Long $MVBF:

At the surface, this is a small W. Va. bank trading around 1.7x TBV.

But a deeper looks shows that it's a fintech play with exposure to Credit Karma, crypto (Kraken) and most importantly igaming (Draftkings, Fanduel, etc)

Gaming deposits grew 70% from Q3 to Q4!
Around 2014-15, MVB was growing loan portfolio at 20% CAGR, but the deposits were not growing.

So CEO Larry Mazza and team went towards fintech as a way to get low cost deposits.
Larry: "We get deposits nationally but still loan locally”...

They are the bank for U.S. operations of Tipico, Score (tie up with Penn National gaming), and Betfred. MVB also has clients in FanDuel, DraftKings and Credit Karma.

Total 22 gaming client as of now
They are now the 21st bank in the US in terms of number of accounts... all acquired through partners with low CAC.
So there's fast growth at cheap price here.

There's optionality on the tech side - MVB has invested in fintech startups as well as bought startups (GRAND app, Flexia).

If these startup investments work out, that's great for investors. If they don't, MVB can acqui-hire
MVB has an entire Fintech division which is growing fast - added 140 FTE to 400 existing last year. Allows full remote work.

Job postings give some hint -- GRAND app & Flexia payment for integrated online/offline payments for gaming to transfer money across gaming apps
There are deals here with payment processors, and referrals from existing igaming customers to get new customers
There are unknowns here on fintech side because MVB hasn't actively promoted it and some things are still cooking.

But Larry (CEO) has a definite view of the future and is creating it. While doing so, he's betting big - owns 6% of stock. Even borrowed money to exercise options
Larry lives in West Virginia. Makes $1-$2M a year and has $22M in MVBF stock. I'd say he's got half of his net worth in it. Big bet!
In December, he plunked $2.5M to exercise options in December, while MVBF was trying to buy back ~20% of stock through dutch auction
When asked about what fintech banking-as-a-service co. he admires, Larry said Live Oak Bank and nCino (nCino is 7-8x Live Oak size). He hinted that it's the reason the Fintech division is separate from MVB the bank

h/t to @hareng_rouge for bringing this to my notice and for discussions
Here's Credit Karma GM talking about savings account opened with MVB bank

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More from @walnutavevalue

25 Dec 20
I was still in high school in 2000, so obviously wasn't investing.
But the more I read, the more I realize it wasn't just a using "eyeballs" for valuation problem.

Thread below:
First up Xilinx

They were the leaders (and still are) with ~40% share in FPGAs. The end market was growing. They were growing fast as shown in this chart for fiscal year 2001 ending in March 2001
The CAGR was lot higher in closer to 2000 - it was growing 50%+. Until 2001 that is. That's when revenues dropped 30% due to market correction.

Xilinx - an innovator and leader in FPGAs - did not reach same stock price until 2018!
Read 22 tweets
7 Sep 20
I am long Nintendo.

It's fascinating setup because it's a great product, but it's an open question if it will be a good investment.

A thread on both sides here:
First, the long side

@aaronvalue does a great job highlighting the bull thesis here. tl;DR: Nintendo has great IP and they could monetize it in various ways.

mindsetvalue.substack.com/p/mama-mia-nin…
Second, culture of Nintendo limits what path they're likely to take in the future.

@ballmatthew: "some are driven by perfecting their specific process. Not scaling it."

Nintendo is likely to continue to be themselves, not what investors expect

matthewball.vc/all/onnintendo
Read 15 tweets
26 Mar 20
No one knows the impact of COVID yet because it's unknown and unknowable.

Reading Zeckhauser and @AnnieDuke is a better preparation for investing in this scenario than the predictions of economists.

Also, focusing on analyzing a single business at a time helps a bit.
" In the fog of pandemic, action must come before perfect information"
Most Buffett-fans don't talk about it, neither does Buffett talk about.

Zeckhauser does: Buffett is a master player when it comes to investing in the unknown and unknowable. One example is Earthquake reinsurance Image
Read 12 tweets
15 Feb 20
$EVI

Quick summary of last QTR results:
GM% down due to initiatives to gain market share
Higher SG&A as they try to modernize their subsidiary operations

CEO called it "short term tradeoff for longer term growth"

/1 Image
Why can they make these short term tradeoffs?
1. Because the majority owners are insiders
2. Most stock options for employees vest at retirement

Folks on fintwit say they are looking for management with long term focus, but lot of digs at $EVI results

/2
The one legitimate criticism is "Where is the cash flow or EBITDA?"

It's hard to tell with so much "buy" activity.

So we have to look back before the buy activity started. Distributors are mid-single digit businesses as seen in Steiner Atlantic statements below

/3 Image
Read 11 tweets
29 Dec 19
Shipping thread:

There's been a long bear market in shipping rates. And new ship building activity dropped post 2010. And more than half of the shipyards close

/1
If we look at the sub-segment of tankers, and specifically clean tankers, in the last 5 years supply has gone up in terms of dead weight tons. In 2019, the deadweight tons went up by another 6 million, but the TCE rates have still gone up a lot.

/2
Further, demolition activity for tankers dropped in 2019 because it was high in 2018 (181 tankers) and the TCE rates for both dirty and clean tankers was high in 2019.

What this all mean? There's inflection now where supply is (finally) constrained

/3


hellenicshippingnews.com/just-4-vlccs-s…
Read 15 tweets
14 Apr 19
Thread - examples of steep drops in wealth from not managing risks esp. in business with operating leverage

Reichmann wealth collapsed 90% due to the huge bet on Canary Wharf when real estate demand / pricing dropped and credit was hard to get /1
Next up: flashy salesguy Erik Bautista who lost 90%+ of his wealth in one year. His investors also lost it all because he lied about OGX offshore oil potential. Here's an article from 2013 that talks about it. /2
Perhaps the craziest saga is of Sean Quinn - who went from being the richest in Ireland to filing for bankruptcy. He used leveraged instrument to bet on 25% shares of Anglo Irish bank - the bank with really loose lending standards- prior to 2008 housing crisis. /3
Read 7 tweets

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