Theme of the Week
The dire state of the US consumer
Let’s think back to the 2010’s. The FED had just introduced ZIRP, and TINA (there is no alternative) was the talk of the town. In search of yield, wealth managers shifted their bond allocation to blue-chip dividend stocks.
In contrast, traditional dividend investors moved up the risk curve to anything that offered a safe, juicy yield.
We recently reintroduced our Fallen Angels monitor. The idea is that you can make a lot of money if something goes from completely fucked to somewhat shitty. Yes, we like to invest behind macro tailwinds.
Yes, we like companies with an event-driven setup. But if we can get a company at a trough earnings and a top multiple, we don’t mind being a few quarters early.
The times when US consumers were flush with COVID stimmies, while at the same time they had too much time on their hands, seem like a distant past.
In 2023, we began researching higher-quality consumer companies ahead of an inevitable recovery. But so far, every year has surprised to the downside, with no end in sight.
Kuppy’s Tweet of the Week
Want to just cut through the noise and get actionable event-driven ideas?
KEDM Lite is a must for event-driven investors.
Each weekly issue of Lite delivers:
- 30+ actionable special situations and event-driven ideas (42–46 issues per year)
- Deeper focus on small and mid-caps, where alpha often hides
- Happy Hour webinars with our own Kuppy and guests, plus AMA sessions
- Full Lite archive access, growing into thousands of highlights over time
*Early subscribers to the annual plan will get access to the KEDM Discord room. All KEDM Pro subscribers get Lite for free!
Kliff Note of the Week
Spin Monitor: Trump Media (DJT) abandoned plans to spin Truth Social and other media assets. An absolutely devastating blow to capital markets. What a huge loss for investors and the world in general.
Anyways… DJT did mention that it remains committed to completing its $6bn merger with TAE Technologies, which is building a fusion‑energy player to serve rising power demand from AI data centers.
TAE has already raised $1bn+ from Google and Chevron. The deal should close by Q4. It might be worth keeping an eye on this one given its hype potential.
Cluster Buying Monitor: Good to see insider purchases at Ashtead Technology (AT/ LN). Ashtead, a subsea equipment‑rental platform, continues to perform well (in strong markets).
We flagged this one late last year. Despite EBITDA doubling since 2023 (in part due to acquisitions) and margins remaining strong, the share price is still at 2023 levels.
Does ~5x forward EV/ EBITDA make sense in this environment? For those who have a view on the oil price.
Announced Buyback Monitor: Highland Opportunities and Income Fund (HFRO) announced a $100m buyback, roughly 26% of its market cap. This one fits many buckets. The whopping 40%+ discount to NAV (even after the recent run) clearly raises questions about the NAV quality.
But Saba has been aggressively building a stake (and still is) and is now at 10.8%. We’re going to see more action here.
Newsletter Short Monitor: Viceroy put out a short report on Abaxx (ABXX), saying that ‘the Exchange is comprised of wash-traded churn sustained by incentives, which collapses the moment incentives are switched off.’
Abaxx’s CEO Crumb is apparently saying ‘thank you’, buying shares in the market almost every day over the past week.
13D Monitor: We highlighted ‘specialty’ chemicals company Ashland (ASH) late last year, basically calling it an interesting takeover candidate/activist target given poor end markets, but with some interesting assets, ok-ish fundamentals, and a rather cheap valuation.
We’ve seen Standard Investments disclose a ~9% stake, and now Ancora is pushing for a sale. We agree. Check out Ancora’s presentation.
Disclaimer. KEDM is provided for informative purposes only. No due diligence has (yet) been performed on the names on this list. The list might change strongly on a regular basis. This overview does not constitute advice; always do your own due diligence. For the full disclaimer, please go here.