstore | 📈 Bullish Idea

Barnes & Noble Education (BNED), the largest US college bookstore operator with 1,245 stores, has launched First Day Complete (FDC), a program providing pre-class materials that has led to 80% revenue and 100% gross profit uplifts. FDC revenue has grown from $100 million two years ago to $300 million in the most recent fiscal year. The company recently recapitalized through a highly dilutive rights offering at 5 cents per share, handing over 98% of the company to new equity. The fund invested at 23 cents per share, sold at 3x the entry price during a meme stock rally, and reinvested some proceeds. BNED now represents 3% of the fund's capital at $10 per share post a 100:1 reverse stock split. Growth potential lies in FDC expansion, with EBITDA potentially increasing from $40 million to hundreds of millions. The improved balance sheet allows for aggressive investment in FDC, and possible re-addition to the Russell 2000 mid-next year could benefit the position.

Read the full article here. Read time: 3 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7437/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Patient Capital Management.

We have 9 stock pitches from them in our database and their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author.

FUND LETTER - Patient Capital Management

Patient Capital Management New Position: IAC Inc.

IAC Inc., together with its subsidiaries, operates as a media and internet company worldwide.

Ticker: IAC | Price: $49.45 | Price Target: $90 (+82%)
Market Cap: $4.20B | Timeframe: N/A

🎥 Media / Internet | 📈 Bullish Idea

IAC Inc. (IAC), currently trading at $46.85 with a market cap of $3.96 billion, presents a compelling investment opportunity with potential for 2x upside. Led by renowned capital allocators Barry Diller and Joey Levin, the company has seen its stock price lag despite significant improvements in business fundamentals. This pullback, particularly pronounced in smaller cap companies, offers an attractive entry point for investors. The stock's current valuation is well below its estimated worth of ~$90 per share, which includes a 20% conglomerate discount. This price target suggests substantial upside potential, making IAC an appealing choice for value investors seeking exposure to a well-managed, diversified portfolio of businesses.

Read the full article here. Read time: 1 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7304/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Apple Inc. (AAPL) [44%]

🟨🟨⬜️⬜️⬜️The Chemours Company (CC) [34%]

🟥⬜️⬜️⬜️⬜️ International General Insurance Holdings Ltd. (IGIC) [22%]

MARKET OVERVIEW / NEWS

Market Overview

Are you short-term bullish or bearish on the market?

Yesterday’s Poll Results: 61% bullish

Stock Market News

Intel to cut 15% of headcount, reports quarterly guidance miss - CNBC

Apple revenue returns to growth as iPhone sales top expectations - Reuters

Snap shares plunge over 20% on weak guidance - CNBC

Dow tumbles over 500 points after fresh data ignite fears about slowing economy - New York Post

DoorDash projects upbeat Q3 core profit as online ordering stays resilient - Reuters

Powell Says Cuts 'On the Table' in September - Bloomberg Markets and Finance

Taco Bell to roll out AI drive-thru ordering in hundreds of locations by end of year - CNBC

10-year Treasury yield falls below 4% for the first time since February - CNBC

LINKS YOU’LL LOVE

Rediscovering Sir John Templeton: Bargain-Hunter Extraordinaire

The Warren Buffett Way: Investing From a Business Perspective

Gibson Greetings case study - a perfect buyout

🎁 REFERRAL PROGRAM 🎁

Use your unique URL below or the share URL for any of the stock pitches to unlock insanely valuable awards.

Premium members have access to these awards here.

THAT’S ALL FOLKS

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Connor

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