YB new stock pitches (Fri, Dec 26)

Home Loan Financial Corporation (HLFN), an Ohio community bank with $370 million in assets operating five branches across Licking, Knox, and Coshocton counties, trades at 6.3x FY26 earnings despite generating a 17.5% ROE and 2.1% ROA with a dominant market position in rural Coshocton County that provides pricing power and customer stickiness. The bank's loan portfolio consists of 51.5% residential mortgages and 25.9% nonresidential real estate, with over 95% being adjustable-rate mortgages, allowing them to maintain stable net interest margins during the 2022-2024 yield curve inversion while peers struggled. HLFN has grown EPS from $2.74 to $5.13 over five years and maintains an exceptional 45% efficiency ratio, though recent credit stress has emerged with delinquencies rising to 2.2% from a 1.3% historical average and substandard loans jumping from $2.8 million to $10 million, resulting in four new troubled debt restructurings. The company maintains strong capital buffers with a 12% Tier 1 capital ratio and 12% equity-to-assets ratio, providing substantial protection against losses, while the Hamilton family owns 21% of shares and has consistently increased dividends, currently yielding 6%. Key risks include increasing delinquency rates and overreliance on brokered deposits, which jumped from $6 million to $30 million to fund loan growth with a loan-to-deposit ratio of 1.14. With a price target of $55 per share representing a 10x earnings multiple, HLFN offers 58% upside potential over two years, trading at deeply discounted valuations due to limited liquidity (200 shares daily volume), OTC listing, and rural footprint despite strong fundamentals.

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OCI N.V. (OCI.AS), currently trading at €3.00, is undergoing a controversial merger with Orascom Construction at an exchange ratio implying €3.73 per OCI share (€3.17 post-tax due to 15% Dutch withholding tax), representing a 20% discount to the merger price and a 40% drop from the €5.0 pre-announcement price. Activist investor Norbury Capital, holding a 4.5% coalition stake, challenges this related-party transaction (both companies controlled by Nassef Sawiris who owns ~54.9% of Orascom and is majority shareholder of OCI), estimating OCI's fair liquidation value at €7.10 per share based on the company's disclosed $1.35 billion equity value and sum-of-the-parts analysis. The deal forces minority shareholders to receive illiquid Orascom Construction shares listed only on Abu Dhabi Securities Exchange (ADX) and Egyptian Exchange (EGX) with limited trading volume of ~100,000 shares weekly, creating potential selling pressure and liquidity challenges for retail investors. Norbury Capital has sent a formal letter demanding response by December 24, threatening to invoke Dutch Ondernemingskamer (Enterprise Chamber) proceedings that could block the merger, force cash alternatives, or deliver binding remedies with historical precedents showing 50%+ valuation uplifts in abusive related-party deals. Key risks include the 15% withholding tax, illiquid foreign exchange listings post-merger, and uncertainty about share conversion mechanics, while the upside potential exists if Dutch courts block the deal or force a cash alternative closer to the estimated €7.10 fair value.

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ZoomInfo Technologies (GTM) faces a critical inflection point as its board granted CEO Henry Schuck an extreme compensation package requiring $2.50-$5.00 free cash flow per share targets and sustained stock prices of $40-$100 for his 9.7 million share options (struck at $13.54, a 40% premium) to vest over ten years, with potential upside exceeding $400 million if the stock reaches $100. The structure suggests the board is implementing an LBO-style financial engineering playbook focused on aggressive share buybacks and margin expansion rather than organic growth, likely in response to activist pressure or private equity interest around $14-$18 per share. The bull case centers on the company's ability to stabilize revenue while executing financial engineering to drive per-share metrics higher, potentially triggering a re-rating that could vault the $3 billion company into large-cap territory with index inclusion benefits. However, significant risks include AI disruption commoditizing B2B data services while management prioritizes buybacks over R&D investment, the potential for multiple compression if customers treat ZoomInfo as a replaceable utility rather than mission-critical infrastructure, and the danger that financial engineering becomes a 'melting ice cube' trap where per-share improvements mask fundamental business deterioration. The compensation structure effectively eliminates any middle path, rewarding only extraordinary results while requiring both operational execution and sustained stock price appreciation, with the company's debt-levered position meaning failure to grow absolute free cash flow could create a dangerous downward spiral despite share count reduction.

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