Yet Another Value Podcast

James Elbaor, founder and CIO of Marlton Capital, discusses his investment thesis for Third Point Investors (TPOU; trades in London). 

TPOU is a closed-end investment company that invests into Third Point, Dan Loeb's hedge fund. TPOU consistently trades at a discount to NAV, and James thinks the combination of Third Point's investing prowess and TPOU's innovative buyback/tender mechanism creates a unique opportunity to generate attractive returns.

James' Twitter: https://twitter.com/jameselbaor
Asset Value's May 26, 2021 activist letter to TPOU: https://www.assetvalueinvestors.com/content/uploads/2021/05/AVI-Open-Letter-to-TPIL-Vote-Co_2.pdf

Chapters
0:00 Intro
1:30 TPOU Overview
3:55 Why invest in TPOU instead of Third Point directly?
7:00 Third Point's return profile, past and forward looking
14:20 TPOU's discount and unique tender mechanism
17:30 Laying out a base case IRR to a potential March 31, 2024 tender
27:30 Pushback #1: Doesn't this deserve a discount given the fee structure?
34:25 Pushbuck #2: The corporate governance issues raised by Asset Value's letter
43:30 TPOU tax consequences for U.S. investors
45:05 Final thoughts on TPOU
50:00 Quick hit on Third Point / Vivendi / PSTH / UMG

Andrew Carreon, founder of Emeth Value, discusses his thesis on Blackstone Minerals (BSM). Key points include how some of the company's undeveloped acreage could be a massive call option, how rising commodity prices impact BSM's value, and how BSM compares to other loose peers.

Side note: I had a puppy emergency for the last ten minutes of this podcast; you might see me glancing to the side a bit as my dog (Penny) tries to get my attention. I still think the conversation was great, but sorry for that!

Emeth Value's website: https://www.emethvaluecapital.com/

Chapters
0:00 Intro
1:00 Blackstone Minerals (BSM) overview
4:40 How mineral rights work
7:15 Contrasting BSM versus TPL
11:50 How does BSM's acreage quality compare to TPL
15:10 BSM's LP structure versus traditional C-corps
18:55 Why BSM's NPV reserve calculation understates their value
23:25 What commodity prices are currently baked into BSM's share price?
31:30 Discussing BSM's GP
33:10 How their capex / farm out agreements work
37:45 Management's track record and pandemic performance
43:25 Drilling outlook for BSM's acreage
50:00 Diving into BSM's Austin Chalk acreage
53:15 Puppy emergency driven conclusion

Aaron Edelheit, founder of Mindset Capital and author of The Hard Break, comes on to discuss his thesis for investing in cannabis in general and Glass House Group in particular. Key topics include why interstate legalization could come sooner than later, how Glass House's California locations are a huge asset, and why U.S. Cannabis stocks trade don't trade in the U.S.

Aaron's Book, The Hard Break: https://amzn.to/34dKyYL
Aaron's article on Glass House: https://mindsetvalue.substack.com/p/the-most-valuable-greenhouse-in-america
Aaron's article on interstate commerce: https://mindsetvalue.substack.com/p/are-interstate-commerce-restrictions

Chapters
0:00 Intro
2:00 Disclaimer
2:25 Why is investing in cannabis interesting now?
11:00 Why is cannabis not a complete commodity once legalized?
16:10 Why is California so great for growing cannabis?
25:05 How retail can be a moat in cannabis
29:40 Discussing the three way SPAC merger that will form Glass House
38:30 When will cannabis go interstate?
43:15 How to think about valuation of Glass House
47:00 What's the difference between BRND in Canada and MRCQF on OTC?

The crypto market currently feels like the wild wild west. It can take only a week or two to run through a full cycle (a bull and a bear market), and coins that are explicitly a joke can be valued at billions of dollars on the back of a tweet from the right celebrity.

David Fauchier, fund manager at Nickel Digital, pops on to discuss how a professional approaches investing in the crypto world. Topics include bitcoin future arb, how to approach the risk of fraud or an exchange blowing up, and why it makes more sense to invest in crypto directly than to invest in mining.

My post on BlockFi and Bitcoin Futures Arb: https://yetanothervalueblog.com/2021/...
David's Twitter: https://twitter.com/dfauchier
David's other podcast covering the crypto market: https://blog.thinknewfound.com/podcas...

Chapters
0:00 Intro
1:50 Overview of Nickel Digital and David's background
4:55 Bitcoin futures arb overview
11:05 Risks and negatives to the arb trade.
15:58 Bitcoin : Ethereum :: Unproductive : Productive?
23:10 Digital Horses and other productive uses for blockchain
25:40 Fraud risk in crypto trading
32:00 Could the crypto exchanges blow up?
50:10 Does cryptos 24/7 nature and extreme volatility minimize blow up risk?
53:20 Buying crypto versus buying miners
1:04:30 How David evaluates managers in the crypto space

Chris McIntyre, founder of McIntyre partnerships, discusses his investment thesis for Garrett Motion (GTX). GTX just emerged from bankruptcy after filing in 2020, and Chris thinks the stock is significantly too cheap. He walks through how Garrett's near term projections are significantly understated, how minority shareholders are aligned with the new controlling shareholders, and why the company is likely to "melt" at a much slower rate than the market is pricing in.

Chris's GTX website: gtxisacheapstock.com

Chapters
0:00 Intro
1:25 Garrett Background
8:40 Why Garrett is better than your average auto-supplier
11:15 Why wasn't the bankruptcy auction more robust?
16:15 Why Garrett filed for bankruptcy
25:55 Risk from Garrett's controlling shareholders
32:30 Garrett's management team
36:00 Garrett's valuation and prefs versus common
43:25 Why Chris thinks Garrett can far exceed their bankruptcy projections
52:10 Medium to longer term capital allocation at Garrett
56:35 Garrett's melting ice cube
1:01:30 Closing Thoughts

Dickson Pau, Tom Moore, and Bill Henry, three first years at Columbia Business School, discuss their investment thesis for Angi. The three pitched ANGI in the Pershing Stock Challenge (placing second!), and they go into the due diligence they did putting their investment thesis together, the potential upside they see at ANGI, and all of the different risk factors they thought about.

The first Yet Another Value Podcast on ANGI: https://youtu.be/J2trsM41DTU
Spring Graham and Doddsville (ANGI pitch on p. 24): https://www8.gsb.columbia.edu/valueinvesting/sites/valueinvesting/files/Graham%20%20Doddsville_Issue%2042_v8.pdf
Tom's Twitter: https://twitter.com/FriarTom15
Dickson's Twitter: https://twitter.com/DicksonPau

Chapters
0:00 Intro and backgrounds
2:40 Why they chose ANGI for their pitch
7:10 Dickson's DD booking ANGI projects
15:00 Takeaways from ANGI expert calls
22:20 Fixed price: the most exciting piece of ANGI
28:30 How the team views ANGI's new CEO
36:20 Why hasn't ANGI hit their merger targets?
40:40 Is ANGI's near term decline in service requests concerning?
45:50 ANGI's struggles with service providers
52:20 Competition risk
57:00 Laying out the long term case for ANGI
1:00:30 Closing thoughts

Javier Lovato from the Blind Squirrel comes on the podcast to discuss his post on Netflix, including why Netflix's scale is a massive moat, why the "Netflix doesn't do have quality" debate is wrong, and why Netflix is years ahead of their competition.

Blind Squirrel's Netflix Write Up: https://blindsquirrel.substack.com/p/netflix-focus-and-execution

Chapters
0:00 Intro
1:25 Why is Netflix a good investment?
7:25 Netflix's relationship with creators
14:05 Where is Netflix's Game of Thrones
21:50 Does Netflix's weak Q1 indicate competition is gaining on them?
39:30 Why'd Netflix stop disclosing churn?
41:35 Netflix cost of capital and share repurchases
48:15 Opportunity cost of Netflix versus Disney, Spotify, or legacy media
51:30 Does Netflix need to get into video games?

Neil Cataldi from Blueprint Capital discusses his investment thesis for Sanara Medtech (SMTI). Sanara is growing quickly, and Neil thinks continued growth in their product portfolio and hospitals they are approved to sell in will drive continued accelerated growth and long term compounding.

Chapters
0:00 Intro
1:00 Sanara overview
5:30 How is Sanara increasing their hospital reach?
14:25 Discussing management
21:10 Related party risks
33:20 Breaking down SMTI's growth
42:45 Sanara's telehealth ambitions
1:01:10 Closing thoughts

Alex Morris, founder of The Science of Hitting, comes on the podcast to discuss his investment thesis for Spotify (SPOT). Topics include how Spotify can compete with larger competitors like Apple and Amazon, why Spotify is gaining the upper hand in negotiations with record labels, and how Spotify today rhymes with Netflix in the early stages of their streaming pivot.

The science of hitting substack: https://thescienceofhitting.substack.com/

Chapters
0:00 Intro
1:40 Why is Spotify a good investment?
4:40 How the past year built Alex's confidence in SPOT
7:55 Spotify as Netflix 2.0
11:30 Spotify's discover potential versus Netflix home page
13:40 Bear case #1: Competing with giants
17:35 Bear case #2: Lack of operating leverage and dealing with labels
22:10 Touching on the Taylor Swift re-recording
24:40 Bear case #3: Valuation
32:00 Bear case #4: Opportunity cost versus buying Twitter
37:40 Bear case #4 continued: Why not buy a label?
41:37 Live and podcast opportunity
46:10 Spotify's video opportunity
48:20 Content moderation issues
52:45 Spotify's concert and live event opportunity
55:45 What could Spotify acquire?
1:01:40 Alex's closing thoughts

Jeremy Raper, founder of Raper Capital (https://rapercapital.com/), makes his fourth podcast appearance to discuss his foray into activism at Hunter Douglas (HDG.NA). Hunter Douglas's controlling shareholder recently made an offer to take the company private that, to put it bluntly, vastly undervalues the business. Jeremy is pushing back on the deal and the process, and in this interview he explains why he's fighting the current offer and how he thinks the process will play out.

Jeremy's letter to the Hunter Douglas Board: https://rapercapital.com/2021/04/21/open-letter-to-the-independent-committee-of-the-board-of-hunter-douglas-n-v/

Chapters
0:00 Intro
1:30 Hunter Douglas Overview
3:05 Why is this a good business?
7:45 Performance in the pandemic and the blockbuster recovery
9:45 Framing the event
12:15 Simplifying the event even further
16:00 Valuation versus peers
22:45 Why is this process worse than a typically conflicted management buyout?
30:45 How the timing of the offer was unfair to minorities
35:45 A callback to the StoneX / Gain deal
39:25 How the process plays out post-acceptance period
45:15 Comping this deal to Collector's Universe
49:40 Discussing the squeeze out
51:30 Praising the poetry of Jeremy's letter
53:35 Jeremy and I hop on our horses about companies and regulators ignoring rules and laws
55:55 Closing thoughts