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Plum Capital

26 Aug, 11 tweets, 3 min read

Here's a quick thread for my latest substack post for $MKTY - a BTC miner that is flying completely under the radar and is poised for a rapid re-rate in the coming months. $SPRT is all the rage, but $MKTY should be interesting for curmudgeonly value folks

$MKTY is a rapid execution story - the Company's EcoChain division is expected to scale to 53 MW of capacity by 1Q'22, once all 3 facilities (TNT, Python, Anaconda) are fully ramped. The pitch here - they all rely on very low cost renewable energy

Mgmt. published illustrative set of projections back in May this year which called for $42mm of annual run-rate EBITDA to be achieved by 1Q'22, if BTC price of $45k holds

ecochainmining.com/news/businessm…

And this equates to 3.5 EV/EBITDA and 28% FCF yield on market cap (assuming full dilution to share count). Pretty interesting right? But this is only 1Q'22 RR, full year 2022 numbers may look a lot better assuming further scaling of the business

And the real reason to be bullish - the projections were given pre China mining ban. BTC mining difficulty has gone down dramatically, and the Company is opportunistically purchasing latest gen mining equipment at a massive discount, which might lead to big upside vs. guidance

Also, the Company has already signed up one lucrative hosting JV whereby they are simply providing space and getting a revenue share. Provides real optionality to the business going forward, above and beyond the base business

Not to mention that $MKTY is highly, highly undervalued versus comps, yet easily has one of the best cost structures and margins due to low-cost renewable power supply. Kingdom Capital has done a lot of good work on comps
seekingalpha.com/article/445160…

Add in the extras - highly motivated management, high insider ownership, tight float, monthly performance updates, ongoing improvement in marketing and investor relations capabilities. This is a real coiled spring imo, just need the market to wake up one day

Finally - the Company does NOT speculate on the price of BTC. They are highly disciplined, and sell BTC on a daily basis through their Coinbase account. Management cares only about scaling the business in a high ROIC manner, not here to gamble on BTC price (a la Saylor et al.)

I truly hate speculative growth companies, especially anything related to technology or crypto, yet saw more than enough redeeming qualities here and made this into one of my core positions. Fingers crossed a lot of good things to happen in the NTM!

plumcapital.substack.com/p/perfect-cryp…

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More from @Plum_Capital

Plum Capital

@Plum_Capital

13 Sep

$MKTY released August numbers this morning before market open. As anticipated, results were good and this update certainly reduces some fears around execution risk, as the facilities are ramping well.

I am not going to provide any further commentary until more substantial developments occur. Not trying to pump anything and interested investors can review the results for themselves.

In fact, the subdued stock reaction this morning tells me that not many people are doing serious work on the name and $MKTY still remains an undiscovered gem. I've only been adding on dips since my initial Substack post on Aug 26th

Read 6 tweets

Plum Capital

@Plum_Capital

25 Aug

Quick thought exercise and a trade idea - I have tweeted about fertilizer stocks in the past, and many of them disappointed 2Q earnings (esp. $UAN and $CF). I was caught off-guard about poor price realization, mainly driven by forward selling.

They sell volumes for anywhere between 1-6 months forward. I didn't realize the tail could be this long (in the case of $UAN due to poor mgmt. communication but w/e, my numbers were still way off). So 2Q did not reflect all of higher spot pricing

But we need to look forward - the point is that 3Q is the quarter that they will finally print a clean quarter reflecting ALL of higher spot prices. Will the market start to finalize capitalize some of this? Of course totally TBD but I like the setup here...

Read 10 tweets

Plum Capital

@Plum_Capital

19 Aug

I added meaningfully to my $JAKK position in the low $12s. Short thread for anyone still following the name or doing work. I think r/r is getting too good to ignore as the Company gets caught up in the small-cap selloff

The thesis hasn't really changed since my initial Substack writeup. In fact after a stellar 2Q, the market was figuring out the potential here and the stock rallied to $15.5 - a very rapid rerate from $9-10/share pre-earnings

Yet now the stock is off almost 25% from recent highs... to be fair there have been some market-related updates; shipping/logistics challenges around the globe seem to have gotten a bit worse, and some COVID worries, but positive news too, such as the expanded child tax credits

Read 7 tweets

Plum Capital

@Plum_Capital

11 Aug

Finally had a chance to read through the $IEA earnings call transcript from the call earlier today. I think this is required reading for anyone interested in the stock. Full of nuggets and I am even more bullish than I was before (not sure if that is possible, but anyway)

I promise to shut up about $IEA shortly but wanted to draw your attention to a line in the transcript that really struck me - the recent equity offering was significantly oversubscribed

This jives with my suspicion that there are many institutions circling around $IEA and looking to snap up shares. And with the earnings commentary out today, wouldn't be surprised to see more strong hands show up in due course as people complete their work and get comfortable

Read 6 tweets

Plum Capital

@Plum_Capital

10 Aug

Hunter Douglas ($HDG.NA) posted a blowout 2Q as expected. Highest quarterly EBITDA margin ever (I think?) at 21.3% and the Company has signaled bullish outlook as well for the near/medium term

@puppyeh1

Given 2Q EBITDA of $254mm, incremental margins and the outlook, not difficult to estimate $850-900mm of EBITDA for FY'21. This was previously calculated by others (e.g. @puppyeh1) and I was initially skeptical - but the 2Q makes clear the art of the possible for this year

Based on my numbers, (including leases in the EV calc as EBITDA is pre lease-payments), $HDG.NA is trading at 4.4x (ref. price 92.3 EUR) EV/EBITDA on FY'21 estimates

Read 9 tweets

Plum Capital

@Plum_Capital

10 Aug

Quick update on my best idea and largest position (by cost basis) - $IEA

Things are working out as planned. Company priced the new HY notes as of Aug 6th. I had a few takeaways and thought this would be helpful for anyone following along

Most importantly, the $300mm Unsecured Notes priced at 6.625% with some OID - 98.483. This is a 6.875% yielding piece of paper. I was slightly disappointed, I thought this might price as tight as 5% given strength in the HY market

But 6.625% is definitely good enough. Recall that we are refinancing a Preferred with a dividend rate of 12% cash (and higher if PIK'ed!). The cash interest savings are gargantuan, and turns the busted cap stack to a more traditional one with a revolver, HY bond and public equity

Read 9 tweets

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