Theme of the Week
Up in the air
Back in June of 2023, we wrote about the resurgence of air travel following 3 years in which in-person events were canceled, and we all had to talk to our colleagues over Zoom.
During the pandemic, the manufacturing of new airplanes had ground to a halt, but we believed production was about to ramp higher to satisfy this renewed demand.
We were bullish on anything that goes into airplanes. Looking back on this trade almost 3 years later, the supply shortage that we flagged materialized.
But while the recovery was real, the Air Alaska door incident in January 2024, as well as the Boeing strike later that year, slowed it down. Evidently, restarting one of the world’s most complex supply chains doesn’t happen at the flip of a switch.
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
Cluster Buying Notes: Gabler (Xk4 GY) is still trading below its IPO price, and the CEO seems grateful, having begun buying shares in the open market. Euro Defense play, strong tailwinds, big backlog, EBITDA margins close to 30%, ~11x forward EV/EBITDA. This is getting interesting!
Priced Secondary Notes: Secondaries aren’t always getting the attention they deserve, but 2 recent KEDM highlights show they are worth paying attention to. We flagged Danone’s sale of its 22% stake in Lifeway (LWAY) and Coliseum’s sale of Universal Technical Institute (UTI).
Both happened at large discounts, depressed the share price, but also saw big pops once the market worked through the new supply. Buying the cleanup print can generate significant alpha.
CEO Turnover Notes: BP (BP/ LN) continues to underperform the sector, and a major reason for that is the leadership mess. BP’s management churn continues, with the Deputy CEO Howle now retiring just two months after her appointment, along with a few other departures.
These all follow the removal of BP’s chair and the departure of its former CEO. In other words, what the heck is going on? BP is framing the changes as part of CEO O’Neill’s ‘organizational simplification’, but it sure ain’t helping the stock.
Golden Handcuff Monitor: Fortune Brands Innovations (FBIN)’s new CEO, Jesse G. Singh, had to commit to a $1 million personal stock purchase right at signing.
On top of that, all net shares he receives are locked up for his entire tenure, meaning he can’t sell a single share while employed and has to hold 50% for a year after he leaves, too.
The performance structure is a 3-year 850,000 PSU ladder at $80, $100, and $125 (currently sitting on ~$54).
Fund Letter Monitor: Meditation Capital’s Q2 letter is taking the long side of the AI-disruption-of-software short thesis, buying heavily shorted application-SaaS names (Workiva, Atlassian, Klaviyo, Braze, Dynatrace). Deep dive on Workiva (WK).
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.