YB new stock pitches (Tue, Mar 24)

Solitron Devices ($SODI), a 67-year-old West Palm Beach military-spec semiconductor manufacturer, is a sole-source defense supplier embedded in critical weapons programs including Raytheon/RTX's AMRAAM air-to-air missile, Lockheed/L3Harris's HIMARS rocket artillery system, and the SM-6 interceptor, with products that cannot be replaced mid-program without extensive re-qualification. The company's backlog exploded 124% year-over-year to $28 million (approximately 2x trailing twelve-month revenue), driven by AMRAAM Lot 39 orders at higher pricing following expiration of a multi-year agreement and HIMARS production ramps, with Q3 fiscal 2026 revenue up 49% to $5 million, net income up 143% to $653K, and gross margin expanding to 34.3% from 29.7%. CEO Tim Eriksen, founder of Cedar Creek Partners who controls approximately 14% of shares through his fund and personal holdings, announced a strategic review process on February 3rd that could include a sale of the company at a premium, stating 'there is strong demand in the market place for defense related companies and numerous parties interested in acquiring the Company at a premium to the current share price.' Raytheon CEO Phil Jasper confirmed AMRAAM production doubled last year and will double again this year with continued increases planned, while Lockheed received multiple compressed-timeframe HIMARS contracts in 2024, and management noted Q4 fiscal 2025 AMRAAM orders are believed to include parts for two to three years of SM-6 production plus development of various prototypes for potential customers representing incremental revenue sources. The company operates with zero debt, generates $14 million in annual revenue, and trades on OTC Pink Markets at a $51.5 million market cap, with material risks including customer and program concentration (AMRAAM and HIMARS represent majority of defense revenue with RTX as dominant customer), MEI acquisition customer concentration (~90% from single medical customer), scale limitations requiring capital investment in employees and facility capacity to meet production doubling, and potential M&A execution risk if the strategic review leads to acquisitions rather than a sale.

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BMW trades at a sub-7 P/E ratio, 0.5x book value, and offers a 6% dividend yield, with €44 billion in automotive net financial assets representing approximately 95% of its €46 billion market capitalization. The company is rolling out its 'Neue Klasse' EV lineup while maintaining combustion engines to serve both traditional and EV markets, with a catalyst emerging as China's EV tax exemptions end in 2026, effectively making cheaper competitors 5% more expensive and improving BMW's pricing power against local rivals. Capex and R&D are dropping from €9.1 billion in 2024 to €7.2 billion in 2025, creating a free cash flow inflection as the Neue Klasse launches, with €4.5 billion+ in projected FCF for 2026. The sum-of-the-parts valuation yields €118 billion (€54 billion automotive business at 5.5x EBIT based on 8% margin target on €135 billion revenue, €21 billion financial services at 1x book value, and €43 billion excess cash) versus the current €46 billion market cap, with a €200 price target implying 9.3% annual returns plus dividends based on projected book value per share of €185 by 2027 and €10 in cumulative dividends from a stable 36.6% payout ratio. A share class merger scheduled for May 13, 2026, will combine preferred and common shares 1:1, creating a catalyst for institutional buying and market simplification. Risks include Neue Klasse execution and rising energy prices due to the Iran war, though the 6% dividend and ~10% annual book value growth provide downside protection even if the market continues viewing it as a value trap.

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Compagnie de l'Odet (ODET.PA), the top listed holding company within the Bolloré Galaxy, reported FY 2025 results with revenue of €2.9 billion (-9% year-over-year, mainly reflecting weaker energy prices) and net income of €354 million compared to €1.75 billion in 2024, with the prior year boosted by a €3.7 billion net capital gain from the sale of Bolloré Logistics and a €1.9 billion loss from the Vivendi spin-out. The Group ended 2025 with net cash of €5.1 billion, up from €4.8 billion at end-2024, and declared an underlying dividend of €4.80 per share (+9% year-over-year). Bolloré SE will pay a €4.2 billion special dividend, 71% of which flows to Odet, and Odet intends to pay out at least two-thirds of this exceptional dividend (approximately €2 billion) in H2 2026, implying a special dividend of either €472 per share (25-39% yield, depending on whether calculated using 4.2 million ex-treasury shares or 6.6 million total shares including treasury shares). Intragroup transactions included Odet selling almost 6 million UMG shares for €165 million (€27.5 per share), buying 26 million Canal+ shares for €59 million (€2.26 per share), and buying 6.8 million Bolloré SE shares for €32 million (€4.72 per share). At end-2025, Odet's shareholder equity was €12.8 billion (flat versus €12.9 billion at end-2024), equating to a NAV per share of €3,021 versus the current share price of €1,220, representing a 2.5x discount, with a price target of €3,021.

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