YB new stock pitches (Thu, Feb 20)

Danaos Corporation (DAC), a Greek shipping company, is trading at $84 with a $200+ price target. The company owns 73 containerships and 10 dry bulk vessels, leasing them to major liner companies. DAC has a $3.4 billion contracted backlog with 70% EBITDA margins, projecting $25+ EPS through 2027 and extending earnings to 2032 with new ships. Trading at 0.46x book value, 3x EPS, and a 30%+ FCF yield, DAC is significantly undervalued. Management is actively buying back shares and raising dividends. The company's young fleet (average 15 years) minimizes replacement capex for 5-7 years. Risks include the industry's expanding orderbook (27.5% of existing fleet), potential de-globalization impacts, tariff uncertainties, and carbon emission regulations. The CEO owns 48% of shares, suggesting potential for value unlocking. Conservative estimates place the stock at $131 in three years, with potential for $200+ if the market recognizes earnings sustainability.

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Cogent Communications Holdings, Inc. (CCOI) is a disruptive B2B connectivity provider with a 25-year history of undercutting competitors, capturing over 25% of global internet traffic and 20% tenant share in its corporate office footprint. The company is poised to enter the Wavelengths market with a unique network offering faster installation, 90% unique routes, and aggressive pricing. Cogent's growth potential is expected to generate over $10/share in free cash flow by the late 2020s, with the stock currently trading at 4-5x this estimate when adjusted for dividends. The company also possesses non-core assets that could yield proceeds exceeding 50% of its current market cap if monetized. With its disruptive strategies, potential for significant growth, and undervalued assets, Cogent presents a favorable risk-reward profile at current prices, making it a substantial position in the portfolio.

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JZ Capital Partners (JZCP.L), a UK-listed private equity fund focused on US and European micro-cap companies and US real estate, entered managed liquidation in August 2020 after years of poor performance. Since then, the company has realized over $500 million in investments, repaid $270 million in debt, and returned $40 million to shareholders. The current NAV stands at $277 million ($4.10/share), compared to a share price of $2.61, representing a 60% upside potential. The portfolio consists of $170 million in private investments and $108 million in cash, with $48 million earmarked for further investments. JZCP plans to return another $30 million to shareholders in Q1 2025 and expects to realize substantially all investments within three years. The US and European micro-cap portfolios have shown small gains, while two remaining real estate properties hold equity value. The company has demonstrated its ability to maintain and realize NAV at healthy levels, suggesting a relatively low downside risk for investors.

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