YB new stock pitches (Fri, Feb 13)

Fox Factory Holding Corp (FOXF), a premium suspension and outdoor brand trading at $15 (down 90% from its $187 peak), operates in cyclically depressed end markets with powersports down 41% versus 2019 levels and mountain bikes down 23% on a volume-adjusted basis. The company, which makes high-end suspension systems for mountain bikes, off-road trucks (including the Ford F-150 Raptor), and powersports vehicles, also owns upfit truck brands and acquired baseball bat maker Marucci for $567M in late 2023. Management has consistently missed earnings guidance by an average of 40% over the past three years and failed to right-size the cost structure, resulting in SG&A bloating to 23% of sales versus a historical 16%, representing 500 basis points above normal levels. The company is currently levered at nearly 4x debt/EBITDA due to the ill-timed Marucci acquisition, but this should improve to 2.3x by end of 2026 through debt paydown and $25M of EBITDA growth from F-150 production recovery, powersports market stabilization, and cost actions. The stock trades at approximately 7x depressed EBITDA when key end markets like RZR and Maverick registrations are 41% below 2019 levels and bike volumes are 23% below 2019 despite price increases of 12-18%. Near-term, the company should generate $2.90 per share in free cash flow in 2026 (driven by capex cuts from $35-40M to $15M and lower interest expense), enabling a re-rating to 9x EV/EBITDA for a $30 price target representing a double in 13 months. Longer-term, normalized EBITDA of $290M (assuming recovery to pre-COVID end market levels and margins of 17.7% below management's 19% target) valued at 11.5x (well below the historical 16x average) yields a $72 price target in 2-3 years, nearly a 5-bagger. Potential catalysts include aggressive SG&A restructuring, recovery in bike and powersports markets to normalized levels, or activist involvement pushing accelerated deleveraging, with alternative scenarios including a PE buyout at $25 (5.5x normalized EBITDA) or activist-driven Marucci sale for $450M combined with margin improvement to 15% yielding a $40 stock.

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Hongkong Land Holdings Limited (H78.SI), a century-old Hong Kong property company, trades at $8.74 per share, a 35% discount to its $13.62 NAV, with insiders recently purchasing shares including Chief Commercial Officer Kei Yeuk Kong buying 19,400 shares at $8.38 and CIO Sze Chi Ling buying 63,300 shares. The company owns 450,000 sqm of prime interconnected properties in Central Hong Kong's CBD (undergoing a $1 billion 3-year expansion), 165,000 sqm of prime Singapore office space through joint ventures, and 5 retail centers plus a 43% stake in a 1.1m sqm mixed-use West Bund project in Mainland China completing in 2028. In November 2023, new CEO Michael Smith (ex-Mapletree Europe/US CEO and Goldman Sachs partner who pioneered Asia's REIT industry) replaced 38-year veteran Robert Wong and appointed Michelle Ling (also ex-Mapletree and Goldman) as first CIO, immediately announcing a transformation strategy focusing on ultra-premium investment properties, exiting build-to-sell residential, divesting non-core assets, accelerating dividends and buybacks, and becoming a fee-earning manager targeting $100 billion AUM by 2035 (from $40 billion, with 55% from third parties). By early 2025, management achieved 85% of their $4 billion capital recycling target for December 2027 through major transactions including selling 9 office floors at One Exchange Square to HKEX for $810 million (80% to debt reduction, 20% to buybacks), collecting $400 million from Mainland China residential inventory sales, selling MCL Land for $657 million with $150 million added to buybacks, and launching the $6.4 billion Singapore Central Private Real Estate Fund in February 2026 with Qatar Investment Authority and APG Asset Management (receiving $1.3 billion in proceeds for debt reduction and $300 million in additional buybacks). Hong Kong's office market is recovering with Q4 2025 net absorption of 234,800 sqft (highest in 10 years), full-year absorption of 500k sqft (best since 2007), vacancy falling to 11% for four consecutive quarters, and rents increasing 3.7% quarter-over-quarter after a 40% peak-to-trough decline, while retail high-street vacancy declined 2.2% to 5.8% (lowest since Q4 2019) with full-year rent growth of 2.9% and projected 5-7% growth in 2026. HKL's 1H25 performance showed office rent at HK$95/sqft monthly (-5% year-over-year) with 92.5% occupancy, retail rent at Landmark of HK$220/sqft monthly (+2% year-over-year) with 97% occupancy, underlying profit of $320 million (+11%), and gross rental income of $652 million (-6%), with NAV increasing for the first time since 2018 as the discount narrowed from 79% to 40% since Smith's appointment. The company targets 2x dividends per share by 2035, 20% of asset sale cash deployed to buybacks, and 2x underlying profit before interest and tax with no city exceeding 40% of total, positioning itself as a recovery play on Hong Kong's improving real estate market supported by its prime Central assets, private fund holdings, and management's capital recycling and buyback initiatives that could bring the share price closer to NAV.

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Atlas Energy Solutions Inc. (AESI) is a new position as the lowest-cost frac sand producer and market share leader in the Permian Basin, the largest hydrocarbon-producing basin in the U.S., with a cost advantage stemming from its in-basin location, high-quality sand reserves, and unique 42-mile Dune Express conveyor system that reduces trucking miles by 60-70%, lowering delivered costs and improving reliability. The company also operates a fast-growing distributed power generation business with a fleet of over 900 natural gas-powered generators serving remote energy, industrial applications, and AI-focused hyperscale data centers facing grid connection delays, targeting over 400 megawatts installed by year-end 2027 compared to around 240 megawatts today, with a potential market opportunity of 2,000 megawatts in the years ahead. Trading at multi-year lows and approximately 1x book value, the market has low expectations for Atlas despite the combination of a cyclical bottom in the sand and logistics business and company-specific catalysts tied to distributed power growth, which are expected to drive increased earnings and cash flow over the next 18-24 months and likely lead to a re-rating in the stock price.

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