PIK26

Investor

[PIK26 @PaidInKind26]

$LEAT screens expensive. It's not. $60mm market cap; $51mm EV. Earnings are ~40% of normal. Destocking cycle is bottoming.
- 7x normal EBIT; 9x normal P/E; 1.4x TB
- Net-net WC = 60%+ of market cap
- 15-20% incremental unleveraged ROEs
- 10% organic CAGR over 15 years

Link below

[PIK26 @PaidInKind26]

@GuastyWinds The b/s strength has also been a big advantage vs. a largely PE-owned/overlevered landscape. While others have been right-sizing costs $LEAT was investing counter-cyclically. I wrote about LEAT a few mos ago. some data in there you might find helpful
https://t.co/UuuVrRtGcY

[PIK26 @PaidInKind26]

$LEAT Q4 2025 Earnings Update. Link in bio along with my initial write-up. Overall, a solid quarter.

[PIK26 @PaidInKind26]

@sungcapital $LEAT write-up is linked in my bio. former fintwit darling but got crushed as channels destocked aggressively exiting COVID (which has bottomed imo). 25% 15Y+ organic sales CAGR ex. neck braces, strong b/s, 15-20% incr. unleveraged ROTEs trading at 7x normal EBIT and 1.4x TB

[PIK26 @PaidInKind26]

@MaaizKhan Not sure what P123 is so can’t comment but agree that structural change in ability to move down market at scale is a risk. Another thing i’ve thought about is whether AI increases myopia (and therefore volatility). Perhaps time arbitrage becomes an increasingly effective strategy

[PIK26 @PaidInKind26]

@MaaizKhan Thanks Maaiz!

[PIK26 @PaidInKind26]

$LEAT screens expensive. It's not. $60mm market cap; $51mm EV. Earnings are ~40% of normal. Destocking cycle is bottoming.
- 7x normal EBIT; 9x normal P/E; 1.4x TB
- Net-net WC = 60%+ of market cap
- 15-20% incremental unleveraged ROEs
- 10% organic CAGR over 15 years

Link below

[PIK26 @PaidInKind26]

https://t.co/UuuVrRtGcY
May be of interest to you @OlivierColombo @SebKrog @mavix_leon @MaaizKhan @majgeoinvesting

[PIK26 @PaidInKind26]

do you have a sense for how large the temp payroll funding is as a % of system sales? I’m curious as presumably the WC burden for HQI would increase meaningfully under a booming economy/high growth scenario, and the AR collections are lagged relative to the payroll funding, so would they just need to tap on the revolver under that scenario?

[PIK26 @PaidInKind26]

@Klad_blok @jaysyoon june 4th is the next measurement date for inclusion into FTSE 100. Need to be 90th largest by market cap to gain inclusion. Vistry is currently LSD% away from the 90th spot.

[PIK26 @PaidInKind26]

yes but the capacity to build 22K is still there. they have 26 or 27 regional units, each with the capacity to build up to 900 homes with current infrastructure/resources. those 8K homes currently built under traditional homebuilding still need to get built, so it’s not like they’re cutting from 16K down to 8K and going back up to 22K. Partnerships is also a much higher asset turn business

[PIK26 @PaidInKind26]

would just note that the completion targets do not require a double. the company did 16-17K completions last year (across both housebuilding and partnerships). As housebuilding is repurposed, those completions will flow to partnerships as the homes are still getting built. Don’t think it’s a crazy stretch to go from 17K to 22K especially when the asset turns on partnerships are much higher

[PIK26 @PaidInKind26]

@DeepSailCapital @abrowninvesting 2 questions: 1) do you have a sense for what they’d want to negotiate to change in the renewed policies? Not clear to me what is unfavorable in existing. 2) Over long term, is pass through of workers comp at big expense of franchisees? assume no bc minimal mid-mgmt cost offsets

[PIK26 @PaidInKind26]

@SFM1010 @DeepSailCapital @abrowninvesting Unfavorable impact to work comp costs seem to be driven by run-off of reserves that were assumed as part of 2021 M&A, as well as cost components of the claims being higher. To @DeepSailCapital’s point, prob not a LT structural issue as it will be a pass-through LT

[PIK26 @PaidInKind26]

@bizalmanac @mjmauboussin what’s your rationale for using incremental CFO ex. WC as opposed to NOPAT or EBIT? I’ve seen a plethora of return calculations from different investors and just curious why some choose certain methods over alternatives

[PIK26 @PaidInKind26]

@alc2022 definitely agree with this and have felt it as well. how do you personally go about preventing burnout? or at least managing it?

[PIK26 @PaidInKind26]

@punchycapital What’s your stance on SPOT?

[PIK26 @PaidInKind26]

@PronkDaniel Would say Costco and Moody’s

$COST - huge TAM
$MCO - significant amount of upcoming debt maturities that will need to be refinanced and rated, plus recovering credit issuer market will be big tailwind for the agencies

[PIK26 @PaidInKind26]

@armin_brack Performance has come down a bit due to certain investments not going well. Believe he’s mentioned his performance in his book Richer, Wiser, Happier.