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Top stock pitches (Fri, May 10)

Top stock pitches (Fri, May 10)

Connor Van Ooyen
May 10, 2024

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👋 Good Morning!

One of today’s stock pitches is from an investor whose previous pitches have averaged 36% 1-year returns, the markets have a green day after the weekly jobless claims come in way higher than expected (so investors are expecting interest rate cuts to begin sooner), an insider at $PENN with 30% 1-year returns buys more of the stock, and more in today’s email!

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

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

STOCK PITCHES

Author Returns

The below stock pitch is from Maran Partners.

We have 20 stock pitches for 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.

FUND LETTER

Maran Partners Fund Portfolio Holding: Clarus Corporation

Clarus Corporation designs, develops, manufactures, and distributes outdoor equipment and lifestyle products in the United States and internationally. The company operates through two segments, Outdoor and Adventure.

Ticker: CLAR | Price: $6.84 | Price Target: $19.83 (+189%)
Market Cap: $279M | Timeframe: 2026

🚣 Outdoor Equipment | 💰 1.4% Dividend | 📈 Bullish Idea

Clarus Corporation (CLAR) recently sold its Precision Sport segment for $175 million, resulting in a net cash position of over $1 per share and an enterprise value of approximately $185 million at the current stock price of $6. The company expects to double its EBITDA to ~$50 million by 2026, which could potentially triple the stock price if achieved. However, even if the guidance is not met, the downside risk is limited due to Clarus' strong balance sheet and history of realizing value for its brands through strategic sales. The current extreme pessimism in the market creates an asymmetric return potential for investors, with the possibility of doubling or tripling their investment over a few years while minimizing the risk of permanent capital loss.

Read the full article here. Read time: 1 min

Author Returns

The below stock pitch is from Cedar Creek Partners.

We have 22 stock pitches for 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.

FUND LETTER

Cedar Creek Partners Added On Portfolio Holding: CrossingBridge Advisors, LLC

CrossingBridge Advisors, LLC is a publicly owned investment manager. It primarily provides its services to investment companies. The firm is a an investment adviser to an investment company which provides portfolio management for investment companies. The firm launches and manages fixed income.

Ticker: ENDI | Price: $8.50 | Price Target: $11.50 (354%)
Market Cap: $43.69M | Timeframe: N/A

💸 Investment Manager | 📈 Bullish Idea

* I recommend using Interactive Brokers (link) to trade international and OTC stocks if you can’t trade them in your current brokerage

CrossingBridge Advisors (ENDI), an asset manager trading at 6x earnings net of cash, has seen its assets under management (AUM) grow from $1.5 billion in 2022 to $2.9 billion today through acquisitions such as RiverPark Strategic Income Fund and Cohanzick Management. Insiders own 53% of the company, which is expected to generate $0.86 EPS in 2024 and rapidly build cash to $2.30 per share by year-end. Based on a fair value of 8-10x earnings plus cash, the stock is worth $9.75-$11.50 per share, although it remains an illiquid stock.

Read the full article here. Read time: 4 min

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Author Returns

The below stock pitch is from Baron Discovery Fund.

Their historic returns are:

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

FUND LETTER

Baron Discovery Fund New Portfolio Holding: Masimo Corporation

Masimo Corporation develops, manufactures, and markets various patient monitoring technologies, and automation and connectivity solutions worldwide.

Ticker: MASI | Price: $124.16 | Price Target: $272 (+119%)
Market Cap: $7.18B | Timeframe: N/A

🩺 Vital Sign Monitoring | 🚨 Special Situation | 📈 Bullish Idea

Masimo Corporation, a market leader in high-end vital sign monitoring, is undergoing a special situation as it unwinds its unpopular $1 billion acquisition of Sound United, a consumer electronics company, to focus on its core healthcare business. The healthcare business, generating $1.3 billion in revenue with 85% recurring from disposable sensors, has the potential to double its revenue and cash flow over the next seven years through new products, customers, and increased usage per socket. An activist investor is pushing for the separation of the consumer and healthcare businesses, which is expected to unlock value in the underappreciated healthcare business. Additionally, Masimo may benefit from the proceeds of a lawsuit against Apple for alleged patent infringement. The investment has the potential to double from current valuation levels, driven by cash flow growth and a higher trading multiple justified by the cleaner healthcare structure.

Read the full article here. Read time: 2 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Enerpac Tool Group ($EPAC) [48%]

🟨🟨⬜️⬜️⬜️ Alta Equipment Group ($ALTG) [33%]

🟥⬜️⬜️⬜️⬜️ H&E Equipment Services ($HEES) [29%]

Your comments:

🏭 donincp*** ($EPAC): Nice 1 year and 5 year chart!

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 73% bullish

The slight dip yesterday was quickly erased and the market was back to green and the sentiment continued to rise. There were a couple of well-known big losers yesterday with Duolingo and Roblox reporting poor earnings, but all the indexes were green. The news sentiment remained slightly bullish while Yellowbrick Road readers were very bullish and the Fear v Greed index got close to escaping the “Fear” zone.

Stock Market News

Warner Bros Discovery misses estimates for quarterly revenue - Reuters

Roblox cuts annual bookings forecast on muted player spending - Reuters

Weekly jobless claims jump to 231,000, the highest since August - CNBC

Beyond Meat reports wider loss, quarterly sales decline - Reuters

Trump Media investor convicted of insider trading ahead of merger - CNBC

Trump vows to target electric vehicles in meeting with oil CEOS -report - Reuters

Robinhood CEO discusses expansion into high-yield savings, retirement investing, and credit cards - Yahoo Finance

Apple apologizes for iPad Pro ad showing hydraulic press destroying guitars, piano - CNBC

Robinhood makes headway beyond trading - Reuters

Airbnb slumps as gloomy forecast fans slowdown fears - 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

Director at PENN Entertainment, Inc. ($PENN)

The Director purchased 40,000 shares at $15.61/share ($624K total) which increased their vested holdings by 17.9%. The current price is $15.66 (+0.3%). Their median purchase size is $453K and this is their 2nd largest purchase out of 7 all time. (trade link)