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Top stock pitches (Fri, Jun 21)

Top stock pitches (Fri, Jun 21)

Connor Van Ooyen
June 21, 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:

Vanda Pharmaceuticals ($VNDA)

Taiwan Semiconductor Manufacturing Company ($TSM)

DLocal Limited ($DLO)

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

The YBR Portfolio copies the trades of the top 10 investors (based on the average returns of their previous stock pitches) in our database of 1,000+ investors. If you want to be alerted when the best investors buy/sell a stock, then this section is for you.

*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).

**I use Interactive Brokers (link) for the portfolio because it makes it easy to trade international and OTC stocks. If you decide to open an account with them, use this link so they know I sent you.

The YBR Portfolio is only available to Premium Subscribers. If you want to know which stocks the top investors are investing in, upgrade to Yellowbrick Premium (you get a 20% discount using that link or the button below).

STOCK PITCHES

Author Returns

The below stock pitch is from Clark Street Value.

We have 113 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. Upgrade for 20% off.

BLOG - Clark Street Value

Vanda Pharmaceuticals: 2 Bidders, Entrenched Management, Upcoming Business Catalysts

Vanda Pharmaceuticals Inc., a biopharmaceutical company, focuses on the development and commercialization of therapies to address high unmet medical needs worldwide. The company’s marketed products include HETLIOZ to treat non-24-hour sleep-wake disorders; and Fanapt oral tablets for the treatment of schizophrenia.

Ticker: $VNDA | Price: $6.00 | Price Target: N/A
Market Cap: $363M | Timeframe: N/A

🧪 Biotech | 📈 Bullish Idea

Vanda Pharmaceuticals (VNDA), a biopharma company with a $365 million market cap, has a portfolio of commercial and late-stage drugs, including Hetlioz, Fanapt, Ponvory, Tradipitant, and Misaperidone. The company has approximately $5.40/share of net cash and marketable securities after subtracting liabilities, with shares currently trading under $6/share. Vanda has received two unsolicited bids from potential buyers: Future Pak, offering $7.25-$7.75 in cash per share plus a CVR, which the board rejected as substantially undervaluing the company; and Cycle Group Holdings, offering $8 in cash per share with no CVR component. Despite these bids, Vanda's entrenched management, led by co-founder and CEO Mihael Polymeropoulos, who owns 3+% of the stock and employs family members, has not engaged with the bidders. There is potential for higher bids or a CEO-led buyout, given the near-term regulatory catalysts, but the position is sized relatively small due to the uncertainty surrounding the board's actions.

Read the full article here. Read time: 4 min

Author Returns

The below stock pitch is from Rondure Global Advisors.

Their historic returns are:

Upgrade to Yellowbrick Road Premium to unlock the historic returns for this author. Upgrade for 20% off.

FUND LETTER - Rondure Global Advisors

Rondure Global Advisors Portfolio Holding: Taiwan Semiconductor Manufacturing Company Limited

Taiwan Semiconductor Manufacturing Company Limited, together with its subsidiaries, manufactures, packages, tests, and sells integrated circuits and other semiconductor devices in Taiwan, China, Europe, the Middle East, Africa, Japan, the United States, and internationally.

Ticker: TSM | Price: $174.45 | Price Target: N/A
Market Cap: $737B | Timeframe: N/A

⚡️ Semiconductors | 📈 Bullish Idea

Taiwan Semiconductor Manufacturing Company (TSMC) is a key driver of the MSCI Emerging Markets Index, contributing 82% of the Information Technology sector's returns and 86% of the overall index gains. As the dominant player in AI chip foundry with few alternatives, TSMC trades at a significant discount to competitors like Nvidia. The removal of election overhang has caused the stock to surge, solidifying TSMC's position as one of the world's most important companies. However, the risk of a potential war with China caps the position size in the portfolio.

Read the full article here. Read time: 1 min

YELLOWBRICK PREMIUM

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Author Returns

The below stock pitch is from Steve Wagner | Invest.

We have 3 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. Upgrade for 20% off.

BLOG - Steve Wagner | Invest

Is DLocal Still a Buy?

DLocal Limited operates a payment processing platform worldwide. The company offers pay-in solution which the business and get paid for their products and services through various payment methods, including international and local cards, online bank transfers and direct debit, cash, and alternative payment methods.

Ticker: DLO | Price: $7.85 | Price Target: $21.20 (+170%)
Market Cap: $2.23B | Timeframe: N/A

💸 Payment Processing | 📈 Bullish Idea

DLocal Limited (DLO), a profitable and cash flow-generative business, presents an attractive value opportunity following a significant sell-off, with the stock trading at a 10% free cash flow yield, 7x price-to-gross profit, and holding $680M in net cash. Despite the execution risk, the new CEO's strategies are expected to yield results over the next few quarters. Under conservative assumptions, including a 10% annual gross profit growth over the next ten years and stable margins, the fair value is estimated at $13.80, while a 15% annual growth and modest margin expansion could potentially reach $21.20. The strategic stock buyback program and the presence of an experienced executive further mitigate concerns, making the current risk-reward ratio highly favorable, with the author purchasing an additional 150 shares at current levels, bringing their cost basis to just over $11 per share.

Read the full article here. Read time: 2 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Gitlab, Inc ($GTLB) [40%]

🟨🟨⬜️⬜️⬜️ Enzo Biochem ($ENZ) [35%]

🟥⬜️⬜️⬜️⬜️ Target Hospitality ($TH) [25%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 64% bullish

It was the first big dip for $NVDA in quite a while, which led the indexes to be mostly red (except for the Dow) for the first time this week. Still not a ton of movement, but it does break the slow grind upward we’ve had. Obviously, if Nvidia begins to struggle and give back some of the insane 170% returns it’s had this year, it would likely drag down the Nasdaq and SPY with it. But, it’s only been one day, so let’s see how this shakes out.

The other sentiment checks have remained pretty sticky all week. Yellowbrick Road readers remain bullish, the Fear v Greed index remains at “fear”, and the news sentiment bounces between slightly bullish and slightly bearish.

Stock Market News

Fast-food customers are shifting to casual-dining chains, Darden Restaurants CEO says - CNBC

Accenture Stock Jumps as AI-Related Bookings Soar - Investopedia

Kroger beats first-quarter same-store sales estimates on steady grocery demand - Reuters

Exclusive: Boyd Gaming makes acquisition approach to Penn Entertainment, sources say - Reuters

McDonald's $5 meal deal to launch next week as fast-food chains woo frugal customers - Reuters

FEATURED INSIDER TRADE

The insider trade is brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones. Subscribe here

10% Owner at CSP INC /MA/ ($CSPI)

The 10% Owner purchased 5,264 shares at $13.97/share ($73,548.61 total) which increased their vested holdings by 0.4%. The current price is $13.92 (-0.4%). Their median purchase size is $44,073.90 and this is their 16th largest purchase out of 63 all time. link

LINKS YOU’LL LOVE

Complete Notes On Joel Greenblatt’s Special Situation Class at Columbia

Introduction to a Value Investing Process by Bruce Greenblatt

The Art of Stock Picking by Warren Buffett

THAT’S ALL FOLKS

Thank you so much for reading today’s email! Your support is the only way I can write this email for free every day.

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Connor

*Follow Yellowbrick on Twitter at @joinyellowbrick

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