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Top stock pitches (Mon, Apr 29)

Top stock pitches (Mon, Apr 29)

Connor Van Ooyen
April 29, 2024

Sponsored by

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

👋 Good Morning!

Large tech company CapEx is exploding with the rise of AI (link); Amazon Prime and the NBA are close to signing a MAJOR deal (link); $ZURA pops 25% after insiders buy during private placement (link); DraftKings continues to take market share (link); a special situation opportunity in $ADTH because of the go-shop period (stock pitches); and much 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

FUND LETTER

Alluvial Capital Fund Portfolio Holding: Garrett Motion Inc.

Garrett Motion Inc., together with its subsidiaries, designs, manufactures, and sells turbocharging, air and fluid compression, and high-speed electric motor technologies for original equipment manufacturers and distributors worldwide.

Ticker: GTX | Price: $9.83 | Price Target: N/A
Market Cap: $2.2B | Timeframe: N/A

🚗 Auto Parts | 📈 Bullish Idea

Garrett Motion delivered nice results in February. The company issued strong guidance for 2024 and indicated it would use nearly all its 2024 free cash flow to repurchase stock. Garrett wasted no time, buying back 10 million shares for $90 million on March 6. The company will continue to harvest cash flows from its dominant turbochargers business, investing in creating products for electric vehicles and returning excess cash to shareholders. While electric vehicles are a near-inevitability, internal combustion engines will remain relevant for a long time, providing Garrett Motion with years of strong cash flows to return to shareholders.

Read the full article here. Read time: 1 min

FUND LETTER

Curreen Capital New Portfolio Holding: Siemens Energy AG

Siemens Energy AG operates as an energy technology company worldwide. It operates through Gas Services, Grid Technologies, Transformation of Industry, and Siemens Gamesa segments.

Ticker: SMNEY | Price: $20.13 | Price Target: N/A
Market Cap: EUR 15B | Timeframe: N/A

⚡️ Energy Technology | 📈 Bullish Idea

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

Siemens Energy, a spin-off from Siemens, was purchased at €14.10 per share, representing a new 2.5% position in the fund. The company combines a world-class electrical power generation business, a world-class electricity transmission business, and an onshore and offshore wind turbine business undergoing a turnaround. The investment thesis is based on three key points: 1) The power industry is experiencing growth after a decade of stagnation, 2) The wind business is expected to successfully turn around, and 3) The risk/reward profile is attractive.

Read the full article here. Read time: 1 min

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BLOG POST

Monthly Special Situation Review: $ADTH Go-Shop

AdTheorent Holding Company, Inc., a digital media platform, provides programmatic digital advertising services for advertising agency and brand customers in the United States, Canada, and internationally.

Ticker: ADTH | Price: $3.25 | Price Target: N/A
Market Cap: $298M | Timeframe: short-term

📢 Digital Advertising | 🚨 Event Driven | 📈 Bullish Idea

AdTheorent Holding Company, Inc. (ADTH) was acquired for $3.21 per share, representing a 17% premium to the 60-day volume weighted average price and a 27% premium to the 90-day volume weighted average price as of March 28, 2024. However, this premium is not significant compared to the recent trading price. The deal includes a go-shop period until May 4 for better offers. The stock currently trades near the deal price, offering a 'free roll' on the possibility of a higher bid. Downside risk is limited by the lack of a real premium and few deal termination provisions. At 2x 2024 adjusted gross profit and 8-10x EBITDA, the acquisition price is cheap. The buyer could realize $10 million in cost synergies, implying a purchase multiple of less than 7x EBITDA. The demand-side platform (DSP) industry is acquisitive, suggesting potential for competing bids. The unusual 33-day go-shop period ending on a Saturday suggests the bidding process may have been derailed or rushed, with the go-shop included to allow for better offers. The large upside potential and downside protection make this an attractive opportunity.

Read the full article here. Read time: 10 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Liberty Latin America ($LILAK) [48%]

🟨🟨⬜️⬜️⬜️ WillScot Mobile Mini Holdings ($WSC) [33%]

🟥⬜️⬜️⬜️⬜️ authID ($AUID) - short [19%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 53% bullish

$SNAP finally had a good earnings report and jumped 28%. We also had a Chinese stock ($XPEV) in the top gainers for the second time last week.

A very green day to end the week, though sentiment still remains pretty low. Yellowbrick Road readers moved just slightly above 50% bullish and the Fear v Greed index gained two points, but the Fear v Greed index is still at “fear” levels and the news sentiment is still slightly bearish.

Stock Market News

Key Fed inflation measure rose 2.8% in March from a year ago, more than expected - CNBC

Exxon earnings miss, hit by lower natural gas prices and squeezed refining margins - CNBC

Chevron beats earnings estimates but profit falls on lower refining margins and natural gas prices - CNBC

BHP shares fall 3.6% after making $39 bln bid for rival Anglo American - Reuters

Microsoft expands its AI empire abroad - TechXplore

ResMed tops quarterly profit estimates on strong demand for sleep apnea devices - Reuters

Snap shares rocket 28% after company reports unexpected profit, better-than-expected revenue - CNBC

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 Biohaven Ltd. ($BHVN)

The Director purchased 25,503 shares at $39.18/share ($999K total) which increased their vested holdings by 1.6%. The current price is $38.72 (-1.1%). Their median purchase size is $2.00M and this is their 5th largest purchase out of 7 all time. (trade link)