Turnaround Time

Multi-bagger in the making

Less than a month ago I published an article titled, “Michael Burry Bought This Stock, So Am I”. Since the write-up was published the stock is up 50%. In the original article I stated that there was likely some tax-loss selling pressure in December and the stock could quickly re-rate above $2.25 over the short-term. The thesis over the long-run was a stock trading at a deep discount to fair value, a debt stack investors didn’t understand, a new management team that is actively cutting costs, selling real estate and turning around the core brand and significant real estate assets that provide a large margin of safety should the turnaround not transpire.

Despite the 50% run-up in the stock price I haven’t sold a single share. My intentions for buying this stock was not for a quick mean reversion. A 50% gain is nice, but the company is valued like an equity stub and any turnaround in the core business will result in a multi-bagger. Said differently, this is a multi-year holding for me and as long as management continues to execute on the turnaround, I’m not selling under $10 bucks per share.

In this article I will go over the turnaround strategy the new management team is implementing. If the management team can execute on the turnaround strategy the stock is a multi-bagger. Execution is key here. As a minority investor along for the ride, the better you can understand the turnaround strategy, the better you can gauge the progress on the executive teams execution.

Let’s dig into the turnaround strategy…