The Investors' Corner

If you like today’s post, please be sure to hit the heart button, comment with any feedback, and share it with friends if you find it useful. At the end of September, F45 Training (FXLV) received an unsolicited proposal from one of its investors, Kennedy Lewis Investment Management LP (KLIM), to acquire the company in a $385 million take-private offer at $4.00 a share. For those of you that don’t...

If you would like to listen to this post on Spotify, click here to visit our Podcast. If you like today’s post, please be sure to hit the heart button, comment with any feedback, and share it with friends if you find it useful. Petcare has been a big COVID beneficiary given the exponential growth in adoptions during the pandemic. This significant growth led to virtually increased spending in all c...

This whole year so far, investors have been trying to gauge whether the consumer is okay. Many have pointed to various different data points that all have provided positive reassurance such as: Retail spending Travel data COVID era savings Low fixed mortgages Company earnings beat, etc. I know because I’m one of those investors. Investing in consumer and retail is what I do and while I have been b...

I never knew that Build a Bear (BBW) was actually a publicly traded company until the start of this year. In fact, I didn’t even know the company was still around. It was a store that I grew up with over two decades ago and by coincidence, heard a pitch on it back in January by Strat Becker. He discussed the company and his long thesis via a Commonstock pitch to Ross Klein, CIO at Changebridge Cap...

Back in January of this year, we released our research on Xponential Fitness $XPOF and revealed our long position in the name. A link to original research that breaks down the business and our thoughts can be found here as well as my chat with Chit Chat Money about the company as well. What we didn’t touch base on was how their growth will help expand their operational leverage and thus, profitabl...

So we all know about Elon Musk and his bid to acquire Twitter $TWTR earlier this spring. Given that it is Elon Musk, having a smooth acquisition was not in the cards so of course drama quickly ensued. Even though shares are trading at $38.98 and the offer price is $54.20 (so stupid), traders on the street are pricing in a deal happening at virtually zero. This is based on a pre-announcement price...

Last week, we released our research on Petco's $WOOF pre-earnings announcement and we were happy with the results [ WOOF: Banking on the Pet Industry ] . The company beat on all estimates and what seemed to be retail armageddon due to the likes of Target $TGT and Walmart $WMT had appeared not to spread to Petco. Due to this, the stock has rebounded ~13% off the lows of last Monday on strong earnin...

* On average over the past century, according to an analysis conducted by Ned Davis Research, the S&P 500 has performed better when its EPS was lower than a year previously — not higher. * The S&P 500’s best quarterly returns in the past have come when its trailing four-quarter EPS were between 20% lower and 5% higher than where they were one year prior. * With the exception of quarters in which E...

TL;DR * Petco’s omnichannel push will help it solidify itself as top pet health and wellness company with a strong defensible moat and loyal customer base * Continued push into value-added services creates a closed-ended one-stop-shop ecosystem for all pet owners * Its strategic initiatives will drive top-line growth and significantly improve the company’s profitability and cash flow * Given the c...

TSR Drivers (as % of TSR) I came across a deck made by Conor Hayley over at Alta Fox Capital which breaks down in a detailed 645-page report about what drives Total Shareholder Return for 104 companies he analyzed. Considering its length, I took one chart (above) that highlighted the three key drivers that data has shown to produce outsized returns and his commentary below. * On average, EBITDA gr...

Background Domino’s Pizza $DPZ has had a stellar run over the past decade, rising over 1,030% during that time. The company has shown its ability to rapidly expand overall store count, expand margins, and not only fend off app-based delivery companies but go toe to toe with them. Underlying business fundamentals remain strong for the company and while headwinds with inflation have put pressure on...

TOC * Deal Specifics * Activision Context * Deal Price Action * What We Know * Odds of the Deal * Trade Strategy * Important Factors 1) Deal Specifics Earlier this year in January, Microsoft $MSFT announced it will acquire Activision Blizzard $ATVI for $95.00 per share (a 45% premium to its previous closing price), in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzar...

SBC Is Propping Up Adj. EBITDA * Many unprofitable companies are leveraging the use of stock-based compensation (“SBC”) when it comes to add-backs specifically geared towards improving overall adjusted EBITDA * This add-back can make many “unprofitable” companies look profitable (or less unprofitable) on a non-GAAP basis because accounting labels it as a non-cash expense * However, some companies...

I remember when I was a kid, my dad would be the family mechanic and help tune and maintain our family cars. They weren’t anything extravagant but just the average family Toyota Camry and Nissan Altima that we held on to for over a decade. I’d always go with him to AutoZone to pick up parts to fix our cars and help out in any way I could, holding a flashlight or grabbing a tool mainly. This was tr...

* The term yield curve refers to the relationship between the short- and long-term interest rates of fixed-income securities issued by the U.S. Treasury. * An inverted yield curve occurs when short-term interest rates exceed long-term rates. * The U.S. curve has inverted before each recession since 1955, with a recession following between six and 24 months later , according to a 2018 report . It o...

Summary * Once a VC darling, this “tech” oriented restaurant chain is anything but * The company is not differentiated and some aspects of its business expose it to more risks than others * Higher inflation and lack of pricing power will continue to eat into the company’s margins * Widening losses and no path to profitability should make investors wary of where the company’s priorities are * Compa...

Rumor Has It… Friday sparked renewed interest in Peloton $PTON after rumors leaked that Amazon $AMZN might be interested in acquiring the company . News of this sent the stock up as much as ~38% before settling down to $31.10, a ~26% increase from Friday’s close. I decided to take to Twitter to share my opinion on the matter which set off a very healthy debate on the cases for and against this dea...

Summary * Company hurt during COVID has executed well on a post-pandemic comeback and has almost returned to full pre-COVID levels * Broader tailwinds fueling a return to in-person workouts and the desire to try new fitness concepts * Management executing well on diversifying revenue channels, improving margins, and growing internationally * The stock is currently trading at 18.4x FY’22 earnings,...

Enterprise Value per Subscriber * With high growth startups taking a beating over the last year, premiums investors have put on valuations for subscriber growth have shown their cracks * High flyers like Rent the Runway $RENT , Hims $HIMS , and Bark $BARK , saw their EV “dollar amount” per subscriber crater 85%, 89%, and 90% respectively since they went public * Seeing the difference between these...

Good morning everyone 👋🏼! Welcome to Cedar Grove Capital — your source for actionable insights, industry deep-dives, and single name coverage in the consumer(tech), and cannabis industries. If you are new, you can join below. Please hit the heart button if you like today’s newsletter and reply with any feedback. Foreword The start of 2022 has not been kind to many of us. With a complete sell-off...

Good morning everyone 👋🏼! Happy Thursday! If you’re reading this but haven’t subscribed, join our community of edgy investors interested in learning more about the markets and receiving recommendations on single-name stocks in the consumer, cannabis, and tech industries. Subscribe 👇🏼, it’s free! For this week’s post, I wanted to do an Industry Deep Dive [IDD] of the fitness industry and how it...

Good morning everyone 👋🏼! Happy Tuesday! If you’re reading this but haven’t subscribed, join our community of edgy investors interested in learning more about the markets and receiving recommendations on single-name stocks in the consumer, cannabis, and tech industries. Subscribe 👇🏼, it’s free! * Nearly 400 traditional IPOs, along with an additional 600 special-purpose acquisition companies (S...

Volatility the New Normal * Looking at intraday percent moves of +/-1% for the S&P 500, 2020 and 2021 combined have almost more swings than 2016→2019 combined (243 vs. 272). * 2020 saw 62% of its number of trading days experiencing this +/-1% intraday price swings compared to 34% for 2021 . * Access to commission-free trading, more cash during COVID, and leniency of ability to borrow on margin hav...