10 best ideas from Q4 2024 investor letters.

Quite a productive end to the year, with several great ideas.

Let’s dive in!
👇 1/ $NRP pitch by @GreystoneCap

A coal royalty biz run by an aligned management with a 30% stake, trading at 4-6x normalized FCF, with a 90% FCF margin and strong durability across different coal price environments, supported by at least 40 years of reserves in the ground.

Finished going through all hedge fund pitches made on this account in 2023.

Below, you'll find a list of my top 10 favorite picks that are still actionable.
👇 1/ $MCB.L pitch by @alluvialcapital

A major European producer of private-label laundry detergents and dishwashing liquids, the company was challenged due to COVID and the subsequent inflationary aftermath while being stuck in long-term supply agreements with retailers.

One of the best ways to generate ideas in special sits is by following certain activist funds.

So, here is my go-to list of 10+ small/mid-cap activist funds to follow.

I scan these regularly and have made a handful of lucrative picks already.
👇 1/ @CapitalVoss

Highly reputable small/mid-cap value-focused fund with a solid activist background and a CAGR of 17% since its inception in 2011. Voss's usual playbook is to take a board seat and push for either an outright sale or a partial segment sale, as seen with $GFF.

10 best ideas from Q3 investor letters.

Quite a few interesting picks with multibagger potential this quarter.

Let’s dive in👇 1/ $HAI.TO pitch by @AtaiCapital

Leader in video streaming infrastructure space. Its Secure Reliable Transport (SRT) protocol has become the industry standard, enabling high-quality, reliable, low-latency video. Gross margins consistently exceed 70% despite being a hardware Co.

Turning over as many rocks as possible is key to success in small-cap investing.

Here are 7 idea aggregation services/blogs that will help accelerate your discovery process. 1) Yellowbrick Investing @joinyellowbrick

A great platform compiling an extensive collection of pitches from across the internet, including fund letters, Twitter thread pitches, and blog posts.

It is agnostic to investment style and size.

Found a couple more interesting idea pitches from Q1 investor letters, so here is the second edition of Q1'24 ideas.

Six further pitches in total.

If you have not seen the first edition, it’s attached at the end. 1) $KITW.L pitch from @JonCukierwar

Kitwave Group is a high-quality food distributor specializing in delivering goods to over 42k convenience stores and food service outlets across UK. One of the largest distributors focused on servicing "independents" or mom-and-pop stores.

Just finished sifting through the Q1 2024 fund letters.

Here are the best 10 ideas that piqued my interest 👇 1) $CLMB pitch by @Headwaters_Cap

Niche cybersecurity and data center software distributor, led by an experienced CEO with an impressive industry track record. CLMB runs its business with negative working capital and minimal capex, leading to an ROIC of 30%+ and strong FCF.

Finding freely available industry research can be challenging, which is why every quarter I share all the industry deep dives/primers I come across with you.

So, here is the new list of 10+ industry deep dives that can help you accelerate your research. Enjoy!
👇 1/ One of the best sources on energy markets "The Palgrave Handbook of International Energy Economics".

Book includes everything from the replacement value of different energy facilities to detailed discussions on S&D dynamics.

Freely available here: link.springer.com/content/pdf/10…

$TLF is a leathercraft goods retailer with an impressive activist investor base that could push the company to sell itself. Meanwhile, TLF trades at 10x FCF on recovering earnings and has zero net debt, with the planned sale of HQs as a cherry on top (netting up to 20% if EV)👇 Two prominent small-cap activists, Jeff Gramm (who owns 34%) and James Pappas (who owns 10%), might be looking to sell the company now that the post-COVID turnaround is in full motion. Both owned the stock from pre-COVID levels and have mostly incurred losses in this position.

$SDPI is being acquired by $DTI for a consideration of $1/share in cash + 0.313x DTI shares, with a minimum stock selection criteria of at least 43%. The blended spread currently stands at 8%, and the closing is expected in Q3'24.

Seems highly likely to close👇 The largest shareholder, who holds a 40% voting stake, already supports the acquisition. Additionally, the buyer owns 5% of the stock. With a simple majority shareholder vote, this acquisition should close easily.

Compiled a short list of event-driven setups shared by various blogs on Twitter/Stack.

Check out my summaries of each situation below.

All of the five trades are still actionable 👇 1) $SASK.V merger with $92E.AX pitched by @AlphaVulture

A three-way merger arb between SASK and two smaller peers, Latitude Uranium and 92 Energy. The Latitude Energy merger has just closed, but the bid for 92 Energy remains with the spread at 8%.

Quick pitch on $ACRS

Busted biopharma, trading at 50% discount to net cash, is exploring strategic alts. Several aspects, including the CEO stepping down, 46% workforce reduction, and the presence of multiple activists (own 20%+), point to a favorable outcome for the investors👇 In November 2023, the company failed a phase 2 trial of its lead drug candidate, prompting a 46% workforce reduction a month later. In mid-January, the CEO stepped down, and a strategic review was initiated.

Whom to follow on FinTwit for idea generation?

As promised, this is part 2 of the series with 10 more criminally underfollowed Twitter accounts.

Part 1 with 10 more Twitter blogs is attached at the end. 1/ @david_katunaric mostly focuses on small-cap, off-the-beaten-path value plays.

He is a generalist without a particular industry or geographic focus.

Check out his recent post on $ATG.AX, a fallen-from-grace Covid darling trading at 3x forward EV/FCF.

https://twitter.com/david_katunaric/status/1765449290325832049

Whom to follow on FinTwit for idea generation?

Sharing a fresh list of criminally underfollowed accounts.

This is part 1 of the series, with 10 accounts, and 10 more coming in the next few days. 👇 1/ @SebKrog covers micro-cap value ideas with a catalyst.

Sebastian is a generalist, so you will find ideas across a diverse set of industries and geographies.

Check out his recent pitch on $IVFH, an asset-light business at 5x EBITDA post restructuring.

https://twitter.com/SebKrog/status/1759264843712864700

Finished going through all hedge fund pitches made on this account in 2023.

Below, you'll find a list of my top 10 favorite picks that are still actionable.👇 1) $DK pitch by Maran Capital @Dan_Roller

Holding firm with 4 refineries, 250 gas stations, and a majority stake in its publicly traded midstream oil and gas MLP, $DKL. Currently, DK's position in DKL covers 90% of its EV, valuing the refineries and gas stations at sub-$200m.

Just finished sifting through the Q4 2023 hedge fund letters.

Here are the best 10 ideas that piqued my interest
👇 1) $CLMT pitch by @LuisVSanchez777

Refining and specialty chemical company with 3 catalysts playing out in 2024: 1) CLMT plans to monetize its renewable energy business via an IPO or outright sale; 2) Conversion from MLP to C-corp; and 3) Access to low-cost debt from DoE.

Quick pitch on $TLIS

Tiny biopharma, with 90% of its workforce laid off and an ongoing strategic review. With only 10 employees remaining, TLIS is essentially a cash shell trading at an unusually large 60%+ discount to net cash. Liquidation or a reverse merger seems likely👇 Confidence in a favorable strategic review outcome comes from the fact that TLIS's shareholder base includes Baker Brothers, one of the most successful biotech investors (owns 66%), as well as David Einhorn’s Greenlight Capital (10%).

Finding freely available industry research can be challenging, which is why every quarter I share all the industry deep dives/outlooks I come across with you.

So, here is the new list of 10+ industry deep dives that can help you accelerate your research. Enjoy! 👇 1/ Soda Ash Industry by Special Situation Investing blog

Nice breakdown of the industry, including the different production processes, end markets, and quick notes on key players.

You'll need to navigate yourself to the blog or drop me a line, and I will send you the link.

One way to generate investment ideas is by following certain activist funds.

Below is my go-to list of 10+ small/mid-cap activist funds.

I scan these regularly and have made a handful of lucrative picks already. 👇 1/ Peter Kamin

Credible investor with quite an impressive track record of activism. His playbook revolves around identifying undervalued businesses, securing a board seat, and improving capital allocation. Occasionally, some of his targets end up being sold.

Wrapping up the blogs to follow for the idea generation series.

Below are the last 10 of 30 freely available blogs worth following, along with some of their latest ideas.

If you missed the previous parts, I am attaching them at the end of the current thread. 👇 A quick note before you delve in:

I cannot share some the links here, so you would need to navigate through the screenshots below, or simply visit the Twitter accounts of the blog authors.

If you still won't be able to find the particular blog, my DMs are always open.

How to find new investments?

Small-mid cap blogs are an excellent starting point.

Here's a list of 10 freely accessible blogs worth following, along with some of their ideas.

This is the 2nd part of a 3-part series, so stay tuned for 10 more blogs
👇 A quick note before you delve in:

I cannot share some the links here, so you would need to navigate through the screenshots below, or simply visit the Twitter accounts of the blog authors.

If you still won't be able to find the particular blog, my DMs are always open.