YB new stock pitches (Mon, Jan 12)

Baltic Classifieds Group (BCG.L), the dominant online marketplace operator in Lithuania, Estonia, and Latvia, has declined 50% since July, creating an opportunity to acquire monopoly assets at approximately 17x forward P/E with a clear path to 15-20% annual earnings growth. The company owns dominant portals for automotive (Autoplius, Auto24), real estate (Aruodas, KV.ee), and jobs (CVbankas), benefiting from powerful network effects where buyers and sellers are locked into their platforms. The investment thesis centers on the belief that AI disruption fears are misguided, as while LLMs may change search behavior, they cannot replicate the unique, localized inventory of physical assets like homes, cars, and local jobs that reside exclusively on BCG's platforms. Supporting the bullish case, company insiders purchased £1.3 million in shares during December 2025, including Chairman Trevor Mather's £465,000 purchase and Independent Non-Executive Director Ed Williams' nearly £800,000 in multiple purchases, signaling management confidence in the business.

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Ascentech K.K. (3565.T), a Japanese Citrix distributor that transformed in March 2025 into the exclusive Citrix operator in Japan, shifted from low distributor margins (8-15%) to a higher-margin revenue-share model (25-35% gross margins) with multi-year recurring subscriptions that reduce working capital risk and provide access to the full Citrix product suite for bundling opportunities. The company has demonstrated strong execution with ~19% ROE and ~38% ROIC over the past decade, positioning it well as an operator of Virtual Desktop Infrastructure (VDI) software, one of two market leaders in a space driven by post-pandemic hybrid work demand, particularly among risk-averse highly-regulated industries like city governments, finance, and healthcare that are unlikely to abandon hybrid work arrangements. Key risks include upfront payments tied to projected sales that could be missed due to execution failures or poor Citrix product demand, though AI disruption is unlikely since Citrix serves as control-plane infrastructure within which AI runs. Despite rising 70% over the past year, the stock trades at seemingly undervalued forward multiples of 9.5x PBT and 13.5x PE given its exclusive operator position in leading VDI software.

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NexPoint Residential Trust (NXRT) is a new position added at approximately 5% portfolio weight, trading at a 40% discount to $50 midpoint NAV with the CEO hinting at a corporate transaction if the valuation gap doesn't close. The REIT offers a 7% dividend yield that was recently raised and a 7% implied cap rate for a Sunbelt portfolio that typically transacts around 5.25%, while trading at one of the lowest AFFO multiples in the multifamily space. Despite being more leveraged than US peers with Canada-like leverage ratios, the company benefits from high insider ownership including CEO Jim Dondero, creating alignment despite external management concerns and Dondero's sketchy public markets track record. BlackRock and Starwood have recently increased their stakes, demonstrating confidence in management, and the risk-reward profile appears attractive given that peer NexPoint Diversified (NXDT) surged 59% off its 2025 bottom, suggesting potential significant upside torque in a sector recovery. New position.

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