I took a position in ALJJ today. This is a holding company that is Jess Ravich's side hustle. The stock has dropped precipitously since the last earnings report a month ago. Part of this has to do with the bad quarter and part of it probably has to do with the fact that Mr. Ravich is facing a high profile sexual harassment suit at his main employer, TCW.

There's a lot not to like about this business but right now it's too cheap to ignore. They just did a private placement in November and issued ~400k shares at ~$3.15 and Ravich himself bought 300k shares on the open market within the past month.

Pro case:
- Guidance of $20mm FCF for this fiscal year will help pay off ~$95mm debt from their printing acquisition.
- Lots of room for improvement in 2 out of 3 of the underlying businesses.

Cons:
- Somewhat sketchy governance. Besides the sexual harassment case, Ravich also pays his daughter 80k to sit on the board. Not a fan of this!
- Lots of debt and again...2/3 of the underlying businesses are performing poorly.


In the spirit of Mori****a, here are my current holdings by position so you can make fun of me: FCAU, PDEX, MX, AIRT, MMAC, YTRA, ALJJ, CISN warrants, LMB warrants, HDSN, DSKE warrants, PRSC, RAD.

I also have 1 short position remaining after I closed out my trade in EVEP today. Again I'm confounded by the StockTwits losers who pump up companies that are clearly going bankrupt. I caught EVEP near the top of the recent pump and closed it today after they announced they would file. On a percentage return basis this was the best trade of my life that didn't involve options.

Cheap by what metric?

ALJJ is interesting. They gave 2018 ebitda guidance of $36-39m and the shortly after put up a terrible Q1. The bad quarter really scared people because they are so close to breaching covenants on their debt now. This is a unique situation, Ravich has every incentive to make this work out for shareholders and he has a very non-traditional/close relationship with the lender Cerberus. Him buying those shares at $2.25 in the open market looks good but he hasn't followed it up with any buys since then, but hes probably also in a blackout period for buying now. If that 36-39m ebitda guidance is still on the table, stock is somewhere around 4.25-4.5x ish EV/EBITDA for a company that pays basically 0 taxes that is cheap. I wish I knew this company a little better i'd potentially be able to have a little higher conviction about what is likely to happen here. The presence of debt is like playing with fire if you don't know what you're doing.

Pretty much any conventional metric...assuming guidance EBITDA of $39mm, EV/EBITDA is 4.9 as of today.

This guy thinks a fair value for the shares is $4.70.
http://www.valuewalk.com/wp-content/...10.23.2017.pdf

I don't think they're in any danger unless cash flow dries up over the next two years, but I agree that if the economy slows down there is a higher than average risk of default. Even then Ravich may lend the company money to keep it afloat. He owns about 35% of the shares so his interests are highly aligned with shareholders.

I like goodfood a lot at this price. We got in much lower but I think its going to be a huge winner. will probably do a full VIC writeup after the next quarterly so dont want to say too much here.

Ahnuld,

Any thoughts on Big Rock Brewery? BR.TO?

I really liked their expansion plans and I feel as if their revenue and costs have gone in the right directions, but the change in the grant structure in Alberta hurt them and now I'm not sure what to think. I still feel as if there is tremendous value in this stock, but I'm fairly novice.

Pretty good Q/Q growth, I think we'll see 30-40% growth since their last quarter (as claimed in their recent news released and confirmed by their similarweb website visit stats).

Also it looks like they have enough cash to keep growing until they reach profitability.

One concern is that SG&A is growing somewhat proportionally with revenue. Though I guess some of those costs are in anticipation of higher revenue, as they are not running at full capacity.

If in the next 3 years, revenue grows x10 and SGA x2, we'd be at $11million net income which is only mildly exciting given the current $131million market cap.

Looking at reviews on their facebook page, I see 3 usual complaints:

- mishaps with delivery
- issues with food quality/ missing items
- overpackaging

It's hard to tell how common those are, but those are issues that will be hard to deal with as the company grows. On the plus side, their customer service seems to be very reactive, though it might be costly to give free bags to disatisfied customers on a regular basis.

My $18 number already accounted for expenses. They get tenant reimbursement revenues to cover CAM/Tax as part of their leases. The tenant reimbursements were around 26% of revenue in 2017 so if you adjusted for that we'd be at 74% of revenue vs. the 64% and 72% number you quote for GGP/SPG.

California and Florida are the two biggest states but its all over the map. 40% of their new leases they are signing are for restaurants, bars, and entertainment venues aka. non-retail. It isn't like they are just closing a Sears/Kmart and trying to find another big box store to fill the entire space, they are completely redeveloping these locations.

Somehow exited the dumpster fire of ARCI with gold. +5%.

Current longs (based on size)
AGO, DS, PDEX, ORBT, TPC, HFRO, FELP, MGM, CBK, APWC, DGLY, PRSC preferreds

Short: TSLA

Long puts: TSLA
Long calls: AFL

looks like NTS finally got the Indian deal done. Worth the wait as it looks broader than they originally contemplated and with a minimum revenue guarantee.

last ceo completely botched it, very competitive market with tons of different micros, hard to get noticed. doesnt mean its not worth a look but thats why its failed

nice! Have they made any of those numbers public?

No details.

https://www.nanosecurity.ca/news/nan...nts-for-india/

no but im thinking 3-4mm in revenues in fiscal 2019

Closed TSLA short for +15% gain, will be looking to reenter.
Sold FELP for -30%. It was a mistake.

Buying PKX. It sank quite heavily in view of the potential steel and aluminum tariffs, but now that KORUS has passed, it should eventually go back to fair value as tariffs are not an issue anymore. It is selling very cheaply right now.

Current longs (based on size)
AGO, DS, PDEX, ORBT, TPC, HFRO, PKX, MGM, CBK, APWC, DGLY, PRSC preferreds

Long puts: TSLA
Long calls: AFL

PRSC hit $78 today, so they can decide to convert the preferred shares into common ones. Does anyone know how and when the decision will be made?

they have to trade above this level for 4 or 6 (i have the filing somewhere, gonna look it up later) weeks before they can convert them.

personally i think they will do it as soon as possible because it gives a bad look to other shareholders if they don't.

2017 Bezos shareholder letter is out
https://blog.aboutamazon.com/2017-le...-shareholders/

ELXS bought out for $51/share this morning

Nice! Unless you thought fair value was more. lol at that 4 year timeline from SPAC to buy out though.

Anyone have a link to Einhorn's presentation on AGO? I can't seem to find it anywhere; I can only find articles that talk about it.

I think you are mistaking ELXS with another company, they have been public for over 15 years.

I'm not a big merger arb fan but I think the merger arb right now with ELXS at $49.50 is a good opportunity. 3% spread ($51/share take out), deal should close in the next 60 days, I think the odds of the deal falling through are pretty low and even if it does you still own a great company, and the odds of someone else coming in with a larger bid I would definitely say is higher than 0% (though probably low).

I definitely was, not sure what I was looking at!

Bought a bunch of new microcaps that all look too cheap: BXC, MMAC, OTEL, NULM, PFSW, SMID, SWKH, CVU, IDT, NTIC, NTP, VMD.V.