YB new stock pitches (Fri, May 1)

Premium Brands Holdings Corporation (PBH.TO), a specialty food manufacturer and distributor with ~40% market share in core better-for-you categories including meat snacks, charcuterie, premium deli, and sandwiches, is trading at decade-low valuations of 10x EBITDA (a 50% discount to peers) despite a fundamental inflection point as its 6-year, $1B+ capex cycle ends, with capex already down 50% from peak FY23-24 levels. The company, led by CEO George Paleologou who has delivered 17% annualized TSR since 2004 versus 10% for the S&P TSX, is experiencing 17% organic revenue growth in 2H FY25 as new facilities ramp, with the Stampede acquisition and Shaw Bakers divestiture adding $100M+ incremental EBITDA on top of a base business tracking toward $1B EBITDA by FY27. Alta Fox estimates FY27 EBITDA of $1.05B versus consensus $990M and FCFE of ~$8/share versus consensus $6.9, implying EPS will approximately double from FY25-27 as operating leverage drives margin expansion, plant startup costs normalize, and working capital improves. The stock trades at 10x EBITDA compared to its 5-year average of 11x and 3-year average where 10x would imply nearly 100% upside, with management highly incentivized through LTIP performance bonuses tied to FCF/share growth after missing FY24 and FY25 targets due to heavy reinvestment. Current underperformance stems from temporary beef price inflation pressures (which PBH can pass through after 1-2 quarters), slower-than-expected capacity ramp creating execution skepticism, elevated working capital obscuring cash flow generation, and management not confirming updated FY27 targets despite recent M&A adding significant EBITDA. Key risks include 3.8x net debt/EBITDA leverage with primarily floating rate debt, continued beef inflation pressure, potential consumer trade-down in a recession, commodity cost pass-through lag, and management potentially choosing to reinvest rather than deliver unadjusted FCFE growth. Alta Fox advises management to provide updated FY27 EBITDA and unadjusted FCFE targets at Q1 earnings to restore investor confidence, with a base case price target of C$143 (17x FCFE, 10x EBITDA) implying 75% upside and a bull case of C$162 implying 95% upside, as the company offers asymmetric risk/reward with limited downside given EPS doubling potential even without multiple expansion.

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Hunterbrook Capital is long Datadog ($DDOG) after identifying Anthropic as the company's 'eight-figure annualized' new logo customer mentioned in the Q4 earnings call—the largest in Datadog's history—based on evidence including Datadog Real User Monitoring (RUM) embedded across Claude.ai (serving 30 million users with 100% session sampling), public bug reports dating to January 6 showing Datadog telemetry calls from Claude Code CLI tools, and a leaked March 31 source map revealing a dedicated Datadog integration module alongside other analytics services. The consumption-priced contract allows Datadog revenue to scale directly with Anthropic's growth, countering the bear thesis that AI companies will build observability tools in-house rather than purchase third-party software. Evidence shows Anthropic is consolidating from 'more than five open-source, commercial, hyperscaler, and in-house tools' (matching Grafana Labs publicly naming Anthropic as a customer) onto Datadog's platform for essential telemetry including crash reports, error stack traces, performance timings, and OpenTelemetry protocol implementation across products like Claude Code and Cowork enterprise features. The partnership was hinted at during Datadog's DASH 2024 conference where Anthropic President Daniela Amodei announced joint product integration, with Datadog now publishing dedicated Anthropic monitoring and Cloud Cost Management products. Wells Fargo previously estimated Datadog's OpenAI contract alone represents 4-6% of revenue run-rate at roughly $200 million annualized, establishing precedent for large AI company deals, while the Anthropic relationship demonstrates that frontier AI companies capable of building in-house solutions are choosing to consolidate onto Datadog's robust observability platform instead.

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SHAZ (short): CEO Manning, sued by prior co MIGI for $11.5M self-dealing via Flynt ICS (now SHAZ vendor), runs neocloud on $1.25B contract w/ ESDS—Indian co that earned $5.8M FY25, $69.5M assets vs $140M L/C requirement. 76% of Compass PT relies on ESDS. $500M USD.AI facility from DeFi protocol w/ only $284M capacity across 3 borrowers. $350M Oaktree convert requires new 4,068 GPU contract to close. Insiders sold private entities into shell at self-determined values; Vertua marked DSS at $0 in 9/23, sold to SHAZ for $25M in 6/24. 10-K falsely stated NVIDIA was shareholder, corrected 13 days later. Lucid initiated $50 PT same day filing to sell $16.7M insider stock. Manning threatened to 'burn MIGI to ground,' guided to 5.5 EH/s capacity at MIGI, delivered <2/3. Same playbook repeating.

Read the full article here. Read time: 31 min