6/27/24 :: VROCKSTAR :: 
OLPX
Buy today, load truck sub $1.4
EPS is slow and i've been on the road for 2 wks, so publishing in some strange stuff today. this is one i've been meaning to write up for some time and was very active in end of april right before i started doing writing publically.
if you're not familiar with this product, it's a salon style shampoo. they went from crushing it hard core (like Celsius-style hype and growth) to getting blamed for people losing their hair using the shampoo. we all know what else made people lose hair but whatever, ppl blamed the shampoo. chit timing.
so in a matter of a year, this thing goes from being ultra premium and loved to avoid and growth get shelled. for a growth stock on growth multiples that's pretty catastrophic to the earnings number and what you pay for that (the multiple).
fast forward to this year. they bring in a new CEO that has a pretty great track record. amanda baldwin. she was at supergoop for several years and 10x'd its growth. she's also former PE (and has these relationships).
so pull this all together and let's summarize the thesis so u all stay with me on this and the conclusions and what to do:
1. at ~$1.5/shr you have ~1 bn market cap and about 150 mm of net debt (though that includes >500 mm of cash, so 'tis not just debt and no cash buffer)
2. co just beat low expectations last Q and now amanda is coming into stabilize, re-write the partnerships w salons (that were abusing the brand/ relationship - more on that if u want we can take it to the comments).
3. ON SUPER LOW CASH FLOW NUMBERS bc that's what we value these troubled stocks on... i'd say you do 120 mm in FCF this year. that's 10% on the current enterprise value.
4. what's the right cost of capital for something that hasn't stabilized? probably 15+%. so the stock is "cheap" but it's not obviously cheap. (and trust me i even struggled to size it up in the $1.2's a few months ago - i remember the feeling and wondering if i was going to regret it). so you can afford to buy it today, but do NOT get too large is how i'm thinking about it.
5. i think she probably finds a strategic buyer for this. blackstone is her relationship (w fmr company), and this company remains w good cash generative footprint, capable leader and 10% is good enough for these guys to gear up for their 20% IRR's. THAT is why i think anything in the mid $1.5's is good money.
...
TL;DR - it's a buy today, skew is probably 2:1 up/down. a greedy buyer waits for <$1.4/shr. and you sell other stuff to buy more of this in the $1.3's and below (responsibly frens, right?)
put this on your watchlist. get a nice 1-2% spot for your portfolio and as it runs in the 12 mo. context/ time frame and amanda delivers we can sell some OTM C's for income to fund other stuff.
k?
thanks for hanging w me. i kinda puked more thoughts than wanted here, but it's a name i've traded a lot in the past successfully so have a good handle on the personality of the ticker.
comments welcome.
V
OLPXBuy today, load truck sub $1.4
EPS is slow and i've been on the road for 2 wks, so publishing in some strange stuff today. this is one i've been meaning to write up for some time and was very active in end of april right before i started doing writing publically.
if you're not familiar with this product, it's a salon style shampoo. they went from crushing it hard core (like Celsius-style hype and growth) to getting blamed for people losing their hair using the shampoo. we all know what else made people lose hair but whatever, ppl blamed the shampoo. chit timing.
so in a matter of a year, this thing goes from being ultra premium and loved to avoid and growth get shelled. for a growth stock on growth multiples that's pretty catastrophic to the earnings number and what you pay for that (the multiple).
fast forward to this year. they bring in a new CEO that has a pretty great track record. amanda baldwin. she was at supergoop for several years and 10x'd its growth. she's also former PE (and has these relationships).
so pull this all together and let's summarize the thesis so u all stay with me on this and the conclusions and what to do:
1. at ~$1.5/shr you have ~1 bn market cap and about 150 mm of net debt (though that includes >500 mm of cash, so 'tis not just debt and no cash buffer)
2. co just beat low expectations last Q and now amanda is coming into stabilize, re-write the partnerships w salons (that were abusing the brand/ relationship - more on that if u want we can take it to the comments).
3. ON SUPER LOW CASH FLOW NUMBERS bc that's what we value these troubled stocks on... i'd say you do 120 mm in FCF this year. that's 10% on the current enterprise value.
4. what's the right cost of capital for something that hasn't stabilized? probably 15+%. so the stock is "cheap" but it's not obviously cheap. (and trust me i even struggled to size it up in the $1.2's a few months ago - i remember the feeling and wondering if i was going to regret it). so you can afford to buy it today, but do NOT get too large is how i'm thinking about it.
5. i think she probably finds a strategic buyer for this. blackstone is her relationship (w fmr company), and this company remains w good cash generative footprint, capable leader and 10% is good enough for these guys to gear up for their 20% IRR's. THAT is why i think anything in the mid $1.5's is good money.
...
TL;DR - it's a buy today, skew is probably 2:1 up/down. a greedy buyer waits for <$1.4/shr. and you sell other stuff to buy more of this in the $1.3's and below (responsibly frens, right?)
put this on your watchlist. get a nice 1-2% spot for your portfolio and as it runs in the 12 mo. context/ time frame and amanda delivers we can sell some OTM C's for income to fund other stuff.
k?
thanks for hanging w me. i kinda puked more thoughts than wanted here, but it's a name i've traded a lot in the past successfully so have a good handle on the personality of the ticker.
comments welcome.
V
Note
w stonk now $1.41 i'm starting to make this into a more meaningful position. no change of the thinking above. i'd love a lot of this sub $1.3 and in this environment anything that's not a top 20 stonk is getting silly cheap (referring to cash generative, solid balance sheets, reasonable multiples).the converse here is that all consumer discretionary is simply getting rekt. this is smaller name, nobody needs to own it. complicated story and history and turn around. hard to make it into a mega position just yet which is probably much closer to $1 where takeouts are obvious.
but it's something to add to here today, from my own book/ perspective. as you guys know i'm pretty cashy, so this is the type of stuff i nibble/ add to on days like today.
Note
I don't mean to communicate my every move here, but this is now back to a 2% position bot $1.5 today. discretionary getting hammered today (again, what's new) and i like the cash generation/ turn around story as spelled out ad nauseum this position also fits into my framework of large cap names that have benefitted from flows/ haven factor and valuations r so much higher r going to be looking to monetize this better currency (their relatively overvalued stocks) to pursue small targets with good brands, good R&D stacks (tech-focused not in this case) and healthy balance sheets that perhaps are not optimized. PE factors into this take-private equation too given debt can be had in HSD's and in case of
OLPX you can buy mid teens FCF yield and probably higher if you gear this up.this is all to say. i'm adding a bit back. it's about a 2% position for me again.
Note
Taking it back to 1.5% on the 8% pop.See my
IWM comment last night. OLPX prime beneficiary of this type of flow.But want to see a reversal on the index to see where the bids get put on the craps table. Taking a trim on a number of positions today
BABA, 
NXT, $olo... just to lighten up a bit on this move. We r at the beginning but it won't be a straight line.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.