Misunderstood By The Market

I was aggressive yesterday, more than doubling my position in a levered shitco. The stock fell over 20% despite the fact that the balance sheet has improved, management reiterated continued improvement of cash flows going into 2023 and there was an additional real estate sale that will bring in $184 million of cash in Q1 2023.

2022 was one of the toughest years for this company. The stock is trading at multi-decade lows. Lows we have not seen since the Great Recession. It is a risky name that is highly levered, controlled through super voting shares and doesn’t have the most straight forward financials or balance sheet — to say the least.

It’s a name where if the management team can turn it around it could 10x. If the management fails it could have real solvency risk and go to zero. I think there is a real shot the new management team turns this around. There is enough cash on the balance sheet to give the team time to execute the strategy. 2023 should be lightyears better than 2022. Real free cash flow should be generated.

In 2020 the company paid a $1.50 per share special dividend. In 2019 they paid a $1.25 per share special dividend. The stock closed yesterday at $1.64 per share. There has been billions in buybacks and the assets are irreplaceable — Amazon tried to build a competing company and failed.

I think the stock is attractive. If the management team executes and turns the business around it is a multi-bagger. I don’t think it is a long-shot either. That is if you can believe what they said on the earnings call. Over the next couple of weeks they will be presenting at a major conference. I’ll be there. Pro members will get a first look at my notes.

Hope you enjoy…