Giles Capital Weekly - Week 44
Welcome to another edition of Giles Capital Weekly. The final days before Tuesday's election are revealing deep uncertainty in polling methodologies. While Ann Selzer's highly-respected Iowa poll shows Harris leading by 3 points, the latest swing state surveys from AtlasIntel show Trump ahead across all battleground states. The contrasting data fits with Nate Silver's analysis that pollsters may be "herding" their results, making a systematic polling error possible in either direction. But let’s not dwell on this, as Matthew Carr argues in his article ‘It's Almost Over... Now What?’ featured below, a $100,000 investment in the S&P 500 would be worth over $32.6 million today regardless of which party controlled the White House.
My top picks this week come from Best Anchor Stocks' analysis of Texas Instruments and The Mikro Kap's deep dive into Colefax Group. TXN's Q3 results suggest we're approaching an inflection point in the semiconductor cycle, with improving margins and strong AI-driven demand ahead. Meanwhile, Colefax Group stands out for its exceptional capital allocation - management has reduced share count by 80% through buybacks while maintaining industry-leading margins in luxury textiles.
Americas
Best Anchor Stocks on Texas Instruments (🇺🇸TXN US - $150.3 billion) Leading semiconductor manufacturer showing strong operating leverage with margin expansion to 28.4% and impressive AI-driven growth potential. Trading at 20x 2024E P/E with substantial recurring revenues.
Unemployed Value Degen on Acacia Research Group (🇺🇸ACTG US - $453 million) Value opportunity in a Ben Graham-style net-net that's pivoting to leveraged buyouts. Trading at 99% of net current assets with $449 million in net current assets against market cap.
Idea Hive on Pioneer Power Solutions (🇺🇸PPSI US - $66 million) EV infrastructure play benefiting from strategic divestiture of e-Bloc business for $50M. Trading at compelling valuation with cash proceeds nearly matching market cap.
Waterboy Investing on Tejon Ranch Co (🇺🇸TRC US - $433 million) A deeply undervalued real estate development company with 270,000 acres of prime California land and significant activism potential. Trading at just $15,000 per entitled acre with a new CEO search underway.
The Finance Corner on Dropbox (🇺🇸DBX US - $8.5 billion) Sticky product with stable financial performance and aggressive share buybacks. Trading at 7.9x P/FCF with strong cash generation capabilities.
Undervalued and undercovered on both Payfare and Mammoth Energy (🇨🇦PAY CN - C$100 million | 🇺🇸TUSK US - $210 million) Fintech play with strong Lyft/Uber partnerships and infrastructure company benefiting from $188 million PREPA settlement. PAY trading near cash value with strategic review underway, while TUSK valued at just 0.28x EV/EBITDA post-debt repayment.
Unemployed Value Degen on Ecopetrol(🇨🇴EC US - $8.1 billion) Colombian oil major with low lifting costs and strong dividend yield above 10%. Trading at 8x earnings with improving capital allocation and US expansion potential.
Europe, Middle East & Africa
The Mikro Kap on Colefax Group (🇬🇧CFX LN - £51 million) Share cannibal in luxury textiles with 95% gross margins and significant buyback potential. Trading at 5x EV/normalized FCF with management having reduced share count by 80%.
Rock & Turner on Yellow Cake (🇬🇧YCA LN - £1.15 billion) Pure-play uranium holding company benefiting from nuclear power renaissance and AI data center energy demands. Trading at 0.99x NAV with strategic partnership optionality.
Overlooked and Undervalued on Nexus Infrastructure (🇬🇧NEXS LN - £12 million) UK civil engineering firm trading below tangible book value with improving margins and infrastructure segment growth potential. Trading at 5x normalized operating profits.
Just A Value Investor on Athens International Airport (🇬🇷AIA GA - €2.26 billion) Monopolistic airport operator with strong pricing power and expansion plans. Trading at 10x EV/EBITDA with 4.38% dividend yield.
Tiny Stock Ninja on three companies, SpaceandPeople, Touchstar & Tristel (🇬🇧SAL LN - £1.6 million | 🇬🇧TST LN - £7.6 million | 🇬🇧TSTL LN - £194 million) Portfolio of UK micro-caps including retail space provider with Network Rail agreements through 2029, mobile computing firm under strategic review, and hospital disinfectant manufacturer with US expansion potential.
Wolf of Oakville on Thermal Energy Group (🇨🇦TMG CV - C$39 million) Clean technology provider showing strong revenue growth despite margin pressure. Trading at 1.5x MC/Revenue and 18.5x MC/EBITDA with international expansion potential.
Asia-Pacific
Dungeon Investing on Cover Corp (🇯🇵5253.T - ¥96 billion) Japanese operator of virtual talent agencies with 90% margins on core products and trading at 10x EV/EBITDA. Strong tailwinds from AI/datacenter growth driving content demand.
Silver Bulletin - There's more herding in swing state polls than… Fascinating deep dive into polling anomalies ahead of Tuesday's election, with compelling evidence that pollsters may be manipulating their results. (Estimated reading time: 15 min)
Silver Bulletin - How high will turnout be? Essential analysis of voter turnout predictions and their historical significance for election outcomes. (Estimated reading time: 12 min)
Matthew Carr - It's Almost Over... Now What? Clear-eyed look at market performance under different administrations since 1950, debunking common election-related investment myths. (Estimated reading time: 10 min)
Uncover Alpha - Inside the AI Chip Market: NVIDIA, TSMC, Custom ASICs Outstanding analysis of the AI semiconductor industry based on interviews with 35 former employees from major players. (Estimated reading time: 20 min)
Special Situation Investing - Datacenters and Nuclear Power Thoughtful exploration of the intersection between AI infrastructure needs and energy requirements. (Estimated reading time: 12 min)
Investing in China - Is China investible? Detailed analysis of Starbucks' struggles in China and broader lessons for foreign companies operating in the market. (Estimated reading time: 20 min)
Value Investing for Sophisticated Investors - Poking Holes in Einhorn's PTON Thesis Rigorous critique of Greenlight Capital's recent Peloton analysis. (Estimated reading time: 18 min)
Quality Investing with René Sellmann - Investing in Alcoholic Beverages: A Sector Analysis Comprehensive overview of the alcoholic beverage industry's competitive dynamics, moats, and investment opportunities. (Estimated reading time: 25 min)
Currently, I’m only featuring free content. If you're a writer producing free, insightful investment analysis and would like to be considered for inclusion, feel free to reach out. What would you like to see in future editions? Let me know in the comments.
Disclaimer: This newsletter is for informational purposes only and does not constitute investment advice. All opinions expressed are those of the quoted authors and do not necessarily reflect the views of the newsletter creator. Always do your own research before making investment decisions.