YB new stock pitches (Thu, Jun 25)

Holley (HLLY) is a leading aftermarket enthusiast performance auto parts platform (Holley brand founded 1903) selling branded products via distributors, retailers, and a growing high-margin DTC channel, now recovering under CEO Matthew Stevenson since June 2023. After pandemic demand pull-forward, supply chain disruptions, excess channel inventory, and margin pressure caused the stock to fall over 80% in 2022—with adjusted EBITDA dropping from $170M (2021) to $115M (2022), margins from 24.5% to 16.7%, FCF to near zero, and requiring covenant relief—financials troughed in 2023. Since then, Stevenson has rationalized the portfolio (SKU rationalization, divesting underperforming brands), improved working capital, restored margins, and cut debt: 2025 saw total revenue +1.9%, core revenue +6.6%, adjusted EBITDA of $124M, 20.2% margin, FCF of $34M, and leverage down to 3.75x after $100M of debt repayments since 2023. Despite this, the stock sits near where it traded when Stevenson joined, recently falling on temporary issues: severe winter weather disrupting early-2026 retail, late-2025 demand pull-forward ahead of 2026 price increases, and a divestiture that lowered headline 2026 revenue guidance (though core growth and EBITDA guidance were unchanged). The stock trades at just 6.2x EBITDA and 5.1x FCFE/share—multiples that misprice it as cyclical, a melting ice cube, or credit-risky, none of which apply given its stable enthusiast demand and improving FCF/leverage. The bull case projects a $6 price target by 2028 (8x EBITDA, justified by precedent aftermarket deals of ~9-10x and Sentinel's ~9.5x acquisition of Holley in 2018 at ~$600M on ~$62M EBITDA), implying a 50%+ IRR via LSD/MSD growth, modest margin expansion, debt paydown, and buybacks. Management is well-aligned through Stevenson's 1.52M performance stock unit inducement award vesting at stock prices of $5.00 (already vested), $7.50, $10.00, $12.50, and $15.00 (1.22M units outstanding, forfeited if unvested by year-end 2030). Risks include the discretionary nature of products and correlation to new car sales amid weak real wage growth and high financing costs, plus management's recently accelerated M&A strategy, which—given prior management's poor integration history and weak returns—could pressure margins, with buybacks preferred at the current multiple.

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LBG Media (LBG.L), a UK social media company reaching a hard-to-reach, wealthy Gen Z audience of over 500m globally, has seen its shares crash 50% to 27p (£58m market cap) after Adjusted EBITDA fell -34% in the period to 31/3/26 (1H26), driven by faster-shrinking 'Indirect' content (third-party content broadcast on its sites, hurt by algorithm changes and fake-content pushback) outpacing growth in higher-margin 'Direct' agency content (made by LBG for brands, now two-thirds of revenue), plus front-loaded investment in talent, leadership and sales capability; underlying cash generation remains intact, with operating profit just under £2m but £2.5m exceptional costs implying £4.5m underlying (only £0.8m below 2H25). The bull thesis rests on Gen Z's rising wealth ($27tn to $36tn over three years; $15tn inheritance over 10-20 years), making them a prime marketing demographic, and LBG's strong content quality and A-lister relationships. Key catalyst: the acquisition of 75% of Uncovered for £26.8m (plus £7m contingent earnout, total up to £33.8m), a Direct-only competitor growing revenue 80% last year (forecast 50-80% ongoing) at a 26% EBITDA margin vs LBG's 15.4%, proving Direct work needn't be low-margin and that content costs needn't rise with revenue; LBG receives 100% of profits until 2030, with founders incentivized via earn-in and a 9x EBITDA call option on the remaining 25% (2028-2030). Upfront the deal is 13x EBITDA, dropping to 3.8x if max growth is delivered or 10x if growth is zero. The acquisition was funded via a £50m facility (£17m drawn) plus £10m cash, leaving £18.4m cash, refuting bear claims it spent its cash pile; other bear points (content hatred, AI/algorithm risk) are dismissed given positive engagement and growing direct reach. A US push via the Betches acquisition lets LBG upsell Uncovered's TikTok/VFX/AI production to US blue-chip clients. KPI momentum includes 17→23 $1m+ clients, higher repeat spend, and Web Yield rising to £13.93 per 1k sessions from £10.34. Broker price target is 60p (over 2x upside), despite conservative assumptions of ~21.5% FY27 and 10.8% FY28 revenue growth (with 40% and 16% EPS growth); the author believes performance will be stronger, with real upside materializing in FY27 as synergies and the content-cost flywheel kick in, and is bullish/excited about LBG's prospects.

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Fugazi Research is short (views as worth ZERO) FreeCast, Inc. ($CAST), a speculative microcap that spiked from ~$0.50 to an intraday high of $12.20 (~$16.20 premarket), briefly reaching a $400M+ market cap, after hype-driven press releases referencing a non-exclusive Starlink Business reseller agreement (June 18, 2026) and a DIRECTV multifamily/FPUnet partnership (~30,000 homes)—deals with no disclosed contract value, minimum commitments, exclusivity, revenue targets, or signed customers, and no acknowledgment from SpaceX. The reality is dire: nine-month revenue of just $350,859 (-15.2% YoY, with subscription revenue down 54%), a nine-month net loss of $10.18M (~$29 lost per $1 of revenue), only $119,302 in cash against a $7.29M working capital deficit and $8.12M total liabilities, a $205.4M accumulated deficit, a going-concern qualification, and a staggering ~579x P/S (vs. ~30x for growing software peers); at peak it traded at ~356x total assets and ~3,367x cash. The company is almost entirely controlled by founder/CEO/Chairman William Mobley (93.1% beneficial ownership, ~88% voting power via 15-vote Class B shares), who funds it through his entity Nextelligence via a 12% revolving convertible note (64.8% of nine-month financing came from Mobley/Nextelligence), recently repriced from a fixed $8.00 conversion to a floating prior-day-close price (then converted into within days), and holds 4M Series A Preferred shares carrying a $30/share liquidation preference (~$120M) ahead of common, plus 10% revenue dividends above $50M. A material portion of 'revenue' is related-party (Celebrity Cigars, where Mobley is sole director and his son works, was over a third of quarterly sales), with circular payments routed through Nextelligence booked as new loans. CAST entered Nasdaq via a March 2026 direct listing (advised by Maxim, which received 125,000 shares worth $1M), meaning no lockups on Nextelligence's 25M+ of 41.5M shares (Mobley already sold shares at $4, $6, and $8), no operating capital raised, and a looming $50M equity line of credit (priced at 95% of five-day VWAP, drawable since May 6, 2026) creating heavy dilution/dump risk. A May 2026 warrant amendment cutting strikes from $4.25 to $1.33 still saw 96.3% expire unexercised (only $332,500 raised), signaling funding stress, not strength. The lone analyst (Maxim's Allen Klee) has a $6.00 target. Fugazi argues the business—spanning streaming aggregation, ad tech, FAST channels, telecom, broadband, multifamily, and regional sports—has no moat, no proven adoption, and faces inevitable repricing toward zero, with momentum traders serving as exit liquidity for insiders.

Read the full article here. Read time: 18 min