YB new stock pitches (Tue, Jun 3)

Chesapeake Financial Shares (CPKF) is a Virginia community bank trading at 8.0x P/E and 0.5x adjusted book value when accounting for $71M in hidden gains on the balance sheet (fair value adjustments). The bank operates 16 branches plus a growing wealth management division generating about $5M in revenue. CPKF offers a 3.3% dividend yield that has never been cut since 2006. In Q1 2025, the company reported a $4.5M loss due to a securities swap, but this transaction is expected to generate an additional $2.25M per year in future earnings from higher yields on $75M in securities. The bank has high leverage with Tangible Assets/Tangible Book at about 10, though it maintains substantial liquidity. Governance concerns include the CEO also serving as Chairman, four directors with tenures exceeding 10 years, and the CFO also functioning as COO. Despite these issues, the bank appears well-managed with good insider ownership, as the CEO/Chairman owns 7.15% of shares, and multiple directors have significant investments in the company.

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Carlisle Companies (CSL) represents a compelling LONG opportunity with a 3-year price target of $598 (73% upside, 23% IRR) following its transformation into a pure building products company with 33% market share in commercial roofing. The investment thesis rests on three pillars: 1) Organic revenue growth of 6%+ annually, driven by aging commercial buildings from the late '90s/2000s construction boom now requiring replacement, pent-up reroofing demand adding 1-2% volume growth, and a 50% increase in insulation content per square foot since 2013; 2) Durable margins supported by a rational industry structure where the top four players control 80% of the market, a shift from pricing-to-cost to pricing-to-value since 2018, margin-accretive systems selling, and a variable cost structure tied to petrochemical derivatives; 3) Strong capital allocation from an 'Outsiders-inspired' management team that has divested non-core divisions, repurchased nearly 1/3 of outstanding shares since 2016, and has potential to buy back another 14% over the next three years. Key risks include macroeconomic uncertainty affecting project timing, new competition potentially undercutting pricing, distributor consolidation, and potential value-destructive M&A, though management's track record and incentives mitigate these concerns.

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Remedy Entertainment (REMEDY.HE), the world's cheapest AAA gaming studio, is transitioning from producing niche titles to mass-market games with a one release per year cycle (versus one every 3-4 years historically). The company now owns the Control and Alan Wake IPs, having purchased full rights from 505 Games and Microsoft respectively, and has established favorable deals with premier industry players including Rockstar Games, Epic Games, and Annapurna. This pivot positions Remedy for significant growth, with conservative estimates projecting €35-40M EBIT by 2026 (4x EV/EBIT) and >€70M by 2027 (<1.5x EV/EBIT). The company's back catalog generates >€10M per quarter, with Control sales fully accruing to Remedy since 2025 and Alan Wake 2 royalties beginning in Q1 2025. Despite having four simultaneous game development cycles and strong financial positioning while competitors cut back, the market significantly undervalues Remedy due to risk aversion toward gaming stocks and misunderstanding of its operational transformation. With Tencent already owning 15% and increasing its stake three times in five years, Remedy represents both a compelling standalone investment and potential acquisition target.

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