YB new stock pitches (Tue, May 19)

Marex Group (MRX – USA) is a mid-market commodities broker providing trading solutions for commodities firms, hedge funds, and futures speculators, currently trading at a high single-digit 2027 P/E multiple despite strong earnings growth and consistently high returns on equity. The company is gaining market share from bulge bracket firms unable to competitively serve mid-market clients while acquiring smaller competitors struggling with rising compliance costs in the global market. The investment thesis centers on Marex being both a consolidation play and long-term compounder, positioned to benefit as CFOs increasingly hedge not just commodities but also currencies, interest rates, freight rates, weather derivatives, and other products that may not yet exist, with executives incentivized by large bonuses for hedging correctly while losses are often adjusted away in EBITDA calculations. The growing retail gambling trend further supports the growth thesis, as speculative trading behavior expands across markets. Marex operates in a sector with few scale competitors for M&A opportunities, continuously reinvesting in the business while maintaining strong profitability, making it an attractive holding with multiple tailwinds including market volatility, increased financialization, and ongoing industry consolidation.

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Pro-Dex (PDEX) supplies high-margin end-effectors for Zimmer Biomet's mBôs surgical robot, which revolutionizes total knee replacement procedures through hands-free automation requiring only 60 seconds for surgical planning with customized implants, representing an early example of applied AI in robotics materially impacting labor markets. The device is expandable beyond knees to shoulders and other joint replacements, with all end-effectors covered under the Pro-Dex agreement. CEO Rick Van Kirk expects Zimmer to become Pro-Dex's number 2 customer by year 2, and the 2030 CVR targets $609 million in net sales for the device's third year. The automated workflow enables scalable capacity where senior physicians can remotely oversee junior clinicians, potentially eliminating the need for future residents to learn joint replacement surgeries, while simultaneously lowering costs and increasing demand. The end-effectors represent higher margins than Pro-Dex's current products, and the investor believes PDEX is wildly underpriced given expectations that Zimmer Biomet will dominate the company's profit and loss statement, as the automated surgical workflow creates an unbeatable competitive advantage with minimal room for further time reduction improvements.

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Grupo Aval Acciones y Valores S.A. (AVAL), a Colombian banking conglomerate, presents an event-driven macro opportunity ahead of Colombia's May 31 presidential election, where despite left-wing candidate Ivan Cepeda leading in initial polls, runoff scenarios and anti-vote statistics favor right-wing candidates Abelardo de la Espriella and Paloma Valencia, suggesting a likely political shift to the right as seen across Latin America in recent years. AVAL trades at less than 50% of its peer Grupo Cibest (CIB) on a Price-to-Book basis, offering over 100% upside potential compared to rivals and significant undervaluation even against the next-cheapest entity, Argentine banking conglomerate Grupo Galicia (GGAL). The company's publicly traded bonds (4.375% due February 2030) have been in a bullish regime for several quarters, signaling lower perceived downside risk among fixed-income investors. The stock exhibits a Tier 2 price action setup, trading just above its 12-month moving average in an accelerating bullish trend, with sufficient liquidity to attract institutional investors when Latin American markets become hot. Banks are poised to benefit from a political shift to the right, as demonstrated across Latin America where nearly a third of the continent has moved rightward in four years, fueling a massive rally in LatAm capital markets, though Colombian equities currently face constraints from rising yields (CO10Y up 6.71% YTD due to populist fiscal policies) and a relatively indifferent Colombian Peso versus USD. The investment thesis stacks multiple edges: a probabilistic catalyst (election favoring right-wing candidates), supportive price action, bottom-fishing valuation, ample liquidity, and bullish fixed-income signals indicating diminishing risk.

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