Bullpen.News From Edwin Dorsey
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Activism

Everything our editor has picked under this sector, best first.

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@KEDM_COM

KEDM.com on X

GungHo Online Entertainment $3765.JP has spent more than a decade living off Puzzle & Dragons, drifting into irrelevance. This could be over, and we might finally see some value unlock. Strategic Capital mounted a year-long activist campaign, forcing the company’s long-time boss out. So now we have a new CEO (with a big pay cut compared to the previous chief) and a TSR-linked incentive plan. But this is not the most interesting part. GungHo holds a stake in Gravity $GRVY (~59%). Worth more than GungHo’s entire enterprise value. Gravity itself is interesting, btw: profitable and with a net cash position equal to its market cap. Now let’s see if Strategic can get this thing over the finish line.
@KEDM_COM

KEDM.com on X

Jana Partners is pushing Alkami Technology $ALKT to pursue a sale, arguing the fintech platform is materially undervalued after a sharp share price drop. At first sight, Alkami looks like your typical not-yet-profitable / disgusting share-based comp / a ton of open market sales company. That said, this thing actually has an interesting offering, which makes continued ~20% organic growth and high customer retention very probable over the next years. Also, we’ve seen funds getting more active in the market and taking significant stakes (ao, General Atlantic).
@ActAccordingly 1 click

PAA Research on X

$ETD announces a $3.00/share special dividend to quell shareholders while Doug Bergeron's activist efforts escalate. As a reminder, $ETD made the strategic decision to pay almost all of its free cash flow out in dividends (regular + special) over the past few years. The company has no debt and still generates strong FCF despite overall weakness in the housing market and what I would call lackluster execution on its growth plans. Seems like there's still a lot of ways to win here as a shareholder.
@KEDM_COM

KEDM.com on X

SEACOR Marine $SMHI has launched a strategic review, looking for value maximizing transactions – tough, clearly preferably a full sale. This comes after a ton of pressure from Pointillist (the largest shareholder), which argued SMHI’s market cap massively undervalues a fleet. Their thesis: the offshore cycle has fully recovered, but SMHI’s equity still trades at well below its $22/share broker appraised value. Seacor remains weighed down by high interest costs, G&A expenses, and subpar utilization, forcing asset sales to bolster liquidity. The premium PSV fleet alone should be worth ~$11/ share, with FSVs and Middle East liftboats pushing embedded value to $15/share+, vs. today’s price.

40 Stock Pitches (3rd-9th August)

Navient trades near 40% of tangible book as Gator Financial Partners argues private student-loan growth and restructuring can reverse its…

NAVI $857M
Capital Employed 9 clicks
@BlueDuckCap 1 click

BDC on X

Very constructive development here w/ $STIM. We have both the largest shareholder and a major activist investor demonstrating full confidence in the balance sheet and new management. We think the new CFO has helped here and credit to Dan Reuvers for taking the CEO role at a tricky time but demonstrating a solid turnaround plan that has obviously has the backing of shareholders. For too long this business has under-punched its weight which is why activism became a reality in the first place. Clearly the new management has things pointed in a more exciting direction. At the same time, shareholder board nominations will ensure that the new direction remains one intent on maximizing equity value.
@BrokenMoats

Broken Moats on X

$RBLX no victory laps I gave up my short a long time ago. Felt the stock was manipulated by insiders to gas monetization and trends with smash and grab tactics like grow a garden drops, etc. That policy that drove the stock higher is also their undoing as the comp trends reverse and monetization declines. But the real undoing here is that he company, and I solely would call out the CEO who has majority voting power, that it is their lack of seriousness around safety that is undoing their platform and could ultimately completely unravel their business. Most parents I talk to won't let their kids play on Roblox even if they had in in years past. They are more comfortable giving them a switch to fulfill any gaming time because of the lack of safety concerns. David had a concept and it took off, got scale, built a genuine niche marketplace and network and he continues to squander that opportunity with poor operating efficiency (see costs), awful capital allocation, and some of the worst governance of any company over a $1B I have seen by dismissing the open problems on his platform, then only after issues are very public making half attempts to put in safety controls like age verification that he touts on Bloomberg interviews the day of. Its a shame the CEO has voting control, because if you could remove him their could be potential here at current prices based of the network, cash flow and the ability to dramatically improve monetization with advertising and brand partnerships over time. But you would need a big public campaign directed at parents on Bloomberg that the company is serious on safety and protections and will clean up their user account issues, and get serious on capital allocation (one buying shares to cover dilution regardless of share price is garbage policy - have conviction, buy when its attractive, and stay out when its not). @BillAckman said he was psychologically short after he walked from Herbalife, not the same as making money alongside your conviction but the best shorts are often complicated to fully execute on. But few public companies that feel more satisfaction in going down then Roblox due to their management team and disregard for their users safety

Seer

Seer trades at $2.04 against $3.90 per share of net cash as activists press a board that rejected five buyout proposals and won reelection.

SEER $113M
Triple S Special Situations Investing 4 clicks