YB new stock pitches (Mon, Apr 20)

Sable Offshore Corp. (SOC) is a new position that has resumed oil production at approximately 50,000 barrels per day (with expectations to reach 60,000 bopd by Q2) following Energy Secretary Chris Wright's Defense Production Act order on March 15. At current oil prices ($83 Brent with discounts due to heavier California crude quality) and an 83% net revenue interest, the company could generate over $1 billion in free cash flow per year with an estimated $10 billion in future reserves, operating at approximately $396 million per year in expenses (roughly $18 per barrel all-in cost including $176 million in G&A and $220 million in operating/maintenance). The primary legal risks include California's lawsuit to nullify Wright's DPA order, California State Parks seeking a preliminary injunction on pipeline right-of-way through Gaviota State Park (with a hearing scheduled next week), and the Ninth Circuit reviewing PHMSA's jurisdiction over pipeline safety and exclusive authority over formerly state-regulated lines. The investment presents a bimodal outcome where either barrels continue to flow or courts shut down operations, with numerous other lawsuits (California Coastal Commission fines, Santa Barbara DA criminal case, Regional Water Board suit, federal lease validity challenges, and Judge Geck's state injunction) being material but not immediate show-stoppers due to federal supremacy. The investor is playing this through a collar strategy: long common stock, selling upside calls at levels reflecting a 'clean runway, 60 kbopd, no major legal surprises for six to twelve months' valuation, and buying downside puts for protection against adverse legal rulings, as going naked long or short is too risky given the contested nature of the DPA invocation and multiple credible paths for judges to halt operations.

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ASB Partners upgraded its position in Japan Exchange Group (JPX:8697), which owns the Tokyo and Osaka exchanges and announced upwardly revised guidance on March 25, 2026. The company operates with structural moats, high barriers to entry, network effects, and minimal capital intensity, maintaining approximately 58% EBIT margins, ranking among the world's most profitable companies. Despite underperforming peers and the Nikkei over the past five years, JPX has experienced a significant inflection in Average Daily Value (ADV) and revenue following the Takaichi administration's election in February 2026, which is considered a major tailwind for Japanese stocks. The market has failed to appreciate the benefit of Bank of Japan rate hikes beginning in July 2024, which now generate ¥7 billion of incremental EBIT (approximately 8% of 2025 EBIT) from ¥7 trillion in client collateral at the current 75bps policy rate with 30% collateral participation through JPX's clearing business (JSCC). The company shows over 20% TTM revenue growth and trades at only 12x EV/EBITDA, representing a discount to global exchange peers despite its superior economics and growth profile. On April 13, 2026, JPX launched FX Futures, Pocket Gold 100 Futures, and Pocket Platinum 100 Futures on the Osaka Exchange, which Goldman Sachs estimates could add 3-16% revenue upside over the medium term. The primary risk is the yen approaching the critical 160 USD/JPY level, which could trigger BOJ intervention and potentially negatively impact equity markets, though increased volatility would likely boost ADV and profits for JPX, and the attractive valuation with strengthening fundamentals provides a margin of safety for this asymmetric risk/reward opportunity.

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Arlandastad Group AB (AGROUP.ST), a Swedish real estate developer with a market cap of ~SEK2.6bn (~$285m), owns ~8m square meters of land and ~1.2m sqm of zoned building rights across two major airport city development projects near Stockholm—Arlandastad (near Arlanda Airport with 24m+ annual passengers) and Skavsta (near Skavsta Airport with ~350k annual passengers, set to benefit from the East Link railway project reducing travel time to ~40 minutes by 2032). The company trades at a 45-55% discount to NAV (SEK45-50bn estimated portfolio value) primarily because its building rights are significantly discounted on the books due to conservative third-party appraiser Forum Fastighetsekonomi assuming very long development timelines (0-20 years for Arlandastad, 0-50 years for Skavsta), resulting in Arlandastad building rights valued at SEK3,215/sqm on the books versus recent transactions at SEK5,000+ and Skavsta rights at SEK314/sqm versus SEK1,000 market prices. After two decades of land accumulation and minimal development (~15k sqm annually historically), AGROUP has hit an inflection point with 300-400k sqm of building rights activated in FY25 through major joint ventures including ~210-310k sqm sold to BRA Bygg for the Western Terminal (the company's largest project) and ~85k sqm in Arlandastad including deals with Arwidsro and an unnamed buyer. Management signaled this accelerated pace is sustainable by introducing a transformational capital allocation shift in December 2025, targeting an 8.7% dividend yield (SEK230m annually, ~5% of equity) as their sole KPI, starting with SEK98m (~3.7% yield) for FY25—a powerful signal given the company burned ~SEK235m FCF in FY25 (driven by -SEK130m operating CF, -SEK75m in-house development, -SEK30m JV funding, offset by SEK135m government grants and SEK55m each from borrowing and property sales). To fund the ~SEK465m needed for ongoing negative FCF plus dividends without increasing leverage (currently ~25% LTV, ~2.0x interest coverage), AGROUP must accelerate asset sales to >90k sqm of building rights annually in Arlandastad alone at current prices, which management explicitly stated they 'would not have set if they thought they could not live up to it.' The company is founder-led by Swedish real estate mogul Per Taube (43% owner through Gelba Management), who has demonstrated exceptional capital allocation including acquiring Skavsta's ~4.8m sqm for SEK117m in 2022 and already selling just 11% of that land through the Western Terminal JV at an underlying value of SEK200m (~70% above total acquisition price), and who has been buying shares in the open market calling the stock 'extremely undervalued' in August 2025. Key catalysts include the ongoing sale of ~SEK350m in already-announced transactions expected within 12 months, annual contract value for commercial properties surging 88% YoY to SEK374m (versus only SEK162m recognized rental income, indicating significant future cashflow inflection as properties come online), potential approval of District 6's 500k sqm of late-stage building rights within 12 months, additional 380k sqm of unapproved rights in process worth an estimated SEK7-14/share, a SEK30m cost-cutting program, potential operational improvements at money-losing Skavsta Airport (impacted by Wizz Air flight cancellations), declining interest rates benefiting the company's SEK1.7bn floating-rate debt (average rate down to 4.9% in FY25 from 6.3% in FY24), and longer-term tailwinds from the 2032 East Link railway completion and potential Bromma Airport closure. Risks include SEK1.3bn of debt maturing 4/7/27 requiring refinancing, continued negative FCF if operational improvements don't materialize, potential delays in municipal zoning approvals (a recurring issue including for District 6 delayed since 2021 IPO), exposure to rising interest rates given floating-rate debt and impact on property valuations, execution risk on the ambitious >90k sqm annual sales target versus 15k sqm historical average, extremely limited liquidity with ~10% free float and ~SEK840k average daily volume, and general Swedish real estate market exposure. The investor is taking a long position, viewing the stock as significantly undervalued with potential to close the NAV gap as accelerated asset sales at prices materially above book value (SEK5,000+ vs. SEK3,200 book for Arlandastad, SEK1,000 vs. SEK314 book for Skavsta) demonstrate true property values, while the 8.7% target dividend yield provides compelling downside support.

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