Eric G

[Kreuzmann @Kreuzmann13]

Listening to this again.

It is the best podcast I have ever heard and took lots of learnings from it.

100% portfolio in one high quality micro-cap. It is a must listen.

$amnf reminds me $iccc

[Michael Mauboussin @mjmauboussin]

This is the time of year when a lot of investment firms welcome interns. While our work is geared toward institutional investors, a lot of it can be useful for learning about markets and the investment process. Here are a handful of reports and how they can guide interns:

[Dalius - Special Sits @InvestSpecial]

$TBPH's failed trial crushed the stock but the cash machine is intact.

- Yupelri royalties: $60-70M/yr, patent through 2039
- $500M+ cash by early '27, strategic review underway
- R&D killed, G&A cut 50%, pure FCF story now
- ~40% upside to $23

Pitch by Summers Value Partners

[GrumpierByTheDay @GrumpierBTDay]

Been digging into $UMAC, trying to understand why the analyst numbers seem so off compared to CEO Allan's statements and my own guesstimates.

The consensus FY27 revenue is about $50M.
A recent Litchfield Hills report targets $50M top line for FY '27.
Needham has a FY26 estimate of $40M (raised from $25M after Q1) and a "clear path to a $100M run-rate by FY27", which implies Q4 27 at $25 M. Scale that back through the year for a FY target of about $55M to $65M
Roth Capital and Jones Trading give a $25 and $20 PT respectively, but I can't find explicit top line projections. Working backwards I figure they're modeling about $50M in FY27.

CEO Allan Evans, on the other hand, has been pretty consistent across multiple channels (AlphaWolf, the Q1 call, and the White Diamond piece). The targets he keeps repeating:
- 1,000+ employees
- 100-120K motors a month
- 140K sqft of factory footprint
- $250M top line FY27 from the Drone Dominance Program alone

This is a $200M discrepancy on the top line between Allan's commentary and analyst targets. Sooooo.... what gives? Either Allan, or the analysts, are off by an order of magnitude. This is the kind of gap worth digging into.

I want to zoom in on the headcount, both because it's something Allan has articulated as an indicator, and because it stood out to me in the CC+Shareholder letter.

To give a quick timeline, as reported in the last 10K:
- Mar 31, 2025: 18 employees
- Dec 31, 2025: 81 employees, $4.9M revenue
- Mar 6, 2026: 141 employees, $8.1M revenue

Then on the Q1 shareholder letter and CC we were informed they're at 200 employees, and still hiring.

So, +60 employees in roughly six weeks between the 10k and Q1. 10 employees per week. With about 85 weeks between May 14th the end of '27, 10/week would put us right at the 1000 employees Allan has targeted.

Interesting.

In Q1 they did $230k/employee annualized ($8.1M / 141 * 4), fueled by a jump in B2B revenue from basically 0 to $7.3 million. Don't forget this number includes new hires, trainees, those not yet truly productive. Compare this to Q4 where they did $240k/employee, annualized, at 81 employees.

Headcount increased 75% while rev/employee basically stayed flat. This suggests to me that UMAC is effectively hiring into demand.

What's more, the ratio between 'productive' and 'trainee' only improves from here. I expect we'll see a bit of improvement and then leveling out.

Side note: they're investing in more factory automation equipment, which should eventually boost rev/employee. I don't think $300k/ is out of the question down the road. Not using that number though.

Putting that all together, if we get to 1000 employees by end of '27 and pencil in $250k/employee, we get $250M top line. Right in line with what Allan has targeted.

Interesting.

So the pace of hiring is on track, and Allan's top line is a reasonable target if both hiring keeps pace and Allan can put 1000 people to work at a $250k annualized rate.

Are there structural barriers to hiring? No, not at all. A recent Bizumentary highlighted how the job requirements can all be taught on site. The factory has a notable contingent of former food service workers. Labor pool is effectively infinite.

The bigger question is do they have the facilities to support 1000 people?

They currently have 62k sqft of space across 5 facilities in Orlando. Let's look at the timeline:
- Jun 4 '25: 17K sqft motor center
- Oct 30 '25: 25K sqft fulfillment center
- Dec 10 '25: 9.1K sqft HQ
- Dec 15 '25: 4.5K sqft headset production

As of the Q1 CC, Allan intends to expand to 100k sqft by the end of Q2. More expansion is expected by Q4, which puts that 140k sqft '27 target clearly in view.

So hiring isn't a constraint, nor are facilities.

Equipment doesn't look like it's going to be a constraint, either. Note 6 on the most recent 10Q indicates there's 1.3M of equipment related to motor production to be delivered in Q2. This is against 2.5M of currently deployed equipment. I think we can expect that to continue to scale through the Qs.

So we've got what's essentially a doubling of manufacturing related facilities, a 50% bump in equipment related capacity, and a steady pace of hiring to put it all to use. All in the next 3 months... let alone the next 12.

What about raw materials? Considering this is a factory environment, we can use materials+margins to cross-check our headcount based projections, and measure both against Allan's statements.

As of Q1, UMAC had $12M of raw materials and $13.5M of prepaid deposits. This is an expansion from the $4.2M of raw materials and $9.7M of prepaid deposits held in Q4. That's $12M of net inflow in Q1. Subsequent to Q1, UMAC placed an order for $75M of raw materials, to be delivered in Q3.

Let's carry that forward.

As of Q1, GM was 32.8%, but long term run rate is expected to be 40%. Of this, most, but not all, will be materials.

The 10Q states COGS includes "inventory costs, which includes an allocation for labor and rent for our manufactured products, direct packaging costs, and production related depreciation, if any." in addition to "certain shipping and other direct product costs including tariffs".

For Q1, COGS came out to $5.4M. Recall this was on a raw inventory of $4.2M as of Dec.

Let's hand-wave and say that labor, packaging, shipping, and tariffs eat up 30% of COGS, and that materials are the remaining 70%. This will produce a conservative revenue number vs if we give raw materials a heavier weight.

At 70% attribution, raw material contributed $3.8M, which means there's a materials-to-revenue ratio of 54%.

That would project our already-placed materials PO of $75M into $139M of top line alone.

This material should arrive

That's *far* closer to Allan's $250M target than to the consensus $50M.

Here's where it gets interesting: Allan has indicated that the $75M raw materials order is just the first of two waves. Per the April 6th AlphaWolf interview:
"And you know, in a in a week or two, we're going to have to order another 60 to 80 million dollars worth of raw material. Okay, right? And then 6 months after that, we're going to have to order 100 to 150 million dollars of raw material."

Then, on May 5th, 4 weeks later (a little delayed), the $75M order came through. The timeline places the next big order some time around December.

So for FY '26, we've got $25M of current inventory and prepaids, and $75M of new orders. That's $100M of raw inventory bought and paid for. A cold hard fact. With our assumed margins that gives us $185M top line.

Even if you totally ignore Allan's statements about another big order, that blows the consensus '26 and '27 numbers out of the water.

What would the next $100M to $150M of raw materials add? Well, at 54% revenue contribution that'd be another $185M to $277M, putting combined '26 and '27 revenue at $370M to $460M.

👏 Against 👏 $50M 👏 full 👏 year 👏 '27 👏 top 👏 line 👏 estimates👏 (did I emoji right?)

Reminder that Needham targeted $40M for FY '26, and a 'run rate $100M' end of '27. Litchfield projects $35.5M top line '26 and $50M '27.

Neither of these are even in the ballpark of what we can project based on already placed materials orders.

What's UMAC trading at today?

$685M MCAP, with $220M of cash and $60M of short term investments gives us an EV of $400M.

On our already-committed materials, and assumed $180M top line that creates, that's just beyond 2xNTM EV/Sales.

That's cheap, especially considering the defense tailwinds and supply chain mandates, let alone the DJI ban and thus domestic commercial market vacuum.

I call that optionality.

So I'm left scratching my head, wondering what these analysts are thinking, but content to keep buying.

[Eric G @ericgold34]

@Bkclaims What did the SEC say?

[Eric G @ericgold34]

@rubicon59 Where do you see the highest returns over the next year or so: SK, $MU, $INTC, $SNDK, other?

[Maius @MaiusPartners]

We like $133.HK, it’s a time machine that gives investors exposure to China’s leading agentic AI model associated with Cursor/SpaceX at a $1.5bn valuation. Thanks to activist involvement, you also get paid an 8% dividend yield to wait for the re-rate. Full writeup: https://t.co/cGPHg0Md3z

[Allen Braden @allen_explains]

🚨 The creator of Claude Code just shared a full walkthrough on how to actually use it the right way.

30 minutes. Free. Straight from the person who built it.

Watch the workshop and save it for later.

You’ll likely get more practical value from this than from most expensive coding courses online.

Most people are only scratching the surface of what Claude Code can do.

Then check out the guide below.

[ToffCap @ToffCap]

At the current Molybdenum prices, Greenland Resources' $MOLY NPV sits around here (~$2.5-3.0bn) 👇

Market cap of $170m.

[Whiteout Capital (Zack) @whiteoutcapital]

$4441.T As of June 2025, employers are required to reduce customer harassment in Japan. The entire concept is a bit odd as someone not from Japan, but Tobila's Solutions Biz is growing quickly and provides a solution for this.

[Nicoper @NicoperJES]

Bawag is a 4x for me in 4 years. It will be much more in next few. Great deal on PTSB.

[ToffCap @ToffCap]

Interesting to see recently listed EU defense small caps Gabler $X4K and Vincorion $V1NC not participating in the recent sector rally.

On the other hand, nobody knows them yet.

Both rapidly growing, profitable, good b/s, decent valuations.

Doesn't matter whether Trump will exit Nato or not, EU defense has a LONG way to go. You'll probably do well over the next decade even from here owning a basket.

[Matthew Harbaugh @themattharbaugh]

Michael Mauboussin on ROIC and Competitive Advantage

If a business has a high ROIC from a high NOPAT margin, focus on differentiation

If a business has a high ROIC from a high invested capital turnover, focus on cost leadership

Very few businesses have both (generally reinforced by economies of scale)

[Rich Howe @stockspinoffss]

Just to update this situation. Management is hinting that Ziggo will pay 70% of FCF as a dividend. Assuming it trades at a 10% dividend yield (closest peer trades at a 3.7% yield) That works out to $11/ per share of $LBTYA. Stock trades at $12.

[Monolith Capital @Monolith_Cap]

Midac (https://t.co/LSW8BGfIiY) is a vertically integrated, extremely profitable waste management business that Tony Soprano could only dream of. Midac operates in a highly regulated and fragmented industry with inelastic demand and a finite supply that takes years to bring online. The company handles everything in-house, from waste collection and transportation to intermediate treatment and final disposal, addressing a major pain point for its industrial clients. Management has an enviable record: it grew revenue 3x and operating profit >10x over the past ten years. The OP margin hit 42% last year, driven by disciplined cost control, fixed-cost leverage, and mix shift toward disposal and incineration services. Unusually, the M&A strategy is creating substantial value as management buys out aging founders for a fraction of the residual landfill value. The remaining site life, ongoing capacity upgrades, and new developments provide growth visibility for decades. So, what is this gem worth? Certainly not a deep value setup: 11x EV/EBIT and 16x P/E on my FY 2027 numbers. Using reasonable assumptions five years out, I see an upside of 40-50%. Not good enough for me to pull the trigger just yet. If I get lucky, I would like to hop in below ¥1,700. For now, Midac will remain one of the prime targets on my watchlist.

[0SG @Zerosumgame33]

$PROP. Long April $2 & $2.5 calls. Not financial advice, do your own research. HIGHLY SPECULATIVE!!!!!!!!!!!

$PROP is death spiraling in the face of a looming dilution death sentence.

They must refinance $158M toxic preferred debt held by Hudson Bay w/ $1.15 conversion floor by March 26th trigger date to avoid ~250 million new share issuance + warants vs. ~59 million shares currently outstanding. Yea, thats 5x dilution.

Dont ask how this shitco mgmt team got itself into this pickle. Good news is the CEO just voluntarily left having been forced out by top shareholder who has been actively buying stock at higher prices.

Imo, worst-case dilution is already priced into shares @ $2-ish.

Available sources
$75M equity shelf registration
$58M available on RBL facility (@ 9/30)
Sale & leaseback?
High yield bank debt?
Non-convertible preferred?

The combination of any of the above is HIGHLY accretive v. letting the preferred convert at $1.15.

$PROP is already $260M EBITDA run rate exiting 2025. Comps trade 3-4x. Fundamentals justify $10+ if preferred are cured. Maybe $3-$5 with ~half the dilution.

They've also~ 80% hedged their oil exposure thru 2028 at mid 60's oil, so ~20% exposed to spot which is a nice kicker.

Interestingly, in early march, reserves were valued at $1.2 billion NPV10 (industry metric for DCF'ing oil in the ground) vs. today's EV fully diluted for worst-case-scenario dilution impact of ~$800M.

The juice?

Mgmt owns ~40% of the equity and theres ~9M shares short.

How does Hudson Bay unwind this? They've shorted the PISS out of the common as a hedge against the pref. I smell a nasty and violent unwind higher.

They're presenting at Piper conference on 3/16. Will they have good news to share? Q4 earnings whisper late March.

The clock is ticking.

I'm long for a trade. Not financial advice, do your own research.

[InsideArbitrage @InsideArbitrage]

Cannae Holdings increased its share repurchase authorization.

Effective March 6, 2026, the board approved a new program for up to 10 million shares, in addition to the 4.9 million shares remaining under prior authorizations, bringing total repurchase capacity to 14.9 million shares.

With 46.4 million shares outstanding, the aggregate authorization represents roughly 32% of the current share count

$CNNE

[Dylan Marrello @ragingbullcap]

$EVC lol so adtech now now running at $50m EBIT annualized, still growing like crazy (16% sequential topline). That's worth $500m at a 10x multiple vs. $400m EV for the whole entity at today's share price. So you're getting Adtech at a big discount and all the Media assets thrown in for free...as we head into what should be a record mid-term year for Hispanic media political ad spend. 7% dividend on top of that. Incredible.

[John W. @jawagner92]

$OTCM

[Kip Johann-Berkel @BerkelKip]

1) AI beneficiary still trading at a value price. $6623.T Aichi Electric gets 45% of profits from printed circuit board (PCB) cores specifically designed for semiconductor packages; segment +35% sales & +45% OP YTD. Trades 1.0x BV, 6.5x EV/EBIT & 10.3x P/E