Giles Capital Weekly - Week 9
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The market right now remains volatile as investors process Trump's hawkish trade policies and monetary expectations. Gold continues its impressive run, pushing toward $3,000 as the Fed pivots to a more dovish stance with quantitative tightening expected to wind down sooner than anticipated. On the international front, Vietnam's ambitious GDP growth target of 8%+ for 2025 and at least 10% from 2026-2030 presents an intriguing counterpoint to broader market anxiety, while China prepares for its upcoming National People's Congress with emphasis on technology self-reliance.
My top picks this week are Valaris (VAL), the world's largest offshore drilling contractor trading at just 16 cents on the dollar based on replacement value with day rates doubling since 2022, and Sky Harbour Group (SKYH), a private aviation hangar developer with a defensible first-mover advantage commanding 80-100% premium rents while operating at 14% unlevered ROI. Let's dive into this week's most interesting opportunities.
Americas
WinterGems on Amazon (🇺🇸AMZN US - $2.23 trillion) Bearish analysis highlighting Amazon's decision to close all warehouses in East Canada, leading to 7-day delivery times for Prime customers. Trading at 40x trailing earnings with growth slowing to 10%, suggesting margin expansion is largely in the past.
Long-term Investing on Meta Platforms (🇺🇸META US - $1.69 trillion) Social media giant reported strong Q4 with 20.6% revenue growth and 33.3% operating revenue increase, with 3.35 billion daily active users (DAPs) and plans for $65 billion in AI infrastructure capex for 2025, raising questions about long-term returns on unprecedented capital allocation.
Jimmy's Journal on MercadoLibre and Nubank (🇺🇸MELI US - $109.72 billion | 🇺🇸NU US - $55.09 billion) Analysis of two Latin American fintech leaders: MercadoLibre delivering robust Q4 with 56% GMV growth and 14.1% comparable EBIT margin, while Nubank reported in-line earnings with 28.9% ROE despite NIM pressure from FX depreciation and higher funding costs.
Deep Value Returns on Snowflake (🇺🇸SNOW US - $59.54 billion) Cloud data platform facing growth headwinds with revenue now expected in mid-20s% range versus previous 30% target, trading at 50x forward free cash flow with concerns about customer consumption trending lower.
Max Dividends on Primerica (🇺🇸PRI US - $9.45 billion) Financial services company increased quarterly dividend by 15.6% to $1.04 per share with 1.43% forward yield, while maintaining strong financial metrics with 95/99 financial score and 17.79% payout ratio.
Quality Stocks on Shift4 Payments (🇺🇸FOUR US - $8.90 billion) Payment processing company showing strong operational metrics despite recent stock decline, with end-to-end payment volume increased 49% to $47.9 billion and adjusted EBITDA climbing 51% to $205.9 million in Q4.
Kairos Research on TopBuild (🇺🇸BLD US - $8.8 billion) Insulation distributor and installer trading at 16.5x forward earnings with potential for LDD% revenue growth, benefiting from disciplined acquisition strategy that typically pays 5-6x EBITDA for targets.
Unemployed Value Degen on Jackson Financial, Transocean, and Equinox Gold (🇺🇸JXN US - $5.995 billion | 🇺🇸RIG US - $2.95 billion | 🇺🇸EQX US - $2.85 billion) Analysis of three diverse value opportunities: Jackson Financial's 11.6% yield through $700-800M capital return program, Transocean's surging EBITDA (+221% YoY) with $8.3B backlog, and Equinox Gold's merger with Calibre Mining to achieve 1M+ annual gold production at just 2.0x projected 2026 EBITDA.
Elliot’s Musings on Darling Ingredients (🇺🇸DAR US - $5.74 billion) Sustainable ingredients company operating in three segments with 75%+ gross margins and strong vertical integration, currently trading at a forward EV/Sales multiple of ~9x with potential upside to $60/share in base case scenario.
Alpha Ark on Valaris (🇺🇸VAL US - $3.4 billion) World's largest offshore drilling contractor by fleet size trading at just 16 cents on the dollar based on enterprise value to replacement value, with jack-up and drillship day rates doubling since 2022 and strong prospects for continued industry consolidation.
Idea Hive on Various Portfolio Positions (Various markets - $38.54-981 million) Analysis of 14 portfolio positions with focus on three compelling opportunities:
Aecon Group: Canadian construction company trading at 5.2x TTM normalized EBITDA compared to peers' low/mid-teen multiples
Pioneer Power Solutions: Fast-growing cleantech company trading at just 0.5x 2025E revenues and 5.4x 2025E EBITDA despite 250%+ YoY quarterly revenue growth
Perma-Fix Environmental Services: Environmental services company with potential $100M annual EBITDA opportunity from Hanford nuclear waste treatment, currently trading at significant discount to intrinsic value
Unemployed Value Degen on PowerFleet (🇺🇸AIOT US - $931.95 million) Logistics software and telematics business positioned as the "Lyft" to Samsara's "Uber" in the rapidly growing IoT market. Currently trading at 1.25x price to sales versus Samsara's 23.4x multiple, with potential for multiple expansion as the telematics market triples by 2030.
The European Investor on Sky Harbour Group (🇺🇸SKYH US - $820 million) Private aviation hangar developer with defensible first-mover advantage at 16 airports toward 50-airport goal, charging 80-100% premium over FBOs while operating at 14% unlevered ROI and targeting $135M run-rate revenue once current sites are operational.
Unemployed Value Degen on Thryv Holdings (🇺🇸THRY US - $749.49 million) Former Yellow Pages business successfully transitioning to SaaS model with 50% of revenue now from software, trading at just 0.74x price to sales despite aggressive debt reduction from $704M to $255M and recent $80M acquisition of Keap adding 15,000 customers.
Wolf Of Oakville on Firan Technology Group (🇨🇦FTG.TO CA - CA$186.03 million) Aerospace and defense electronics manufacturer showing 20% YoY revenue growth to $162.1M with strong cash flow generation of $14.1M, though margin slippage and expense growth raise concerns at current 17x PE and 13x cash flow valuation.
Investment Ideas by Antonio on Chegg (🇺🇸CHGG US - $113.69 million) Education technology company showing signs of turnaround with retention rate increasing to 82.3% in Q4 2024 from 78.5% in Q2, despite 49% YoY traffic decline, demonstrating improved product-market fit in the AI era.
Toni on Nations Royalty Corp (🇨🇦NRC CA - $77 million) Canadian royalty company majority-owned by the Nisga'a First Nation, acquiring mineral royalties from impact benefit agreements with indigenous communities. Key asset is an 11% mineral tax royalty from Seabridge Gold's massive KSM project expected to produce 14.3 million ounces of gold starting in 2029.
Europe, Middle East & Africa
Golden Bear Capital on ASML Holding (🇳🇱ASML NL - €277.06 billion) Dutch semiconductor equipment manufacturer holds monopoly in EUV lithography essential for advanced chip production, trading at reasonable multiples with 16% revenue CAGR over ten years and expanding gross margins above 50%.
ShowMeTheValue on Bayerische Motoren Werke (🇩🇪BMW DE - €53.47 billion) Comprehensive analysis of German automaker with strong balance sheet and improving margin trajectory, concluding with fair value estimate of €110-€130 per share despite recent operational challenges, representing potential 50% upside from current €77 share price.
TQI Capital on Ashtead Group (🇬🇧AHT GB - £20 billion) Despite recent underperformance versus United Rentals, Ashtead's "clustering" strategy creates local economies of scale with 36% higher EBITDA margins in mature clusters, while specialty equipment segment presents $10B revenue potential at mature rental penetration versus current $17B total fleet size.
Memyselfandi007 on EVS Broadcast and Sixt AG (🇧🇪EVS BE - €543.02 million | 🇩🇪SIX2 DE - €3.78 billion) Analysis of two European companies: EVS Broadcast's bullish 2025 outlook with 10% underlying organic growth despite absence of major sporting events, and Sixt's optimistic 2025 forecast with 7.5% top-line growth and 10% EBT margin, implying EPS of around 6.70 EUR and a P/E of 9x.
Unemployed Value Degen on Höegh Autoliners and Okeanis Eco Tankers (🇳🇴HAUTO.OL NO - $1.47 billion | 🇳🇴ECO NO - $700 million) Analysis of two Norwegian shipping companies: Höegh Autoliners with 3.5-year backlog and 80% of fleet contracted at cycle peak rates projecting 29% annual dividend yield, and Okeanis Eco Tankers with youngest crude oil tanker fleet experiencing day rate recovery to $50,000/day as Iran sanctions create favorable supply-demand dynamics.
Sempiterno Investments on Watches of Switzerland (🇬🇧WOSG GB - £1.14 billion) Luxury watch retailer with 50% of sales coming from Rolex and 60% total from absolute luxury brands including Audemars Piguet and Patek Philippe. Trading at 8x operating cash flow with ambitious US expansion plans targeting 20-25% growth in that market. The original report is in Spanish, but the investment case is compelling enough to warrant translation.
Kroker Equity Research on Pandora A/S (🇩🇰PNDORA DK - DKK 114.80 billion) Danish jewelry retailer demonstrating 4.8% CAGR in sales since 2017 and 13.6% CAGR since 2020, with impressive 79.8% gross margin and strong free cash flow conversion of 97% of operating income.
Eloy Fernández Deep Research on Stille AB (🇸🇪STIL SE - SEK 2.12 billion) Swedish surgical instruments manufacturer with 29.47% CAGR in sales from 2019-2024, maintaining high 51.9% gross margins and 25.2% operating margins while benefiting from a strong global reputation in precision surgical tools.
Asia-Pacific
The Finance Corner on Grab (🇸🇬GRAB SG - $18.4 billion) Southeast Asian super-app with 40 million monthly users across mobility, delivery and financial services, projecting 4x revenue growth and margin expansion to 12% over time, currently trading slightly above fair value estimate of $16 billion.
The Great Wall Street on Tongdao Liepin (ðŸ‡ðŸ‡°6100 HK - HK$2.61 billion) Chinese recruitment platform focusing on high-end talent, positioned to benefit from AI-driven demand surge as state-owned enterprises compete for technical talent, trading at favorable price-to-net-current-assets of 1.45 despite 90% share price decline.
Investment Ideas by Antonio - What Happened to Nike? Compelling analysis of Nike's decline under CEO John Donahoe, arguing that management incentives skewed toward short-term financial performance led to reduced investment in brand building and demand creation. The piece offers valuable lessons on the importance of incentive structures and long-term value creation in consumer businesses. (10 min read)
Dirtcheapstocks - The Wildest Arbitrage Story You've Ever Heard Incredible tale of a market inefficiency where someone turned $450,000 into $2.7 million through a convertible preferred stock opportunity with Middlesex Water Co., buying at $95 per share and converting to common stock worth $600. A reminder that significant mispricings still exist even in public markets. (7 min read)
Noahpinion - What happens when we gut federal science funding? Incisive examination of the Trump administration's science funding cuts and their potential long-term consequences, featuring compelling economic research showing government-funded R&D accounts for a quarter of business-sector productivity growth since WWII, with public R&D spillovers 2-3 times more impactful than private R&D for firm productivity. (20 min read)
Overlooked and Undervalued - Takeovers and delistings A timely analysis of the risks minority shareholders face during takeovers, using Cambria Automobiles as a case study where CEO Mark Lavery offered a mere 20% premium before delisting. Ford provides a valuable comparison of UK and Australian takeover rules that every small-cap investor should understand. (8 minute read)
Dragon Invest - The most undervalued consumer staples sector in the world: Chinese baijiu sector An in-depth analysis of the Chinese spirits industry, highlighting the sector's exceptional margins (70-85% gross, 30-40% net) and current undervaluation. A fascinating look at how inventory speculation and price controls are creating a compelling entry point for long-term investors. (12 minute read)
Panda Perspectives - China Weekly Wrap (feat. Politburo meeting wrap) A comprehensive analysis of China's markets ahead of the National People's Congress, covering key developments from Baidu and Tencent to the Chinese EV market where Xpeng is maintaining stable deliveries and Leapmotor is posting 167%+ YoY growth. Essential reading for anyone tracking China's tech and automotive sectors. (15 minute read)
The International Investor - Week 9, 2025: Vietnam's Economic Surge: A Golden Opportunity for Global Investors Insightful analysis of Vietnam's ambitious economic targets following attendance at Vietcap's Vietnam Access Days conference. Highlights opportunities in infrastructure, manufacturing, and consumer sectors as Vietnam targets 8%+ GDP growth in 2025 and 10%+ thereafter. (6 min read)
Quality Investing with René Sellmann - Who's Next? The Inevitable AI Shake-Up Headed for the S&P 500 Forward-looking examination of how AI will accelerate creative destruction in the S&P 500, drawing on research showing the average company tenure in the index has fallen from 30 to 24 years and could drop to just 12 by 2027. A thought-provoking look at how technological disruption reshapes market leadership. (12 min read)
Quality Investing with René Sellmann - Meta's AR Ambitions: WhatsApp as a Strategic Edge in the Smart Glasses Race? A thought-provoking analysis of how Meta's ownership of WhatsApp with its 2 billion users provides a unique advantage in the AR smart glasses race against competitors like Apple and Google, demonstrating how Meta's long-term platform strategy prioritizes scale over short-term profits. (12 minute read)
The Pareto Investor - Bitcoin to $10 Trillion! Bold analysis of Bitcoin's potential to reach a $10 trillion market cap by absorbing monetary energy from negative-yielding bonds and other traditional assets, featuring Michael Saylor's thesis that Bitcoin will eventually "flip" gold and become the world's premier digital treasury asset. A provocative perspective on Bitcoin's long-term trajectory. (7 min read)
Kingswell - A Closer Look at Warren Buffett's 2024 Annual Letter to Shareholders Thoughtful analysis of Buffett's latest shareholder letter, highlighting his non-concern about Berkshire's $318 billion cash position and his praise for key leaders including Greg Abel and Todd Combs. An essential read for understanding Buffett's current thinking on capital allocation and succession planning. (8 min read)
A Letter a Day - Letter #264: Greg Coffey and Jawad Mian (2024) Fascinating transcript of a conversation between hedge fund manager Greg Coffey and Jawad Mian discussing risk management, position sizing, and the psychology of trading. Coffey's insights on letting trends run longer rather than being stopped out provide valuable perspective for any investor navigating volatile markets. (12 min read)
Capitalist Letters - Don't Imitate Druckenmiller, Learn From Him: 5 Timeless Lessons Insightful breakdown of Stanley Druckenmiller's investment approach, emphasizing the importance of focusing on the future rather than the present, understanding market psychology, mastering position sizing, maintaining emotional control, and remaining flexible. A valuable distillation of principles from one of investing's greatest minds. (11 min read)
Flyover Stocks - The Inevitable Capital Cycle A thoughtful exploration of how capital flows influence industry profitability and investment opportunities, using homebuilding and bourbon as case studies. This piece offers a framework for identifying potential investment opportunities when a sector's cycle begins to turn from peak pessimism. (8 minute read)
Max Dividends - Anne Scheiber: From $5,000 to $22 Million An inspiring account of how an IRS auditor turned a modest $5,000 investment into $22 million through patience, dividend reinvestment, and a focus on quality companies, illustrating the power of compounding over decades rather than seeking quick gains. (10 minute read)
Quality Investing with René Sellmann - The Confidence Paradox: Cash Management in Roaring Markets Compelling argument for maintaining cash positions in overvalued markets, examining how cash's "option value" increases as market valuations stretch, with empirical evidence showing the correlation between starting valuations and future returns. A contrarian view that challenges conventional wisdom about staying fully invested. (10 min read)
Eloy Fernández Deep Research - Weekly thoughts #19: ETFs - a speculative way to invest Thought-provoking analysis challenging the conventional wisdom on ETF investing, arguing that despite their passive nature, ETFs represent a form of speculation rather than true investment. The piece explores limitations including higher costs, lower dividend yields, and reduced ability to build positions in quality companies. (5 min read)
Cockney - The Weekend Rebel Review, March 1st, 2025 A well-balanced market review arguing that despite current volatility, the power of compounding and staying focused on the long term remains the best strategy. His analysis of Rolls Royce's post-results surge offers a compelling case for why international companies may outperform domestic ones. (15 minute read)
Golden Bear Capital - 29. Weekly Market Recap: Key Movements & Insights A comprehensive market breakdown covering everything from sector performance to industry leaders and gainers/losers, with particularly strong analysis of the shift from growth to value as evidenced by Real Estate (+2.44%) and Financial (+2.33%) sectors leading while Technology (-4.26%) lagged. (10 minute read)
The market ended 2024 with significant divergence between large-cap and small/mid-cap performance. Technology and AI-driven businesses continued their dominance, while defensive dividend-paying stocks remained attractively valued. Several fund managers highlighted opportunities in natural resources, utilities, and industrials heading into 2025.
Baron Discovery Fund: Growth-focused small-cap strategy that significantly outperformed its benchmark in Q4 (6.20% vs. 1.70%) and for the full year (16.28% vs. 15.15%). Fund managers attribute success to their contrarian, long-term approach focused on expected value (EV) calculations. Letter discusses:
Axon Enterprise (🇺🇸AXON - $45 billion) - Existing Position: Leading provider of tasers, body cameras, and public safety solutions with eleven consecutive quarters of >25% revenue growth
Chart Industries (🇺🇸GTLS - $7.96 billion) - Existing Position: Global leader in process technologies for gas/liquid handling with revenue growing double digits and mid-20% EBITDA margins
Horizon Kinetics: Strategy focused on scarce assets including land, energy, and water resources that should benefit from AI infrastructure buildout. One client's account gained 103% in 2024, primarily from positions in Texas Pacific Land and Bitcoin. Letter discusses:
Texas Pacific Land (🇺🇸TPL - $30.02 billion) - Existing Position: Land/mineral rights owner with water revenue growing from $12 million in 2013 to annualized rate of over $150 million in 2024
Bitcoin (🇺🇸BTC - $2 trillion) - Existing Position: Fixed-supply asset with daily trading volume of $69 billion, approximately 5x Apple's trading volume
Madison Dividend Income Fund: Value-oriented equity strategy focused on above-average dividend yields. Underperformed in 2024 (7.7% vs. S&P 500's 25.0%) but maintains a high-quality portfolio with an absolute dividend yield of 2.8%. Letter discusses:
Rockwell Automation (🇺🇸ROK - $32.68 billion) - New Position: Industrial automation equipment provider trading at relative dividend yield of 1.4x S&P 500, its highest since 2008-2009 crisis
TE Connectivity (🇺🇸TEL - $45.50 billion) - New Position: Leading manufacturer of connectors and sensors with applications in EVs, renewable energy, and AI; has raised dividends by 7% annually over past five years
Madison Investors Fund: Long-term focused large-cap strategy that returned 16.5% in 2024 versus S&P 500's 25.0%. Maintains high-conviction portfolio with 30 holdings and 87% active share. Letter discusses:
Parker-Hannifin (🇺🇸PH - $86.68 billion) - Reduced Position: Industrial manufacturer executing well on Meggitt acquisition and margin improvement despite slowing industrial economy
Dollar Tree (🇺🇸DLTR - $16.13 billion) - Eliminated Position: Retailer with strong consumer value proposition and potential operational improvements, but insufficient position size to justify maintaining
Madison Mid Cap Fund: Quality-focused strategy that underperformed in 2024 (10.46% vs. Russell Midcap's 15.34%). Maintains high active share (96.4%) with focus on companies with strong balance sheets and competitive advantages. Letter discusses:
Liberty Formula One (🇺🇸FWONA - $30.38 billion) - Existing Position: Owner of F1 racing league benefiting from increased competition driving higher attendance and viewership
CarMax (🇺🇸KMX - $12.71 billion) - Eliminated Position: Used car retailer with strong market share track record but facing changing industry dynamics
Madison Small Cap Fund: Strategy with significant outperformance in 2024 (22% vs. Russell 2000's 11.55%), with strength in Consumer Discretionary, Healthcare, and Information Technology. Letter discusses:
Knowles Corporation (🇺🇸KN - $1.53 billion) - New Position: Supplier of micro-acoustic and precision device solutions with intrinsic value estimated at $27 per share
VF Corporation (🇺🇸VFC - $8 billion) - New Position: Owner of apparel brands including Vans, North Face, and Timberland; sold Supreme brand for $1.5 billion to reduce debt
Thanks to Letters & Reviews (lettersandreviews.blogspot.com) for compiling investment letters, which is where I sourced these letters.
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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.