Welcome to another edition of Giles Capital Weekly (arriving a few days later than usual due to travel, my apologies). Markets continue their impressive run, with the S&P 500 advancing to bring year-to-date gains to 25.9%. While these returns are remarkable, Howard Marks' wisdom reminds us that sustainable long-term performance often comes from avoiding major mistakes rather than chasing exceptional years.
This week presents a fascinating mix of opportunities across markets - from ServiceNow's consistent Rule of 50 performance to Park Hotels & Resorts trading at just a third of replacement cost. In other areas, the AI narrative continues to evolve with OpenAI's o1 announcement, while Chinese markets show signs of life amid policy support and improving consumption data.
Americas
Deep Value Returns on SentinelOne (🇺🇸STNL - US$5.2 billion) Cybersecurity player poised for a significant turnaround with sustainable profitability expected by fiscal 2026. Trading at an attractive valuation with potential for $100+ million in forward free cash flow.
Investment Talk on Kura Sushi (🇺🇸KRUS US - US$1.1 billion) Despite recent share issuance expanding count by 43%, revenue (+90%), gross profit (+152%), and book value (+97%) growth have more than offset dilution effects.
Just A Value Investor on Sun Residential REIT (🇨🇦SRES.V - US$5.5 million) Trading at 0.37x P/B with an 8.4% dividend yield, this nanocap REIT owns Florida properties and has half its market cap in cash.
Modern Value Investing on Park Hotels & Resorts (🇺🇸PK US - US$3.5 billion) Trading at a 37% discount to NAV and 9.7% FFO yield, Park offers exposure to premium-branded hotels with strong potential for margin expansion and earnings growth through increased group travel and conventions.
Northwest Frontier Capital's Research on Lockheed Martin Q3 (🇺🇸LMT US - US$115 billion) Despite strong order growth, challenges with the F-35 program and margin uncertainties make the current 5% free cash flow yield less compelling, leading to a more cautious outlook on this defense contractor.
Special Situation Investing on Bakkt (🇺🇸BKKT US - $177 million) A potentially undervalued exchange platform that could benefit from regulatory clarity under a new administration. Recent Trump Media acquisition rumors add another layer of intrigue to this ICE spinoff.
Rijnberk InvestInsights on ServiceNow (🇺🇸NOW US - $200+ billion) Remarkable execution with 30%+ revenue CAGR over 5 years and consistent Rule of 50 performance, though current valuation at 62x forward earnings suggests waiting for a better entry point around $1,000 per share.
Undervalued and undercovered on Kohl's (🇺🇸KSS US - US$3.1 billion) Special situation play with 40% short interest, tangible book value of $34.50 per share, and potential catalysts including Sephora partnership expansion and possible share repurchase program.
Value Degen on Coursera (🇺🇸COUR US - US$2.4 billion) AI-enabled education platform trading at 1.62x P/S with 162 million users, positioned to benefit from potential Trump administration education reforms and AI-driven reskilling demand.
Europe, Middle East & Africa
Rock & Turner on ITV (🇬🇧ITV LN) Multiple potential suitors including CVC Capital Partners and RedBird Capital are evaluating bids for parts or all of the business, highlighting significant hidden value in the company's production arm.
LTValue on Compass Group PLC (🇬🇧CPG LN - US$57.1 billion) World's largest food services provider trading at 25x P/E with a 17% IRR potential, benefiting from procurement economies of scale and post-COVID structural growth in outsourcing.
Dungeon Investing on Asmodee (🇬🇧 Estimated US$2-3 billion) Gaming company preparing London Stock Exchange IPO with strong position in tabletop and trading card games. Currently generates 7-8% EBIT margins with potential for improvement through synergies and operational efficiencies.
Schwar Capital on Teqnion AB (🇸🇪TEQ ST) Swedish serial acquirer focused on niche industrial companies, maintaining high ROIC through disciplined acquisition strategy at 4-5x EBITA multiples.
The Finance Corner on Kering (🇫🇷KER FP - US$25.8 billion) Deep dive into Kering's transformation from timber to luxury, trading at ~6x EV/EBITDA with potential for margin expansion through branded goods growth and strategic repositioning.
Asia-Pacific
KonichiValue on Tokyo Metro (🇯🇵TM JP - US$9.5 billion) Recently IPO'd at ¥1 trillion valuation with shares up 47%, Tokyo Metro's expansion into London's Elizabeth Line operations presents an attractive international growth opportunity at 8.1x P/E.
The Great Wall Street on Pinduoduo (🇨🇳PDD US - US$148 billion) Strategic shift toward merchant support and ecosystem investment, with strong positioning in lower-tier cities and potential for improved monetization despite margin pressure.
Noahpinion - The best-case scenario for Trump's second term A surprisingly optimistic take on potential positive outcomes, from continued economic expansion to reduced social unrest, offering thoughtful analysis of different policy areas from trade to China relations. (15 min)
Uncover Alpha - Google's Sum-of-Parts Analysis: Why a Breakup Shouldn't Alarm Shareholders Compelling analysis of Google's individual business units suggests current $2.08T market cap fairly values component parts. Particularly insightful for understanding Google Cloud's competitive position in AI. (15 min)
StockOpine - 3 Companies Worth Your Attention Right Now A quick analysis of Alphabet, Evolution AB, and Rentokil Initial, with specific focus on valuation metrics and growth catalysts. (15 min)
Generative Value - The Inference Landscape Deep dive into AI inference technology, market dynamics, and competitive landscape following OpenAI's o1 announcement. Essential reading for understanding the next frontier of AI deployment. (15 min)
TQI Capital - Lemming effects Thoughtful piece drawing parallels between the dot-com bubble's fiber optic boom and today's AI investment wave. Essential reading for maintaining perspective in frothy markets. (8 min)
Hundred Year Lens - The Sound of Artificial Reality Fascinating exploration of Adobe's Super Sonic AI audio generation tool and its implications for content creation. Essential reading for understanding the evolution of AI-generated media. (8 min)
Panda Perspectives - China's Recovery: A Complex Path Forward Comprehensive analysis of China's economic recovery, with particular focus on monetary policy reforms and consumer spending trends. Essential reading for understanding the world's second-largest economy. (20 min)
Quality Investing with René Sellmann - Navigating Social Media's Investing Advice Thoughtful piece on distinguishing genuine investing expertise from superficial knowledge in the age of social media. Practical advice for modern investors. (10 min)
Investment Talk - Why are You Looking at Everyone Else? Thoughtful piece on avoiding performance comparison anxiety and focusing on your own investment journey. Features excellent Howard Marks insights on consistent performance. (10 min)
The Finance Corner - The evolution of an investor - Which level are you? Fresh perspective on investor development stages, from price-watching novice to understanding intangibles like management quality and corporate culture. Valuable framework for self-assessment. (10 min)
Rock & Turner - Thinking like Pabrai, Marks & Buffett Excellent exploration of how market confusion between risk and uncertainty creates opportunities for patient investors. A masterclass in value investing principles. (15 min)
HindeSight Letters - Investment Insights Historical perspective on banking crises and the role of tally sticks in medieval finance, with relevant lessons for modern banking risks. (10 min)
Undervalued Shares - Guyana and the mystery of the largest ranch in the Americas Fascinating exploration of investment opportunities in one of the world's fastest-growing economies. Unique angle looking at land-based plays rather than the obvious oil sector. (25 min)
Invariant - The Bounties We Are Given Fascinating historical perspective on R.J. Reynolds Tobacco Company and the importance of corporate culture in long-term business success. (12 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.
Thank you for featuring me twice in your list of essential reading this week.