Top stock pitches (Mon, Aug 5)

Connor Van Ooyen
August 05, 2024

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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:

Kosmos Energy (KOS)

Fathom Holdings Inc. (FTHM)

Vistry Group PLC (VTY.L)

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.

YB Portfolio Returns (started mid-May)

WINNING PITCH

+30% returns in less than 1 week by shorting Intel

What a killer call by Monopolistic Investor who bet that Intel stock was doomed going into earnings.

This pitch was added to the database and shared with Premium subscribers on Monday and Intel had one of its worst days in 40 years after a terrible earnings call.

You can find the pitch here.

STOCK PITCHES

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: Kosmos Energy Ltd.

Kosmos Energy Ltd., together with its subsidiaries, engages in the exploration, development, and production of oil and gas along the Atlantic Margins in the United States.

Ticker: KOS | Price: $5 | Price Target: $11.34 (+127%)
Market Cap: $2.42B | Timeframe: N/A

🛢️ Oil/Gas | 📈 Bullish Idea

Kosmos Energy (KOS), trading at $5.54 with a $2.6B market cap, is an offshore oil and gas exploration and development company poised for significant production growth. The company boasts low-cost, low-carbon reserves, making it an attractive long-term asset. As development CapEx declines, free cash flow is expected to surge, with projections of $1.30 per share in 2024, representing a 23% yield at the current stock price. Kosmos plans to prioritize debt paydown initially, transitioning to shareholder returns in the second half of 2025. Notably, KOS shows significant upside potential even at $65 WTI crude, setting it apart from other energy stocks. The company is considered an acquisition target, with a price target of more than double its current value. Given its attractive assets and growth prospects, Kosmos Energy presents a compelling investment opportunity in the energy sector.

Read the full article here. Read time: 1 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7295/?ref=PLACEHOLDER

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Author Returns

The below stock pitch is from Antarctic Circle Capital.

We have 5 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 - Antarctic Circle Capital

Real estate player at 0.11x P/S and 10x potential - Fathom Holdings Inc.

Fathom Holdings Inc. provides a real estate services platform that integrates residential brokerage, mortgage, title, and insurance services in the United States.

Ticker: FTHM | Price: $2.14 | Price Target: $20 (+835%)
Market Cap: $43M | Timeframe: 5 years

🏡 Real Estate Technology | 📈 Bullish Idea

Fathom Holdings Inc. (FTHM), a real estate tech company, trades at 0.11x P/S with a 35% 5-year revenue CAGR. The company recently sold assets for $15M, representing 37.5% of its market cap. FTHM expects to achieve positive EBITDA in 2024 and maintains a net cash position. Insider buying in 2024 signals management confidence. The company's flat-fee model attracts agents, with 20-25% annual agent growth projected. FTHM aims to reach 100k transactions and $40M EBITDA in 5 years, potentially leading to a 10x valuation increase. The recent industry-wide legal settlement may benefit FTHM's transparent model. Risks include prolonged high interest rates, challenges in agent recruitment, and potential legal settlement penalties. Despite these risks, FTHM's unique business model, growth potential, and current undervaluation present an attractive investment opportunity in a recovering real estate market.

Read the full article here. Read time: 12 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7317/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Laughing Water Capital.

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.

FUND LETTER - Laughing Water Capital

Laughing Water Capital Portfolio Holding: Vistry Group PLC

Vistry Group PLC, together with its subsidiaries, provides housing solutions in the United Kingdom

Ticker: VTY.L | Price: 13.71 | Price Target: 66 (+381%)
Market Cap: 4.41B | Timeframe: N/A

🏡 Homebuilder | 🇬🇧 United Kingdom | 📈 Bullish Idea

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

Vistry Group PLC (VTY.L), a UK homebuilder, is transitioning from capital-intensive traditional homebuilding to an asset-light Partnerships business model. Despite a 30% year-to-date rally, the stock remains significantly undervalued. The company is executing its plan through notable new business wins and daily stock buybacks, with insider buying from CEO Greg Fitzgerald demonstrating management confidence. Vistry's recent addition to the FTSE 100 is expected to raise its profile among investors. The company's intermediate-term goal of £800M in EBIT would result in shares trading at approximately 4x EBIT, compared to past industry transactions at 12-13x EBIT, suggesting a potential upside of 300-400%. A newly elected Labour government could further benefit Vistry's prospects. With these factors in play, Vistry presents a compelling investment opportunity in the UK homebuilding sector.

Read the full article here. Read time: 1 min

Share this stock pitch:

https://www.joinyellowbrick.com/stock-pitches/7352/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Mereo BioPharma (MREO) [46%]

🟨🟨⬜️⬜️⬜️ IAC ($IAC) [35%]

🟥⬜️⬜️⬜️⬜️ Vertiv Holdings ($VRT) [19%]

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 45% bullish

An absolutely brutal end of the week last week with some poor earnings reports from large companies and really poor economic data. All of our sentiment trackers are the most bearish they’ve been all year. We’ve had plenty of fakeouts this year, so we will see if this one sticks.

Stock Market News

Tech stocks wrap up steepest three-week slump in two years, led by plunge in Amazon and Intel - CNBC

Jobless rates fall in July for Asian Americans, bucking the overall trend - CNBC

Job growth totals 114,000 in July, much less than expected, as unemployment rate rises to 4.3% - CNBC

Intel suffers one of its worst days in 40 years as stock plunges 26%, loses $30M in market value after earnings miss - New York Post

Japan's Nintendo says profit slid 71% in Q1 - Reuters

Morgan Stanley tells wealth advisors they can pitch bitcoin ETFs in a first for major Wall Street firms - CNBC

Amazon shares tumble 12% after third-quarter outlook disappoints - CNBC

Snap shares plummet as weak outlook intensifies ad competition 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 CHOICEONE FINANCIAL SERVICES INC ($COFS)

The Director purchased 6,000 shares at $25.00/share ($150K total) which increased their vested holdings by 12.0%. The current price is $27.09 (+8.4%). Their median purchase size is $97,195.60 and this is their 1st largest purchase out of 3 all time. link

Note: 9 other insiders also purchased the stock

LINKS YOU’LL LOVE

Top insider trades from last week

What I Learned from Every Annual Letter of Terry Smith

Ted Weschler Case Study

🎁 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

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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