YB new stock pitches (Fri, Sep 11)

Howard Hughes remains a core holding following management’s Q2 2026 decision to treat real estate as effectively self-liquidating and accelerate capital release through joint ventures, partnerships and asset sales. The parent now owns two platforms: an appreciating land bank and recurring-income property portfolio, plus specialty insurer Vantage, whose ~$3.4bn investment portfolio Pershing Square manages fee-free. Management plans to direct incremental free cash flow first toward Vantage, including redeeming Pershing Square’s preferred, and later toward controlling stakes in durable operating businesses. The shares trade near $65 versus a 2026 sum-of-the-parts value of roughly $119, implying about 83% upside; management targets more than $200 per share by 2030. Supporting evidence includes residential residual value rising despite acreage declining roughly 45% since 2020, ~$96m of trailing adjusted maintenance free cash flow from Operating Assets, and Vantage’s ~16% trailing ROE. Risks include ~$5.5bn of debt, cyclical property cash flows, insurance and equity-market volatility, a persistent conglomerate discount, and dependence on Pershing Square’s capital allocation.

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PesoRama is expanding its JOi Dollar Plus network in Mexico, a highly underpenetrated dollar-store market, with announced September openings set to bring the chain to 49 locations and management targeting roughly 500 stores within five years. Store-level economics support the rollout: each location requires $0.4-0.5M of capex plus $0.15M of inventory, generates $1.0-1.3M of sales at a targeted 17% EBITDA margin, and offers a 2-3-year payback. Momentum is improving, with Q1 revenue up 36% year over year, traffic up 19%, FY26 same-store sales up 5.2%, and product gross margin reaching 45.6%. Adjusted EBITDA is forecast to break even in H2/27 following the refinancing of costly senior debt. The $1.60 target implies 227% upside and is based on 400 stores by FY31, below management’s goal, but relies heavily on terminal value. The central risks are rollout execution and funding: the expansion requires substantial debt and equity, while convertible debt, options, warrants and future financings create meaningful dilution; unresolved legal claims could also pressure the balance sheet.

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VIGO Photonics is the only traceable Warsaw-listed supply-chain exposure to Poland’s €43.7bn SAFE allocation and the resulting shift toward localized European defense production. The company makes mid-infrared detectors and specialized semiconductor substrates; its military division expanded 78% between 2023 and 2025. In early 2026, VIGO signed a strategic supply agreement with PGZ unit PCO for infrared detector arrays after completing qualification batches, ahead of planned serial production. It also signed an LOI with CRW Telesystem-Mesko to develop seeker matrices and laser-warning sensors, creating a potential link to the PLN 8bn Piorun framework. The September MSPO exhibition could provide binding Piorun volumes and supply-chain allocations. Execution remains the key risk: the LOI is not enforceable and has produced no disclosed purchase order, VIGO’s small revenue base limits absolute cash flows even at high growth rates, and reliance on state-owned customers creates procurement-policy exposure. The stock has also participated in the broader Warsaw rally, limiting how much of the opportunity remains unpriced.

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