Chris Waller

Looking for 'hidden gems' among small cap value stocks. Founder at Hidden Gems Investing. Founder & PM at Plural Investing. Posts are not investment advice.

[Chris Waller @HiddenGemsInves]

I write about ‘hidden gems’ in small cap value stocks based on extensive primary research.

This includes 30 page reports (with 1 page summary) after speaking with ~20 industry experts, and insights from attending trade shows.

Learn more at: https://t.co/EiE9sMt3Gn

[Chris Waller @HiddenGemsInves]

The hardest part of finding a ‘hidden gem’ is not finding the stock. It’s having the strength of conviction to hold on for a long time despite the market ignoring it, and knowing you are not crazy and that the business continues to compound in value in the meantime – so that when it does re-rate the upside is even greater than it was originally.

[Chris Waller @HiddenGemsInves]

https://t.co/YnzRDRVsEH

[Chris Waller @HiddenGemsInves]

TerraVest launched a buyback recently at C$117 - the first meaningful buyback in 5 years.

The stock quickly rose past C$120 and the buyback stopped, which suggests management see that level as a floor.

It comes as the business splits into two platforms heading in opposite directions.

The storage-tank platform (mostly reported as HVAC) grew +11% organic against a tough +24% comp, pulled by demand from data centers. You can see it building in customer deposits, which rose to C$112mm — with C$52mm of that added in just the last six months.

The trailer platform (mostly reported as Compressed Gas) fell -10% organic in an industrial slowdown centered on Western Canada. But peers like TFI are now calling a bottom in flatbed demand, so this half may be closer to turning than the headline suggests.

See the article below for a full update on TerraVest’s recent earnings.

[Chris Waller @HiddenGemsInves]

Most US investors won't look outside the S&P 500.
Most non-US investors won't look under a $5B market cap.
That means many high quality businesses that dominate a niche industry are simply ignored.
I'm finding ‘hidden gems’ with 20-30% ROICs and excellent owner-operators trading at 10x FCF.
As the market becomes increasingly focused on Large-Cap AI, the number of ‘hidden gems’ seems to be increasing.
That will change at some point, and the time to be prepared is beforehand.

[Chris Waller @HiddenGemsInves]

@ValdivianCap Judges scientific, watches of Switzerland, XPEL, TerraVest would fit and I’ve written about

[Chris Waller @HiddenGemsInves]

Most US investors won't look outside the S&P 500.
Most non-US investors won't look under a $5B market cap.
That means many high quality businesses that dominate a niche industry are simply ignored.
I'm finding ‘hidden gems’ with 20-30% ROICs and excellent owner-operators trading at 10x FCF.
As the market becomes increasingly focused on Large-Cap AI, the number of ‘hidden gems’ seems to be increasing.
That will change at some point, and the time to be prepared is beforehand.

[Chris Waller @HiddenGemsInves]

Here is an example that I like (article is free): https://t.co/58nvB8gCev

[Chris Waller @HiddenGemsInves]

**Update on Watches of Switzerland (WOSG.L)**

Watches of Switzerland is up ~85% since I published the Special Report, but I continue to see substantial upside over the next three years.

Results over the 18 months appear to be proving out the thesis that WOSG earns economics closer to a subsidiary of Rolex than to a retailer.

The risks that hung over the stock for two years — the luxury slowdown, falling secondary prices, and Swiss tariffs — have reversed or are reversing.

H2 organic growth was +11% on an underlying basis, and the US business, which has the grow runway, grew +22% cc against a +19% comp.

My data shows US waiting lists continue to strengthen, and FY27 guidance is for adj EBIT margin expansion of 40-80bps.

The stock still trades on only 13x NTM FCF, and the outlook looks stronger than at any point since the report. This is a mid-to-high single-digit organic grower with a long runway to keep opening stores in the US.

There are three additional tailwinds:

1. The Roberto Coin deployment into the Mayors subsidiary has more than doubled the business in those stores, and WOSG is likely to now roll that out across its store base.

2. Rolex has said it will lift employees by 20% as it expands capacity — a proxy for the supply that flows through WOSG.

3. I believe the market still underappreciates capital allocation. Net debt is down to £53mm, and with the cash the company generates I estimate it has up to £500mm of acquisition capacity over three years even at a conservative 1x EBITDA.

➡️ If you enjoyed this update, take a look at the full earnings update in the link in the next comment — it covers the FY26 results, the US and UK divisions, and the FY27 outlook in detail.

[Chris Waller @HiddenGemsInves]

https://t.co/0PGdnmNJnf

[Chris Waller @HiddenGemsInves]

ContextLogic’s Chairman spent $5.2mm of his own cash buying the stock since March.

Raja Bobbili, from Abrams Capital, has bought repeatedly in the open market between $7.92 and $8.75 a share, from March through to May.

What makes the signal unusually clean is that Abrams Capital take no ongoing compensation for running ContextLogic. They are paid only through the stock they own — so every share Bobbili buys adds to the single way he gets paid.

ContextLogic is the former https://t.co/icyWfutBJP, now set up as a permanent capital vehicle with $2.9bn in NOLs that recently bought US Salt, a niche evaporated-salt producer, at a fair 19x projected EBIT. The plan is to compound free cash flow per share by buying more high-quality niche businesses over time.

I don't own the stock given the 19x multiple. But sustained open-market buying from a value investor of Abrams' caliber, with alignment structured this tightly, is signal that it is worth taking another look. I know several smart investors who are invested in ContextLogic.

If you want the background on the US Salt deal and how the vehicle is put together, take a look at my write-up in the next comment.

$LOGC

[Chris Waller @HiddenGemsInves]

Owning 7-8 stocks in different industries gives you most of the benefits of diversification without the costs of diworsification. Agree or disagree?

[Chris Waller @HiddenGemsInves]

https://t.co/YnzRDRVsEH

[Chris Waller @HiddenGemsInves]

**Update on Watches of Switzerland (WOSG.L)**

Watches of Switzerland is up ~85% since I published the Special Report, but I continue to see substantial upside over the next three years.

Results over the 18 months appear to be proving out the thesis that WOSG earns economics closer to a subsidiary of Rolex than to a retailer.

The risks that hung over the stock for two years — the luxury slowdown, falling secondary prices, and Swiss tariffs — have reversed or are reversing.

H2 organic growth was +11% on an underlying basis, and the US business, which has the grow runway, grew +22% cc against a +19% comp.

My data shows US waiting lists continue to strengthen, and FY27 guidance is for adj EBIT margin expansion of 40-80bps.

The stock still trades on only 13x NTM FCF, and the outlook looks stronger than at any point since the report. This is a mid-to-high single-digit organic grower with a long runway to keep opening stores in the US.

There are three additional tailwinds:

1. The Roberto Coin deployment into the Mayors subsidiary has more than doubled the business in those stores, and WOSG is likely to now roll that out across its store base.

2. Rolex has said it will lift employees by 20% as it expands capacity — a proxy for the supply that flows through WOSG.

3. I believe the market still underappreciates capital allocation. Net debt is down to £53mm, and with the cash the company generates I estimate it has up to £500mm of acquisition capacity over three years even at a conservative 1x EBITDA.

➡️ If you enjoyed this update, take a look at the full earnings update in the link in the next comment — it covers the FY26 results, the US and UK divisions, and the FY27 outlook in detail.

[Chris Waller @HiddenGemsInves]

@BCValueInvestor @sidecarcap Over time, your library of companies you are knowledgeable about should grow, and therefore the incremental effort to own more stocks should decrease. You may well be right that diversification is something you build into.

[Chris Waller @HiddenGemsInves]

Diversification is not owning 30 stocks. It's making sure you understand the risks you are taking and that you are not just making one bet.

Investing in 7-8 businesses across industries, geographies, and business models is more diversified than 30 AI companies.

Agree or Disagree?

[Chris Waller @HiddenGemsInves]

Unpopular opinion: a company that grows revenue 30% a year but consistently burns cash is not earning FOR shareholders. It's earning FROM shareholders.

[Chris Waller @HiddenGemsInves]

@sidecarcap Exactly

[Chris Waller @HiddenGemsInves]

Seaport Entertainment (SEG) is an ignored small cap with a market cap of $300mm and:

✅ Properties Howard Hughes spent $1.2bn building, 10 mins from Wall St
✅ $87mm in net cash
✅ Property-level EBITDA about to turn positive for the first time
✅ Four catalysts coming this summer, starting in August

The company spun out of Howard Hughes in July 2024 and a two-year Tax Matters Agreement has blocked asset sales and buybacks. That restriction expires in August 2026.

This article discusses:
✅ Why I see four catalysts arriving this summer
✅ Why property-level EBITDA is about to inflect positive
✅ Stabilized profits by segment once announced leases and programming begin

Link in the first comment.

[Chris Waller @HiddenGemsInves]

@invest091 @rhaej Yes but I have not found a way to automate that unlike the SEC API. So if you want to pull hundreds of transcripts that has to be manual if via TIKR.

[Chris Waller @HiddenGemsInves]

@rhaej @TechFundies @RagingVentures Very interesting, thanks. And that can be automated like the SEC API, or Motley Fool just has transcripts publicly so you scrape them?