YB new stock pitches (Fri, Nov 1)

Cineverse Corp. (CNVS), the indie studio behind Terrifier 3, is poised for a significant cash windfall from the film's $45 million box office success. With a 45% split, Cineverse stands to receive at least $11.9 million, a substantial sum compared to its $37 million market cap and $45 million enterprise value. The company's potential for additional revenue from streaming and licensing deals, recent $8.9 million in SG&A cost cuts, and growing FAST channel business position it for future growth. Cineverse's content library, valued at $39.8 million but with a book value of only $2.6 million, represents hidden value. Corsair Capital Partners' recent 5.8% stake acquisition adds credibility to the investment thesis. However, risks include the company's small market cap, historical lack of consistent profitability, and potential volatility due to limited float. With these factors in mind, the author suggests a $4 price target for CNVS.

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GDS Holdings Limited, a leading Chinese data center operator, presents a compelling investment opportunity with a potential value of $46-$56 per share in two to three years, compared to its current market price of $20. The company's Asia ex-China business (GDSI) is expected to grow cash flow from under $50 million to over $500 million in three years, valued at $16 per share. The mainland China business (GDSH) is projected to increase cash flow from $700 million to $1 billion in the same period, worth $30-$40 per share. Key catalysts include a potential IPO of GDSI in 12-15 months and a possible REIT transaction for GDSH's stabilized assets. Blackstone's recent acquisition of Airtrunk at 25 times cash flow supports the valuation thesis. Management meetings with the CEO and CFO have reinforced optimism about the company's growth prospects in both segments.

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Molina Healthcare's CEO and CFO recently received unusually large performance stock units (PSUs) valued at $50.6M and $17.5M respectively, tied to 2027 EPS targets. This timing and size are atypical compared to historical grants. Four potential scenarios are considered: 1) The EPS target is easily achievable, 2) Executives have a more optimistic outlook, 3) Debt-funded acquisitions or buybacks may be used to boost EPS, or 4) A sale clause exists in the PSUs. Molina currently trades at 13.5x 2024 earnings estimates, compared to peers at 10-20x. The executives likely view the stock as undervalued and the EPS target as achievable. However, investors should exercise caution due to potential misalignment of incentives, as the PSUs create a 'heads I win, tails I don't lose' scenario for the executives. The company has a history of acquisitions and recently approved share buyback programs, which could impact future EPS growth.

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