YesssDo that! Where can I tune in? Time to put some pressure on management.
I sold out most of my position here. Let's take best case scenario in the coming year or two, they add $1-1.5m of annual revenue (that is sustainable). Probably only $0.5-1m of that will be cash flow, so a bit over $1m of FCF. Value that at 15x, and you get a double from current prices. But it is attached to overpaid lying management. Exposed to a dying industry and clearly sensitive to bad economic conditions (less ads when economy goes sour).
And that comes with a lot of risk and uncertainty. Just added shares in Tessenderlo, a rock solid company (run by Warren Buffett of Belgium) that just announced their results will be better than in 2019, and you can actually trust those guys. And their revenue is connected to providing basic necessities (food supply). With $25m of depreciation and amortization that can be added back, that means with a high certainty they are already trading at about 8x earnings right now. It is safe to say t hat a business that grows in earnings in this crisis, with above average return on capital, run by one of the smartest capital allocaters around, is worth probably twice that. So I got a 90% double in Tessenderlo, and maybe a 50% or 25% double (who knows at this point) in YOO.
I see loads of much better doubles and triples like that laying around. For example natural resource royalties trading below their producers, even though they are lower risk (they actually get paid before the bond holders, if you pick the right royalty companies and trusts) and lower debt. VNOM, FLMN, KRP, BSM. Most of these trade at >10% distributable cash flow yields even with awful commodity prices.
But I invest all around the world, if that is not your thing, holding this stock may be a better option. Just think that at this point, this is a double with very high uncertainty, where you can get doubles with much higher certainty.