YB new stock pitches (Mon, Jan 26)

Liquidia Corporation (LQDA) was the author's largest contributor in 2025, with shares rising from $11.76 to $34.49, having been first purchased in October 2022 at $4.83 as a legal special situation play involving patent disputes with competitor United Therapeutics (UTC). After winning multiple patent battles, Liquidia's drug Yutrepia launched in late May 2025 and achieved what may be one of the most successful drug launches ever, capturing 25% market share with 75% of patients being new to treprostinil, generating $90 million in Q4 revenue and $30 million in positive free cash flow. Yutrepia's superior effectiveness stems from Liquidia's patented PRINT manufacturing process that creates smaller, more uniform treprostinil powder particles that reach deep lung tissue with fewer side effects and uses a low-effort inhaler, with CEO Roger Jeffs believing Liquidia can capture 80-90% of UTC's inhaled market share. The main remaining risk is the pending '327 patent decision regarding PH-ILD treatment, though 75% of Liquidia's revenue comes from PAH prescriptions which would be unaffected by an adverse ruling. The company is expanding into larger markets including Pulmonary Fibrosis, Systemic Sclerosis, and COPD through new clinical trials, and plans an investigator-initiated study combining Yutrepia with Merck's sotatercept (Winrevair) for combination therapy, making Merck a potential acquirer. CEO Roger Jeffs targets $1 billion in revenue by 2027, with the author maintaining price targets of $75-100 per share by 2027, believing the bull case could be exceeded if the revenue target is achieved.

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Huntsman Corporation (HUN), a global specialty chemicals company trading at 11x 2026E EBITDA, presents a new position opportunity despite currently operating in a cyclical trough with the stock priced at $18 and a $35 bull case price target. The company has transformed from a diversified conglomerate into a focused specialty chemicals operator with three main segments: Polyurethanes (65% revenue, focused on MDI production), Performance Products (17% revenue), and Advanced Materials (18% revenue, including aerospace and semiconductor applications). The MDI market faces a supply glut with BASF adding 150kt capacity in 2026 and Wanhua Chemical's 700kt expansion pressuring margins, though US anti-dumping duties have reduced Chinese imports from 22% to 7% of total Chinese exports. Management has implemented aggressive cost-cutting measures targeting $100 million in savings with $80 million already achieved, closed the Moers, Germany facility, and slashed the dividend 65% from $0.25 to $0.0875 quarterly to preserve cash. The company carries $1.5 billion in debt at 5.4x debt/EBITDA with no near-term maturities and $1.4 billion in liquidity. The investment thesis centers on the cyclical setup improving as BASF capacity gets absorbed in 1H 2026, followed by potential benefits from no new capacity additions, EU facility closures, and construction market recovery. Bull case scenarios project normalized EBITDA reaching $700 million, which at 10x multiple justifies the $35 price target, representing significant upside as the MDI cycle turns and the company's quality Advanced Materials and Performance Products divisions (which have shown structural growth) are currently undervalued due to focus on the cyclical MDI business.

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Stratus Properties Inc. (STRS) is an Austin, Texas-based residential and retail real estate company trading at $26.69 per share versus a $40.38 net asset value, representing a 33.9% discount with a market cap of $214 million against gross asset value of $693 million. Recent asset sales totaling $60.8 million in pre-tax proceeds from Lantana Place ($57.5 million), Kingwood Place ($60.8 million), and West Killeen ($7.8 million) validate management's valuations and provide strong cash position. The company has hired Eastdil Secured, an investment bank that has completed $3 trillion in transactions over fifteen years, to monetize the remaining portfolio which management estimates at $244.3 million ($29.85 per share) while the market implies only $100.4 million ($12.27 per share) value. The portfolio includes completed properties Jones Crossing (estimated $40 million value with $24 million loan) and Saint June (182-unit luxury multifamily project generating $4.5 million NOI, estimated $80 million value with $32 million debt), plus development assets including Amarra Villas, Barton Creek, Circle C, Holden Hills and Saint George comprising residential units under construction, active planning phases, and future development. CEO William Armstrong owns 8.3% of the company and the board previously rejected a $27.18 per share unsolicited bid from NXSTEP Opportunity Partners in January 2024, determining it substantially undervalued the company, with Armstrong's stake potentially increasing from $17 million to $25 million upon successful re-rating to net asset value.

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