Late to the market this morningSo I missed out on averaging down due to panicky overreaction. But this has been seen before, and it really highlights why ESG has become the next big thing for companies of all sorts, not just oily-cos.
I'm not sure who cares if NVEI has porn customers - for some reason banks are still funding weapons, alcohol and gas/oil drillers too, so I think the market is pretty agnostic about that. Same with their principals - the past is the past, future performance is predicated on current visibility. A "disappearing LinkedIn" isn't exactly a smoking gun as anyone has seen who has followed the ever-changing profiles of some other founder-CEOs as they get rid of their frat-party pictures and try to present themselves as staid pillars of the community.
And really, the business is in no danger. Their debt ($500M) could be considered a risk but it's all private debt covenanted to their cash on hand and nothing else - as long as they maintain at least $70M in cash, their debt is safe, and in September they had nearly $290M in cash. All the debt is between 1.00% - 3.00% and locked in for at least a year at a time, so it's not like there's a huge risk there either. The biggest risk to NVEI is to goodwill, which is pretty much $1B. But it's non-cash, and the debt doesn't depend on it either. So, like who cares?
Anyone who has followed the story of LSPD will know exactly how immaterial much of the nonsense is. That said, the business value isn't overly high, and people have been paying a lot for future expectations in these past months, so it's hardly a surprise to see NVEI following LSPD into the deep woods for a beating. Having recently taken a small position at under $113, I'm looking for a place to add a few more. Just after 10am this morning would have been a good time.
As another poster said, can someone get Spruce Point to take SHOP out to the same place for a beating too? I need some cheaper shares of that. This should make for a good roller-coaster.