Fresh Ideas: Investor Letters, Options Wins And More

This edition is loaded with investor letters as we clear the deck for one of our favorites: Scott Miller. We’ll touch on some other things, such as a trader turning $700 into $100K+. Artko Capital continues to kill it. And Howard Marks discusses negative rates.

But we’re saving room for what matters most, fresh ideas.

Are you ready?!

October 23, 2019

Size Matters: Last week’s trivia prize was a shout-out and $1 Venmo from yours truly. We received a lot of feedback from last week’s Value Hive and the winner is … *drumroll please*

NOBODY!

That’s right. Nobody emailed the correct answer to last week’s question. That means we’re going double or nothing. Yep. Two whole dollar bills and two week’s worth of shoutouts is up for grabs. Here’s the question: What is the world record for the largest pumpkin ever grown?

House rules, no Google! Good luck!

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Investor Spotlight: Scott Miller Likes SPACs and South Africa

GIFs by tenor

Early last week, Scott Miller released his Q3 Investors Letter. Miller — who runs Greenhaven Road Capital — returned a hair below 1% for the quarter. Astute Value Hive readers know we don’t care about short-term performance.

We agree with Miller on this one. Quarterly performance is a blip on the long-term radar.

Before we dive into Miller’s new investments, let’s glance at his top four holdings (thesis descriptions are taken from letter, not my opinion):

  1. KKR & Co. (KKR)
    • Miller’s Thesis: A strong balance sheet with $17+/share in cash and investments. A sub 6x distributable earnings valuations. Conservative accounting, high insider ownership and strong secular tailwinds.
  2. Digital Turbine (APPS)
    • Miller’s Thesis: Neutral third party that works with wireless carriers to pre-install apps on new cell phones. Then sells the ‘slots’ to app-driven companies such as Uber, Amazon and Netflix.
  3. PAR Technology (PAR)
    • Miller’s Thesis: The asset Greenhaven wants to own is the restaurant POS (point of sale) system, Brink. Brink remains buried under a defense contracting business and a hardware business that is currently far bigger.
  4. BlueLinx (BXC)
    • Miller’s Thesis: The company has 9M shares, a sub-$300M market capitalization, currently running at approximately $100M in adjusted EBITDA per year. There is debt, but all the earnings improvements would accrue to the equity holders.
  5. SharpSpring (SHSP)
    • Miller’s Thesis: If the product continues to evolve and SHSP can maintain a LTV/CAC above 5, this [recent] sell-off will likely be a blip on the way to a bright future.
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Disclaimer: All statements are solely opinions and are for educational purposes only.

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Barry Glassman 1 year ago Member's comment

Great article. Where can I read more about that Options Trader who had a 13,967% return on just two trades. That sounds like a story that must be told in more depth!