Top stock pitches (Thu, Sep 5)

Connor Van Ooyen
September 05, 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:

VersaBank (VBNK)

Hagerty (HGTY)

Lumen Technologies (LUMN) - short

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 Premium Portfolio returns - started mid-May

WINNING PITCH

+170%+ Returns in 5 Months for $INSM

Insmed Incorporated was one of Clearbridge Small Cap Growth’s pitches in their Q1 letter. It was added to the Big Money Feed (link) in early April and is already up over 170%.

As a reminder, the Big Money Feed is a curated feed of stock pitches from only the best performing Professional Investors. Upgrade to Yellowbrick Premium to unlock access to the Big Money Feed.

STOCK PITCHES

Author Returns

The below stock pitch is from @blondesnmoney.

We have 30 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.

TWITTER - @blondesnmoney

The Fastest Growing Bank You've Never Heard Of - $VBNK, You Decide

VersaBank provides various banking products and services in Canada and the United States.

Ticker: VBNK | Price: $13.35 | Price Target: N/A
Market Cap: $470M | Timeframe: N/A

🏦 Digital Bank | 📈 Bullish Idea

VersaBank (VBNK) is an innovative digital bank trading at 6.9x 2025 P/E and 1.15x P/TBV, with 46% insider ownership. Its Receivables Purchase Program offers superior financing for Point-of-Sale partners, with no credit losses since inception. The company is poised for imminent U.S. expansion, potentially doubling its growth rate. VersaBank has achieved a 19% 5-year Net Income CAGR and a 15% 5-year Net Interest Income CAGR. The company's unique deposit base, consisting of Wealth Management firms and Insolvency Professionals, provides operational advantages and hedges against economic cycles. Potential catalysts include the sale of its cyber division and U.S. market entry. Risks include economic downturns affecting partner loans, capital constraints due to rapid growth, and the possibility of a secondary offering at current undervalued levels. Despite these risks, VersaBank's conservative management, proven risk management track record, and significant growth potential make it an attractive investment opportunity in the rapidly growing Point-of-Sale financing industry.

Read the full article here. Read time: 22 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11356/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Greenhaven Road Capital.

We have 39 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 - Greenhaven Road Capital

Greenhaven Road Capital Main Fund Portfolio Holding: Hagerty, Inc.

Hagerty, Inc. provides insurance agency services worldwide. It offers motor vehicle and boat insurance products; and reinsurance products.

Ticker: HGTY | Price: $11.85 | Price Target: N/A
Market Cap: $4.04B | Timeframe: N/A

💸 Classic Car Insurance | 📈 Bullish Idea

Hagerty (HGTY) is a classic car insurance company with diverse operations including direct insurance, partnership insurance with major auto insurers and brokers, reinsurance, a marketplace business, and a membership program. The company's GAAP financials are misleading when compared to traditional insurance peers, as they don't accurately reflect the unique business model. Hagerty owns car shows which serve as both customer acquisition and retention tools, aligning with their mission to preserve car culture. The company's complex structure and diverse revenue streams make it difficult for the market to accurately value, leading to potential undervaluation. Notably, Markel owns 23% of Hagerty, and State Farm has invested over $550 million, indicating strong institutional confidence. The stock's true value may be better understood through in-depth analysis, such as examining Bermuda tax authority filings for the reinsurance business and attending company-owned car shows to gain insights from top management and gauge member perception of Hagerty's initiatives.

Read the full article here. Read time: 2 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11335/?ref=PLACEHOLDER

Author Returns

The below stock pitch is from Kerrisdale Capital.

We have 4 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 - Kerrisdale Capital

Lumen Technologies Faces Overvaluation Risk as AI Hype Fades and Fundamentals Deteriorate.

Lumen Technologies, Inc., a facilities-based technology and communications company, provides various integrated products and services to business and residential customers in the United States and internationally.

Ticker: LUMN | Price: $5.38 | Price Target: N/A
Market Cap: $5.47B | Timeframe: N/A

📞 Telecom | 📉 Short Idea

Lumen Technologies (LUMN) is a short opportunity despite its recent 400% stock rise, as AI deals won't save this dying, overleveraged telecom. The newly announced 'Custom Networks' deals with Microsoft and other tech companies will only net LUMN about $800 million in cash over three years, insufficient to address its $19 billion debt. LUMN recently reported a 13% EBITDA decline and guided lower for next year. The company's 'Grow' products are now shrinking by 1% year-over-year, and former executives report that these products are uncompetitive against leading providers. Gartner has demoted LUMN's standing in global network services, and the company is absent from key quadrants. The core business continues to deteriorate, with revenue falling 9%, and the shift from telco to techco appears to be failing. With little hope for sustainable free cash flow and worsening sales and margin trends, the equity is considered worthless at the current valuation, which is in line with growing, dividend-paying telco peers.

Read the full article here. Read time: 2 min

Share this stock pitch:

https://www.joinyellowbrick.com/sp/11342/?ref=PLACEHOLDER

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Nutrien (NTR) [56%]

🟨🟨⬜️⬜️⬜️ CACI International Inc (CACI) [26%]

🟥⬜️⬜️⬜️⬜️ United Parks & Resorts (PRKS [18%]

Your comments:

🧪 nanr*** ($NTR): Very interesting stock. I am checking it out today.
🧪 loril*** ($NTR): Great upside potential and dividend

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 54% bullish

Stock Market News

Dollar Tree shares slide after discounter cuts full-year forecast - CNBC

Dick's Sporting Goods blows past earnings estimates but issues cautious guidance ahead of 2024 election - CNBC

Biden preparing to block Nippon's US Steel takeover, Washington Post reports - Reuters

Job openings fell more than expected in July in another sign of labor market softening - CNBC

Frontier Communications Pops on Potential Deal With Verizon - Barrons

Nvidia says it didn't receive antitrust subpoena from DOJ - 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 CECO ENVIRONMENTAL CORP ($CECO)

The Director purchased 10,000 shares at $28.77/share ($288K total) which increased their vested holdings by 3.9%. The current price is $27.55 (-4.2%). Their median purchase size is $179K and this is their 13th largest purchase out of 35 all time. link

LINKS YOU’LL LOVE

Debt is an anti-investment

Phil Fisher on the single most important lesson to be learned from his career as an investor

The Art of Stock Picking by Charlie Munger

🎁 REFERRAL PROGRAM 🎁

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Premium members have access to these awards here.

THAT’S ALL FOLKS

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Connor

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