YB new stock pitches (Fri, Sep 25)

VersaBank is a branchless wholesale bank whose US buildout is depressing current returns ahead of asset growth. Its Structured Receivable Program, now 85% of the loan book, grew 40% year over year and uses partner recourse and cash reserves to limit consumer-credit exposure; expected losses are 0.13% of assets. The US book expanded from US$310M at FY2025 year-end to US$793M nine months later, while an ECN Capital subsidiary is expected to add US$300M annually. Despite reported EPS weakness, nine-month core EPS rose 37%, and declining funding costs have helped NIM begin recovering. The thesis is that a US cost base built for US$3–4B of assets can restore operating leverage: VersaBank achieved a 46% efficiency ratio and 11.75% ROE in FY2023, versus 57% core efficiency and 7.1% ROE today. At roughly C$28 and 1.6x book, the 12-month target is C$37, with C$49 bull and C$21 bear cases. The decisive risks are failure to scale US efficiency, a capital raise as CET1 declines, and loss exposure if a large recourse partner fails.

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Added shares ahead of the expected verdict and owns October $80 calls, treating the court decision as the first domino in the existing “case first, partner second” thesis. The trial assessment is that liability is trending Nektar: the judge’s instructions favored the company, and Lilly’s closing focused more on limiting damages than disputing breach. The predicted outcome is a verdict for Nektar on both the implied-covenant and contract claims, with $531M in damages. At a $62 spot price, the stated ladder is roughly $75 after discounting the verdict for appeal and collection timing, $80+ as the overhang clears and partnership or business-development value is recognized, $100+ on favorable October 1 alopecia-areata off-therapy data, and $120+ if a partnership or transaction materializes. New York’s 9% simple prejudgment interest could add an estimated $12-$15 per share. Multiple parties were reportedly evaluating rezpeg under confidentiality agreements as recently as August; the immediate uncertainties remain the verdict, damages, appeal and timing.

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I-Tech sells Selektope, an ultra-low-dose antifouling additive that deters barnacles when ships are idle and can reduce both copper use and fuel losses. It is used in 36+ coating products and on more than 2,500 vessels, versus a global commercial fleet of roughly 100,000 hulls. A seventeen-year-high ship orderbook should translate into coating demand during 2027-29, while repeat five-year dry-dock cycles expand the installed base. First-half 2026 gross and EBITDA margins were 59% and 40%, respectively; the balance sheet held SEK 165 million of cash and no interest-bearing debt. At SEK 70, enterprise value is roughly SEK 675 million, or about 7x estimated underlying 2026 EBITDA and 10x annualized earnings ex-cash. The shares yield about 1.8% after the dividend was raised 25% to SEK 1.25 for 2025, while weighted scenarios imply an estimated 22-25% annualized three-year return. EU non-renewal is assigned 35-40% odds but directly touches only 2-4% of revenue; the real regulatory risk is contagion to Asia, which generates 96% of sales. Asian demand has remained strong so far, but subsequent order data is decisive. Customer concentration is equally material, having caused two prior growth stalls and a 46% drawdown.

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