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Kuppy

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10 Dec, 9 tweets, 3 min read

1) Quick Event-Driven idea in $MCAC. Lemme start by saying I own a bunch (fair disclosure). It is “breaking out” today on big volume, which means it’s been “discovered.” (I havent added any today, but would if I weren’t at the airport and still in de-grossing mode).

2) What is $MCAC? It’s a small float (5.7m shares)SPAC that’s buying Playboy. What’s Playboy? It’s no longer the magazine and porno brand of Hef days. Now it’s a licensing business (clothing/casinos/condoms/booze/etc). Licensing is a stunningly good business and it’s growing fast

3) New CEO (Ben Kohn) took over in 2017 and pivoted out of bad biz (magazine/porn) to licensing. I spoke with Kohn. He has a PE background. He gets it. He’s here to make money—not chase girls. They will expand licensing and grow their Direct-To-Consumer business.

4) Playboy is going public to pay down high-cost debt and refinance. Then they’ll have a currency for tuck-in consumer acquisitions. I’m no fan of M&A, but their past deals have “worked.”

5) Playboy is a top 30 global brand with more contracted royalty revenue (contracted minimum) than EV. If they exceed the minimum royalties, it all goes to bottom line at fat margins. 10x 2021e EV/EBITDA is cheap. Also had big NOLs to shield tax. Licensing is an amazing biz.

6) I bought all the $MCAC I could below the trust value at $10.20. That’s the floor. I don’t know what upside is, but ~$400m EV seems low for such a well-known brand, even one that may be a bit faded lately.

7) Can Kohn turn Playboy around? It’s growing revs organically today, so more a question of if he can grow it faster. I suggest listening to a few presentations since the SPAC. He has the right ideas and it has now inflected towards profits pro-forma a lot of one-time things.

8) Why is this an Event-Driven trade? Floor is $10.20, it’s finally been “discovered” and is “breaking out” on volume. Float is tight and it is a well-known brand, so retail will know it. With that, I’m taking off for a vacation in Costa Rica as the plane is boarding...

BTW-each of these GIFs is licensed from Playboy. As you scroll this thread, I make money... (haha)

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More from @hkuppy

Kuppy

@hkuppy

11 Sep

1) Let’s do a Friday happy-hour Event-Driven (ED) thread as ED keeps working. Not every trade is a home-run, but the hit rate has been surprisingly good lately. Let’s look at one of my favorite strategies; potential short squeezes...

2) $DDS may or may not be undervalued. It probably goes the way of $JCP, but that’s not my fight. I care about the short interest at 6,819,568. It has been high forever and there have been a number of squeezes in the past few years.

3) What matters today is that $DDS keeps buying back stock, setting up for a new squeeze. During July, they bought back 586,851 shares. By my math, between Aug 1 and Aug 29, they bough back another 267k shares. That means there are 18,366,790 Class A shares outstanding on Aug 29.

Read 11 tweets

Kuppy

@hkuppy

3 Aug

1) Quick $LPG thread. They report Q2 tomorrow. Results will be solid. I expect some low forward guidance for Q3 rates, but that doesn’t matter as VLGC is screaming higher again. NAV is in the low $20’s and financial leverage is low. They’ve been agressive on buybacks in Q1.

2) They bought back 6% of shares outstanding in 1 quarter. I expect they hoovered stock in Q2 at 1/3 of NAV. At current VLGC rates, they earn north of a buck a quarter and possibly higher if the sharecount shrank. The fundies are super solid due to Asian demand and US exports.

3) Anyway, $LPG is a damn large position for me and I added more before earnings.

Read 4 tweets

Kuppy

@hkuppy

30 Jul

1) Final $LOOT thread. On May 29, I wrote a thread joking that I was long a basket of companies that did well if the riots and looting acceleated (as I suspected they would). I felt that I had VERY low risk as the basket was cheap on valuation.

2) Over the next few weeks, people lost their collective minds and torched many large cities, while begging for police to be de-funded. There was a massive run on guns and ammo that surprised my own expectations.

3) Over those 2 months, I sold out of the core names as they rallied. Some like $DGLY were multi-baggers, while other substantially larger positions like $SWBI more than doubled and $VSTO was up almost that much. I really thought they’d come for $VTSI and maybe they still will.

Read 9 tweets

Kuppy

@hkuppy

10 Jul

1-Summer Friday Boredom Thread with a stock idea at the end....(wait for it)

2-In 2020, what makes stocks go up?? Not valuation. Definitely not cash flow. Revenue growth helps, as does losing globs of money, but this is simply indicative of current investor focus—it’s not real or sustainable.

3-Today, what makes a stock go up is small float + cross-ownership in multiple ETFs and other passive groups. As the ETFs fight for limited shares, they push the market cap higher, increasing the weighting in the ETF, forcing them to buy more shares. Positive Feedback Loop (PFL)

Read 10 tweets

Kuppy

@hkuppy

22 May

1) After some adjustments, $TNK did roughly $100m FCF in Q4/2019, $150m FCF in Q1/2020 and has forward guidance of $200m FCF in Q2. That’s roughly $450m in 9 mos and market cap is $525m today.

2) They locked in 20% charter coverage for next year at solid rates to protect the downside. LTV is in 40’s now and 30’s after Q2. They intend to buy in some expensive leases. No one knows what happens starting tomorrow and we can debate it forever, but TNK just created big value

3) Why is everyone so short-term focused on rates comping negative WoW instead of huge positives YoY? They just earned their market cap and the stock is barely up. It was at a discount to NAV even before this process started and now NAV nearly doubled.

Read 5 tweets

Kuppy

@hkuppy

14 Mar

Thread) P1-You all have gone crazy!! Everyone here on fintwit is a virologist now. I have never seen such extreme bearishness—not even the lows in 2018 when I pounded the table to buy stuff right before a massive 14 month rally. Aren’t you all self-proclaimed contrarians..??

P2-IWN just gave back 5 years of gains. It’s down 40% in a month!! These companies were “cheap” to begin with. Discount rate to use in financial models is low single digits, so year 5 matters a lot more than in the past. 2 of the next 20 quarters will suck, that’s only 10%.

P3-Sure, some companies won’t make it. Be more selective than normal (low leverage, no near-term maturities, plenty of liquidity) but if you can’t find bargains today or you’re panic selling down here, you might as well find a different career.

Read 6 tweets

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