Top stock pitches (Wed, May 8)

Connor Van Ooyen
May 08, 2024

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

👋 Good Morning!

I’ve got a huge announcement about an upgrade to Yellowbrick that will help us identify the highest potential stock pitches to help us make more money in the stock market.

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

HUGE ANNOUNCEMENT

I’ve finally signed a (wildly expensive) contract with S&P for global stock data which means that I can start calculating the returns for all of the stock pitches in our database.

This also means I can calculate the average returns for each investor in the database and determine which investors have the best historic returns (and whose stock pitches may be worth investing in).

I’m working on backfilling the historic stock pitches for the 1,000+ investors in my database, which will take a while, but starting in this email, I’ll be including the historic returns for the authors of the stock pitches featured in these daily emails.

This is a Yellowbrick Road Premium feature, so if you want access to the historic returns for the authors of each stock pitch, make sure to upgrade to Yellowbrick Road Premium.

I think this is a MASSIVE upgrade for Yellowbrick as we can now identify the top investors in the database whose stock pitches are most likely to be highly profitable.

I’m also planning on restarting the Yellowbrick Road Premium Portfolio which will invest in the stocks pitched by the top 5/10 investors in the database.

But more on that later…

ONE QUICK FAVOR

If you’ve already completed this survey, thank you! (Recent subscribers probably already completed it when you signed up).

Could you please take (literally) 3 seconds to answer this survey? It’s just one question about how sophisticated of a stock investor you are.

I’m trying to better understand who is reading Yellowbrick Road so I can continue to make it better for you.

Thank you!

STOCK PITCHES

Author Returns

The below stock pitch is from Greenhaven Road Capital.

Their historic returns are:

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

FUND LETTER

Greenhaven Road Capital Holding: Burford Capital Limited

Burford Capital Limited provides legal finance products and services worldwide. The company operates through two segments, Capital Provision, and Asset Management and Other Provision.

Ticker: BUR | Price: $16.00 | Price Target: $28 (+75%)
Market Cap: $3.47B | Timeframe: N/A

💼 Litigation Financer | 🚨 Special Situation | 📈 Bullish Idea

Burford Capital Limited (BUR) is a litigation financer with a significant $6.2B judgement against Argentina related to the YPF case, which alone is worth $28 per share. Although a haircut is expected in a negotiated settlement, Burford's CIO is in talks with Argentinian officials. The company also has ~$782M of pre-2020 vintage deployments that should start flowing through the P&L as pandemic-delayed cases conclude post-reopening, with $242M of proceeds already received from $135M of these deployments in 2023. Burford has multiple near-term catalysts beyond the Argentina case, making it an attractive investment opportunity.

Read the full article here. Read time: 1 min

Author Returns

The below stock pitch is from go2bl93 on Value Investors Club.

Their historic returns are:

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

VALUE INVESTORS CLUB

ADTRAN Holdings, Inc. - $ADTN

ADTRAN Holdings, Inc., through its subsidiaries, provides networking and communications platforms, software, systems, and services in the United States, Germany, the United Kingdom, and internationally. It operates through two segments, Network Solutions, and Services & Support.

Ticker: ADTN | Price: $5.40 | Price Target: $26 (+381%)
Market Cap: $365M | Timeframe: 2026

🗼 Networking/Communication | 💰 7.8% Dividend | 📈 Bullish Idea

ADTRAN Holdings (ADTN), a telecom equipment company, is trading at $5.40, down from $25 in mid-2022, due to a severe downturn in the sector. Despite the challenges, ADTN expects to reduce costs by $90M+, generate $70M from working capital in 2024, and $50M+ from real estate sales. The company sees tailwinds from $42.5B in US fiber subsidies and Huawei replacements in Europe. With normalized revenue of $1.2B-$1.4B, ADTN could generate $1+ EPS. The company must pay $360M to ADVA minority holders, but liquidity looks manageable. Price targets range from $13 on 8x EV/EBITDA to $26 in a bull case. Risks include financing needs if the downturn persists and tight debt covenants.

Read the full article here (free sign up required). Read time: 11 min

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Author Returns

The below stock pitch is from Kehlet Capital.

Their historic returns are:

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

FUND LETTER

Idea Brunch with Michael Wright of Kehlet Capital - Wrap Technologies, Inc.

Wrap Technologies, Inc., a public safety technology and services company, develops policing solutions to law enforcement and security personnel. The company's flagship product is BolaWrap 150, a handheld remote restraint device that discharges a seven and a half-foot Kevlar tether, entangling an individual from a range of 10-25 feet.

Ticker: WRAP | Price: $1.50 | Price Target: N/A
Market Cap: $75M | Timeframe: N/A

🚔 Law Enforcement Tech | 📈 Bullish Idea

Wrap Technologies (NASDAQ: WRAP) is a $75 million public safety technology company that manufactures the BolaWrap, a handheld device used by police officers to remotely restrain noncompliant suspects without force or pain. The BolaWrap, launched in 2018, discharges an eight-foot Kevlar cord that wraps around a subject, providing a safer alternative to Tasers, Pepper Spray, Batons, or Guns. By allowing officers to de-escalate potentially violent situations before force is required, the BolaWrap has the potential to save lives and help police agencies avoid the significant costs associated with the use of force, estimated to be over $300 million annually. Although the BolaWrap is used by more than 4,500 officers in roughly 1,400 agencies, the company has substantial growth opportunities, with a total addressable market of 900,000 police officers in 18,000 agencies in the U.S. and more than 12 million officers globally. Wrap Technologies enjoys patent protection through at least 2036 and faces no direct competition, positioning the company for continued above-average growth for many years.

Read the full article here. Read time: 2 min

Which stock idea was the most compelling to you?

Yesterday’s Poll Results:

🟩🟩🟩⬜️⬜️ Backblaze ($BLZE) [54%]

🟨🟨⬜️⬜️⬜️ CoreCard Corporation ($CCRD) [25%]

🟥⬜️⬜️⬜️⬜️ PAR Technology ($PAR) [21%]

Your comments:

💳 anthony*** ($PAR): Nice bullish structure on monthly and weekly
💳 rwarre*** ($CCRD): Lower risk with good potential

MARKET OVERVIEW / NEWS

Market Overview

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

Yesterday’s Poll Results: 58% bullish

It was still a green day in the market, but much less bullish than the last few days. In fact, two of our biggest winners from yesterday ($PLTR and $LCID) both appear on the biggest losers list today. Overall, sentiment is still quite bullish with the news sentiment and Yellowbrick Road Readers remaining bullish while the Fear v Greed index continues to remain in Fear territory.

Stock Market News

Apple announces new iPad Air tablets - CNBC

Reddit predicts strong second-quarter revenue, shares soar - Reuters

Private equity firms circle Peloton for potential buyout - CNBC

UBS swings back to profit and smashes earnings expectations for the first quarter - CNBC

Instacart partners with Uber to offer food delivery services to customers in US - Reuters

Federal reserve president says rate cuts may not come in 2024 - Fox Business

Datadog President Amit Agarwal to step down, shares drop - Reuters

Lyft forecasts strong quarterly earnings as ride-hailing demand picks up - Reuters

BP misses expectations as profits slip on weaker oil and gas prices - CNBC

Rivian sticks to annual production forecast, posts wider quarterly loss - Reuters

Stanley Druckenmiller cut his Nvidia stake in late March, says AI may be a bit overhyped short term - CNBC

Amazon to spend $9 bln to expand cloud infra in Singapore, Bloomberg News reports - Reuters

Robinhood set to report highest quarterly revenue since meme stock frenzy - Reuters

Apple working on AI chips for data centers, WSJ reports - 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 SAIA INC ($SAIA)

The Director purchased 500 shares at $407.00/share ($204K total) which increased their vested holdings by 2.8%. The current price is $393.26 (-3.4%). Their median purchase size is $81,453.80 and this is their 1st largest purchase out of 3 all time. (trade link)

LINKS YOU’LL LOVE

How I think about debt by Morgan Housel

Michael Mauboussin Database

Warren Buffett explains how Berkshire selects their stocks

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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