YB new stock pitches (Thu, Jul 24)

Clarus Corporation (CLAR) is an outdoor adventure gear company featuring Black Diamond climbing equipment and Rhino-Rack roof racks, currently valued at just 0.4x sales compared to industry M&A multiples of 1-2x sales. Though subscale and struggling with profitability after excessive SKU expansion, the company possesses significant brand value. Chairman Warren Kanders, who owns 18% of shares, has recently purchased more stock and holds options on 1 million additional shares that vest only if the price reaches $15, $18, or $50 by 2033. Kanders has a strong history of value creation, evidenced by the recent sale of PIEPS subsidiary at 1.7x sales. With substantial cash, no meaningful debt, and an experienced operator at the helm, the likely outcomes include operational rationalization followed by a potential sale process in the next 6-18 months, which could value shares at approximately $11 (about double the current price) assuming a mid-point valuation of historic M&A multiples.

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Red Violet, Inc. ($RDVT) warrants a 25% allocation as it shows potential for 20%+ revenue CAGR over the next 5+ years. IDI customer additions are growing at a 17% 6-year CAGR with increasing revenue per account, and the company now has 100+ customers generating over $100K annually. FOREWARN, comprising 13-18% of revenue, has 325,000 users (growing at a 75% 6-year CAGR) out of 900,000 US realtors, and doubled its user base last year. This product demonstrates strong product-market fit and is becoming a 'mandatory' safety application for realtors. The company's fixed cost model with high operating leverage should drive operating margins to around 30% by 2028-2029, potentially generating $2.50+ in EPS. At a 40x multiple, this suggests a 3-4 year double from current levels, making it an attractive investment despite a recent 70%+ run-up in share price.

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Auto1 Group (AG1.F) is building Europe's dominant online used car ecosystem, with its profitable B2B Merchant segment funding the growth of its AutoHero retail business. The company possesses three key competitive moats: proprietary C2B sourcing that saves €500 per unit, a pan-European industrialized refurbishment network, and a growing embedded finance platform. The business model operates as a flywheel where the Merchant segment (80% of revenue, 75% of gross profit) provides proprietary data and low-cost inventory to AutoHero. After pivoting to profitability in 2023, Auto1 is now re-accelerating growth, with Q1 2025 showing 45% YoY gross profit growth and €30 million in net income. The base case projects a 25% CAGR in retail units through 2029, reaching €15 billion in revenue and over €1 billion in net income, with GPU expanding through increased C2B sourcing, growing ancillary sales, and finance platform maturation (from €375 to €1,000+ per unit). Operating leverage will drive Adjusted EBITDA margin expansion from 3% to approximately 9% by 2029. Despite trading at €26 per share, the company offers a 4x upside opportunity over five years based on conservative market share assumptions in Europe's highly fragmented €600-700 billion used car market.

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