YB new stock pitches (Fri, Oct 11)

More pitches from Kingdom Capital in “The Rest of the Pitches” section.

United Natural Foods, Inc. (UNFI) has been reintroduced to the portfolio after being a significant winner in 2019/2020 during the Covid-19 pandemic. The company demonstrated a turnaround in Q3 with improved margins and sales volumes, and Q4 started strong, validating the investment thesis. The new CFO's focus on cash flow generation is expected to contribute to continued balance sheet improvement in upcoming quarters. This re-entry comes after several disappointing quarters, with the investor patiently waiting for an opportune moment to reinvest in the stock.

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Aehr Test Systems (AEHR) is a provider of semiconductor test and burn-in equipment, specializing in high-volume wafer-level burn-in solutions. The company's Q2 earnings are expected tomorrow, with anticipated revenue of $13 million. AEHR has multiple growth catalysts, including opportunities in SiC/GaN with ON Semi and Volkswagen, a potential HDD ramp with Seagate in Q2 2025, ongoing AI processor testing, and a memory benchmark. The company's Fox-XP system can test 18 wafers simultaneously with high power, meeting increasing demand for yield improvement and high-power testing in complex semiconductors. AEHR's stock is down 80% from its highs but poised for a potential rebound on order flow. The company has a large cash position and is involved in various semiconductor markets, including SiC, GaN, HDD, AI processors, and memory. Recent developments include ON Semi expanding its customer base to Volkswagen, a data center opportunity likely related to Seagate's HAMR drives, and the acquisition of Incal to cover both wafer-level and packaged part testing for AI accelerator chipmakers.

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Seaport Entertainment Group (SEG) is a recent spinoff from Howard Hughes with a rights issue that key insider Pershing Square is oversubscribing to. The company's main assets include 250 Water St (valued at $180M), Pier 17 (potential $30M annual earnings), and the loss-making Tin Building. With a market cap of $330M and $50M in net cash, SEG trades at a significant discount to the $1.3B+ invested in its assets. New CEO Anton Nikodemus, with $12.4M in stock/options, brings hospitality and entertainment experience to lead the turnaround. The company's three key assets are: a fully entitled land block at 250 Water St, the Pier 17 building with office space and entertainment venues, and the struggling Tin Building food court. Despite current losses, management aims to improve operations and redevelop spaces to increase profitability. Investors see potential for SEG to become a multi-bagger in three years, with the stock currently trading around $27 per share. - link

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