YB new stock pitches (Fri, Jul 31)

Vistance Networks (VISN), a new holding for Alluvial Fund, is a company in the midst of dismantling itself, having sold its two largest businesses over the past twelve months and reducing annual sales from nearly $7 billion to just $1 billion. It is now down to a single remaining operating asset, Aurora Networks, which manufactures equipment for cable networks like Comcast and Charter—not a wonderful business given its lumpy results and high customer concentration, but a sticky one, as cable operators facing relentless competition from fiber and wireless alternatives must continue investing in speed and reliability upgrades. Once Vistance pays out the proceeds from its latest business sale, it will have a market capitalization below $1 billion, making it an easily overlooked micro-cap that bears all the headaches of being a public, SEC-reporting company without most of the benefits. Given the choice between fading into irrelevance or achieving a neat resolution and a nice liquidity event, the thesis holds that the company will elect to sell, aided by management's deal-making experience and their ownership of 7.8 million shares and equivalents.

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Unite Group (UTG), a UK Purpose-Built Student Accommodation (PBSA) REIT, trades at £5.50 per share, a 36.5% discount to its 865p EPRA NAV, and the Oak Bloke argues it remains fundamentally cheap despite a negatively-reported 1H26 update. The bear/commentator view cites falling EPS (29.5p→27.1p), falling EPRA NAV (998p→865p), rising gearing, a flat earnings outlook, and dependence on international student recovery, but the author rebuts each: the EPS decline was already expected/in the price (the EPS yield actually rose to 5% today, 5.8% for those who bought at £4.60, with a 6.9% dividend unchanged in 2026); the NAV fall of ~£426-429m stems purely from NOI yield expansion (5.1%→5.21%→5.5%, tied to the 4.96% 10-year Gilt plus a 0.54% risk premium) rather than any actual asset deterioration, so the assets aren't genuinely worth less; rising gearing (net debt £2.54bn after the £1,075m Empiric acquisition, £165m buybacks, £131.7m dividends, +£20m interest) is old news and is being addressed via a disposal program of 15,000-20,000 lower-yielding beds (~30% of beds) across nine UK cities, targeting ~£1bn realizations that would cut LTV from 36% toward 23-25% (with £170-270m on track in 2H26); and the 'flat' outlook is contradicted by evidence of reservations now +2% ahead year-on-year (Hello Student +9%), 7% growth in high-tariff university applications for 2026/27, stabilizing international numbers (China applications +12%), and a potential ~£27.5m FY27 earnings boost from £18m cost synergies, £3.5m non-recurring RRA loophole costs, and ~£6m from 2% income growth, plus 719 fully-let beds added at Hawthorne House (6.1% yield) in September 2026. Additional bull points include the moat from constrained competitive supply, HMO landlords being squeezed out by regulation, accretive capital re-allocation (buying back stock ~40% yield vs 6.5% property yields; the £165m buyback added 28p/5.1% to NAV), the completed ~£20m Yardi system implementation boosting efficiency and retention (NPS improvement precedent at Fresh from +11 to +36), and potential for 100% Russell Group occupancy (which would add ~£15.5m rental profit and +3p EPS). Bear-case risks acknowledged include rising cost of debt (3.9% in 2025 → 4.3% forecast 2026 → 4.5% in 2027), elevated LTV of 36% and Net Debt/EBITDA of 7.5x, and moderating like-for-like rental growth slowing to 1-2%, though the author argues these same cost pressures reinforce the supply moat and that shelter is a non-discretionary essential. The author notes interest cover of ~5x, a conservative 3% (£4.5m on £130m) loss assumed on disposals, and that if UK rates fall the NAV should re-rate upward; overall he views UTG as a buy/hold that has already delivered a 70p gain since inclusion in the 2026 OB picks (plus 37.7p dividends and 28p buyback accretion), remaining cheap at £5.50.

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Creek & River Co. (4763.T), a Japanese multidisciplinary talent agency founded in 1990 by CEO Yukihiro Igawa, trades at historic lows of 4.5x FY2026 EV/EBIT, 3.9x EV/EBITDA, 6.9x P/E, 1.45x P/B, with a 3.8% dividend yield (50 yen/share), a 17.3% FY2027 ROE, a 28.0 bn yen market cap, and 6.1 bn yen net cash (17.7 bn cash, 2.3 bn investment securities, 11.5 bn debt) at 1323 yen/share (July 3, 2026), earning the author's second-highest conviction 'A/A+' rating (Business economics B+/A-, Management B+/A-, Value S). CR operates as an agency (dispatch/placement fees), production (project fees), and rights management middleman across 18 fields (targeting 50), 35 companies, 463,000 professionals, and 57,000 clients, with three core segments: the Creative field (largest, 59% of sales, 10% 10-yr revenue CAGR, 7.3% margin, consolidating ~1,000 game creators into the MSC Onarimon C&R Creative Studio, with a Bandai Namco JV via URS Games and a Montreal branch), the Medical field (~30% of operating income, 24.9% margins, 7.1% revenue/13.4% profit CAGR, 185,000 physicians representing an estimated 69% of employable physicians, bolstered by the unreplicable 'Resident Navi Fair' and monthly 'Doctor's Magazine,' with Q1 being the key seasonal quarter—Q1 FY2027 revenue +15.6% yoy, margins to 46.4%), and the smaller Accounting & Legal field (4-5% of revenue, 3.3% CAGR, declining margins, boosted by the Zeikai acquisition); the business has held ~8% operating margins since FY2022 and proved defensible through COVID (margins rose from 5.3% in FY2019 to 6.6% in FY2021). The core thesis is a narrative inflection over 12-24 months driven by CR's pivot to M&A growth—signaled by the 9.5 bn yen (EV) acquisition of Takahashi Shoten (planners/calendars, ~6.15 bn yen sales and 691 mm yen operating profit in 9 months, higher-margin, also providing a shareholder gift perk)—which, combined with 3-4 bn yen annual FCF, gives CR 9-10 bn yen for another meaningful acquisition, rerating the 'poor capital allocation discount' as CR can inject AI/DX/IT and management talent (via its CRES 'Business Succession' business and network of 2,400 CEOs/COOs/CMOs/CFOs) into acquired firms; the opportunity exists because the stock is complex (35 companies, 18 fields), fields have stagnated at 18 for five years disappointing 2022-2024 shareholders with high expectations, management gives little commentary on loss-making segments (hidden in the 'Incubation and Development' category), and CR may have overpaid for Takahashi. Bull case: unusual for Japan to find a cheap EV/EBIT and cheap P/E stock that is growing and not hoarding cash, with newer fields (AI/DX/IT) potentially bearing fruit like Medical did after 7 years; buybacks totaled ~999 mm yen in FY2024 and FY2025 (none currently in FY2027). Price targets: ~1600 yen short-term (3-6 months) on capital rotation from the AI boom, and 40-100% upside over 12-24 months if operating income reaches 5,000-6,500 mm yen (the 6,500 upper range assumes an acquisition generating ~500 mm yen operating income), with EV/EBIT rerating to 8x+ and P/E to 12x+ if a cash-generative acquisition is made at 9x EV/EBIT or below and excess cash is deployed. Risks: value trap concerns, business complexity, overpaying for acquisitions, declining Creative margins, persistent losses in Korea, and reliance on management execution—though the author argues Yukihiro 'has to royally screw up' for the thesis to fail from here.

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