Beautiful weather down here in Sarasota versus back home in Seattle. Amazing to have happy hour outside with the kids.
While happy hour was happening certain stocks kept drawing down (while others were up bigly). Vaporware stocks got absolutely smoked and seemed to bust down through 52-week lows. I wish them the best.
In the meanwhile, I picked up starter positions in Franchise Resource Group and B.Riley Financial (on my cell no less, what a world).
Without getting in to deep details here, FRG is run by a proven company builder and capital allocator, has guided towards ~$5 / share in ’22 earnings, has a fairly resilient and predictable revenue profile, and trades for ~$48 / share right now. It has had a big run over the past ~2 years, but well deserved, as the company’s per-share earnings KPIs have bloomed thanks to shrewd M&A. It pays a well-covered ~$2.50 / yr dividend.
B.Riley is a weird company and doesn’t fit into any clean bucket. The CEO admits this contributes to his perceived undervaluation of the stock. It’s an investment bank to small / medium sized companies, has a retail liquidation arm, owns a few rusty old no-growth principal investments that generate cash, and a smattering of apparel brands. Super odd. That said, it will likely print ~$15-20 / share in earnings this year on a ~$56 stock. While ’21 was an outlier, its normalized earnings may be in the range of ~$7-10 / share, with trough earnings around ~$3-5 / share. It pays a $4 / yr dividend, which is likely breakeven in an economic downturn, and obviously very well covered in a boom year.
There’s nothing crazy complicated or asymmetric about these. Just decent businesses at reasonable prices that pay their owners.