Portfolio Update 4.30.21

Period
April 30, 2021

A slightly new layout this week with positions broken down by bucket (Core, General, Option).

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Core

No changes in this category. Still dominated by B Riley Financial ($RILY)Viatris ($VTRS), and bebe stores ($BEBE).

  • Insider owned and controlled B Riley is somewhat in the “never sell” camp for me. CEO Bryant Riley continues to buy stock and make savvy investments with the business. I believe he’ll compound at a great rate over the long-run.
  • Viatris has had a slow start following the Mylan-Upjohn merger. They sandbagged guidance out of the gate but set a low bar to clear. The stock is cheap, has a good balance sheet, and tailwinds in generics / biosimilars.
  • Bebe is an oddball security owning a few formerly-distressed/bankrupt brands generating high-margin licensing income. They’ve used the net cash balance sheet to acquire some Buddy’s rent-to-own locations from B Riley-affiliated Franchise Group. Market doesn’t appreciate the earnings potential.

General

A few new positions in this bucket over the last month. Trecora Resources ($TREC) and NN Inc ($NNBR) were recently written up. The former is a specialty chemical company with heavy insider buying and correlation to rebounding energy prices. The latter is an automotive turnaround on the heels of a major asset sale.

Another new stock which will be covered soon is Liberated Syndication ($LSYN). They operate a podcast and web hosting business which generates a ton of free cash flow. They levered up to do a large acquisition in 2017 and have since repaid all debt. Now, they are at it again with another large acquisition in the podcast space. In tandem with the latest deal, they are raising some equity capital to fund more acquisitions.

Saga Communications ($SGA) is another new one. A traditional radio broadcaster that has drifted for years. While other radio players have been rebounding, Saga is still reeling. Q4 results look back on track to pre-COVID levels. It’s trading at 3.3x EBITDA based on 2019 levels… With a net cash balance sheet too.

The final new position here is Vistra Corp ($VST), an unregulated utility based in Texas facing massive one-time losses from the recent Texas cold spell. The stock looks cheap after it works through temporary losses from winter weather.

Option

Hallmark Financial ($HALL) is the lone new name in this bucket. More to come on this name as I plan on writing it up soon.

I’ve also started to build a position in Viatris ($VTRS) call options as the underlying stock price has continued to slide.