YB new stock pitches (Fri, Jan 30)

Shift4 Payments (FOUR), an integrated payments company founded in 1999 by Jared Isaacman (now Executive Chairman who owns 30% of the company), is a new position trading at 7x EBITDA versus Toast's 24x despite superior unit economics from owning the full payments stack including gateway, processor, and POS software across hospitality, restaurant, and stadium verticals. The company's competitive advantage stems from absorbing payment complexity for merchants through 550 software integrations and end-to-end processing capabilities, generating significantly higher gross profit margins compared to gateway-only transactions, with converting gateway customers to full processing driving 60%+ gross profit growth since 2021 and payment volume growing 4x over the same period. Shift4 maintains less than 3% annual merchant churn (1% among top 50 customers) due to sticky embedded workflows and switching costs, while executing disciplined M&A to acquire under-monetized payment flows in new verticals like the VenueNext stadium acquisition. The company has deployed $2.7 billion in growth capital since 2019 generating $515 million in incremental EBITDA for a 19% unlevered ROIC, with management currently integrating its largest acquisition Global Blue and executing a $1 billion share buyback program covering 20% of shares outstanding. Under conservative assumptions excluding incremental M&A, management expects $8-11 per share earnings by 2028 versus the current $63 share price, with potential upside to $140-155 if execution continues as demonstrated since IPO, while the company targets $1 billion free cash flow run rate within two fiscal years and could achieve mid-to-high teens organic growth simply by converting its existing gateway customer base without any new acquisitions.

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Genus plc (GNS.L) is a dominant animal genetics company with a highly recurring customer base and royalty-like revenue stream that delivered a 70% return in 2025, contributing nearly 3% to portfolio performance. The investor added to their position after initially entering in 2024 at ~12x EBITDA when the stock traded at a material discount to historical averages and comparable transactions. The investment thesis centered on a high-quality porcine business, a turnaround in the ABS cow business, a free call option on gene-editing platform, and future China rebound potential. Two major catalysts drove 2025 performance: FDA approval in April for the company's porcine gene-edit targeting Porcine Reproductive and Respiratory Syndrome (PRP), a disease costing U.S. producers at least $1.2 billion annually, which has potential to 2-3x operating profit over 5-7 years pending regulatory approval in Japan and Mexico within 12 months; and a September announcement of a strategic JV with Beijing Capital Agribusiness selling 51% of China business at an accretive price, providing optimal PRP commercialization route in China while accelerating value crystallization and fully de-levering the company from concerning 2x net leverage threshold. Operating income grew 20% during 2025, and management under CEO Jorgen Kokke demonstrates strong accountability and capital allocation discipline, with anticipated significant free cash generation potentially enabling future share buybacks for this UK-listed company.

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Victoria's Secret & Co. (VSCO) is being shorted at a 21x forward P/E and 2.3x PEG ratio following a 170% rally over the past six months, as the company is viewed as overvalued after its recent recovery from a failed woke rebranding strategy. The bear case centers on Sydney Sweeney's new lingerie brand SYRN potentially poaching VSCO's non-woke customer base that recently returned after the company abandoned its 2021 woke pivot, which had included eliminating the VS fashion show and marketing to plus-sized minorities, causing sales growth to falter and the stock to plummet 78% to $14 in 2023. VSCO's May 2024 decision to bring back the fashion show helped win back core customers and drove the massive stock rally, but the thesis argues that SYRN will capture significant online market share from VSCO's 30%+ online sales, particularly among male customers buying gifts who are expected to prefer SYRN over VSCO. The short position is based on Sydney Sweeney's proven ability to drive sales through her endorsements, as demonstrated with AEO and other sponsorships, with SYRN's launch expected to serve as a catalyst for a significant stock reversal given VSCO's current overvaluation after its recent surge.

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