HRouge Profile picture
Nov 12, 2021 15 tweets 6 min read Read on X
Naive view but I think Hunting #HTG may be on its way back to Covid lows because it's orphaned on the wrong market and there's an information disconnect - if so, my guess is that it's pretty oversold here. Image
The company isn't a pure play but it's good enough to say it's very shale exposed, towards the completion side vs the drilling side of things.

Three year chart to around May 2021: HTG in green vs several US oil services ETFs - as you can see, they trade in lockstep. Image
Same chart but on a 2021 YTD basis and it starts diverging somewhere around mid summer. Image
The quick and dirty is that the first half had the first signs of a little recovery but then guided to a 2021 EBITDA result "below previous expectations, but ahead of the 2020 full year result of $26.1m", then in Q3 lowered it from that to breakeven. ImageImageImage
Disappointing sure but it's par for the course. Here's that 3 year to Summer chart in HTG vs $NOV - "no other vendor", services bellweather etc and again, it's lockstep. Image
Here's the last 3 halves of HTG's revenue vs $NOV's, the cadence is the same. Since it's orphaned in the UK without domestic comps, quarterly reporting or calls - we need to look to the US to find out what's going on Image
Here's what NOV say at Q3 - a similar H2 to HTG but look to 22

"While fourth-quarter results will be muted by ongoing supply chain challenges and cost inflation, recent orders growing global drilling activity, and improved pricing have us increasingly optimistic regarding 2022."
"Book-to-bills in excess of a 100% for the second quarter in a row for both the Completion and Production Solutions and RIG Technologies. I'm decidedly more positive about the outlook for the coming year... supply chain issues are making business challenging in the short run"
B2Bs up, quiet inflections happening.

"In our aftermarket business, we realized our third straight quarter of improved spare part bookings.. we expect this trend to continue into the fourth quarter"
DNOW - a distributor - same H2, same issues with logistics. Revenue cadence between this and HTG similar too. Image
You can break these segments out of dozens of companies and see the same trends and outlook everywhere. HTG is nothing special but I think the odds are more likely it's just operating in a UK information vacuum Image
What are the odds the UK market is somehow correctly identifying idiosyncratic problems with its single shale services company? Or that the UK is pricing in the shale capex outlook more accurately than the entire US market? I have my doubts. Image
HTG balance sheet. Just a collection of cash and assets, not going bust before the uranium dawn arrives. Image
Red line trading here at historic price to book lows, first green line's a double, second's a triple. If the US oil sector turns out to be correct and HTG is just another middle of the pack services co, it should do fine. Image
In the context of commentary from US peers and sat at 52 week lows, this is about as bullish an update as you could wish for from #HTG Image

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More from @hareng_rouge

Dec 22, 2021
$RADA makes small tactical military radars. The recent sell off hasn't made it cheap but it has begun to bring it closer to GARP territory

It's a rare pure-play on a theme that's perhaps not yet widely appreciated and is hard to access directly but you can see it in the numbers
Here's where it trades on a forward sales multiple against some of the big diversified defence majors - has lost much of the premium and now sits a little off the top end. Brits bottom of the pile.
Same group of majors but here on forward EBITDA multiples and towards the bottom end excluding the UK companies.
Read 19 tweets
Nov 9, 2021
IG Design #IGR was a ten bagger in the 5 years leading up to Covid. An update a fortnight ago dropped the shares by half and erased all the gains in the most recent five years. Knife catching and broken growth this soon is almost always a mistake but IG may be an exception here. ImageImageImage
My basic premise with it is that the accounts are a complicated nightmare (CTRL+f for "adjust" is 232 hits in the last FY report) but most immediately, that this is right now a gross margin story - I think there are grounds to at least consider whether IG can be given a pass here
Unfortunately, it does mean walking through it so grab a.. (just no) so anyway, here's the rough idea: Pre-covid in white, M&A growth darling, 20% gross margins. Forget the op margin for now - I'm stripping out the adjustments that made adjusted whatever go up and to the right Image
Read 20 tweets
Oct 5, 2021
Saw a one-line tweet the other day mentioning McColls #MCLS as one of 2 highest conviction names.

I think I see why: there's a metamorphosis happening underneath and reasonable path to PE and FCF multiples between 2-3 plus a growth narrative, all under that lovely grim exterior
Story is that they're shrinking. 1500+ stores 2 years back, to 1050 by the end of FY21

Also changing: culling small newsagent shops to focus towards larger, more profitable grocery-heavy stores. So far, so worthy - but the real interest is the transformation into Morrisons Daily
Company raised recently to accelerate a programme converting 350 stores into these Mini Morrisons. They're at 56 today, will be 350 by end FY22

Cost is £90K per shop, what they call "cash payback" is 2-3 years and so far they're providing pretty immediate LFL sales growth of 25%
Read 12 tweets
Sep 23, 2021
What does Sneller see to get such sudden FOMO for the old zombie that is Iofina #IOF? If you recall the name, it should produce revulsion but a few things have changed and there's a chance it may be about to make some money. ImageImage
IOF produces Iodine in the US via O&G brine. Iodine is a beneficiary of industrial recovery generally and covid specifically - the largest use is used as x-ray contrast which may benefit demand from catch up on delayed hospital treatment.

And because it's 2021, inevitably: Image
Production is trapped on the wrong side of the Pacific: the two major production centres are Japan and Chile - so you have the obvious logistics issues for both and potentially politics for the latter.
Read 12 tweets
Aug 20, 2021
I think it's worth revisiting Aquis #AQX here in light of a couple of data points that have since come out.

There are three main parts to the co: a stock exchange (AQSE); a tech licencing biz and their multilateral trading facility (AQXE) - it's this last one I want to look at.
First is the RNS from earlier this month announcing their MTF (investopedia.com/terms/m/multil…) had achieved 6.2% market share. Across the €53.6B traded on AQXE in July, this came out to €1.7B a day.

Those 6.2% and €1.7B are quite significant numbers and I'll come back to them later Image
In the period since the beginning of 2018 market share has risen from 1.72% to that 6.2% above. Here's how that value traded looks. Image
Read 15 tweets
Jun 10, 2021
Someone else has also since mentioned $JAKK to me - it's a (shitco) toy maker, similar to Character Group #CCT in the UK. CC's tweet mentions the refi, he has a point - I think there may be something here to play for, perhaps towards a double or so before the end of the year.
Company has cash of $80M + new debt of $99M (pink) repays difference on prior debt of $129M with cash on hand (green) so $50M cash + debt $99M

6,395 shares at $10.6, converts at $5.65 (purple) into $18.9M (blue) so + 3,345 shares = 9,740 / $103 cap & $20M prefs (grey) $172M EV
As you can see it's highly seasonal into Q3. Mgmt mentioned in the last (Q1) call that inventories are low. Typically they would be about $20M higher than here in Q2, so if we penalise the cash in the EV by that amount to account for inventory build we're at $192M
Read 12 tweets

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