YB new stock pitches (Wed, Jun 10)

Mobilicom (MOB) is a founder-led Israeli-American defense-technology micro-cap trading at ~$82M market cap (~$4.60/share, 17.8M FD shares) with $19.1M cash (as of 12/31/25), zero debt, and a modest $159K/month burn, yielding an EV of ~$63M and multi-year runway, with downside cushioned by ~30% of market cap in cash; the company makes the embedded cybersecurity, communications (SkyHopper SDR datalinks, mesh networking, ground control stations), and control systems that Tier-1 drone OEMs design into their platforms for the life of a program (~5 years), making it hard to displace once designed in. The core anchor is a Tier-1 customer (likely tied to the U.S. Marine Corps OPF-L program, possibly Teledyne FLIR's Rogue 1) that won a $249M U.S. DoW Program of Record where MOB is the datalinks/cybersecurity provider (SkyHopper PRO + ICE Suite), with production now ramping and the budget—set ~4 years ago pre-Ukraine/Mid-East surge—expected to expand; MOB estimates capturing at least 5-7% of the $249M and previously booked $1.55M in 2025 scaled orders. The larger thesis is a pivot from lumpy hardware (50-60% gross margins) to recurring high-margin software (85-90%) via its Secured Autonomy framework, including OS3 cybersecurity software (hardware-agnostic, edge + cloud) and the ICE EW-resistance suite, with management illustrating that attaching ~$300-$400/unit OS3 licensing to 50,000-100,000 deployed drones could yield $15M-$40M/year in recurring revenue; MOB targets 4-6 AI autonomy computing OEM partners in 2026 (NVIDIA, Qualcomm, taking a 'Switzerland' approach) up from 2, plus software partners (Palladyne/PDYN, ARK), with effectively unlimited software delivery capacity. Catalysts and tailwinds include Blue UAS certification (3 SkyHopper products added Feb 2025), a rare FCC Covered List exemption (one of only four companies, the only one with multiple products exempted) creating a regulatory moat, NDAA Section 848, the American Security Drone Act (effective Dec 22, 2025) and EO 14307 banning Chinese components, the DoW CSRMC mandate driving real-time cyber defense demand (OS3 among first compliant), 170% tariffs and 16-24 week lead times on Chinese parts that MOB pre-bought with its cash (a structural margin/availability advantage), planned U.S. manufacturing by end-2026 to meet Made-in-America mandates, EU/NATO expansion (first German design win Nov 2025, Israeli Tier-1 perimeter fleets across EU-NATO), the March 24, 2026 termination of its ATM as a sign of financial strength, pipeline Programs of Record (SOCOM GOPSS, Navy LRT, Army SRR 12,000 drones ~$600-700M, Pentagon Replicator), potential Nasdaq index inclusion, and ~$14M additional cash from warrant exercise (bringing cash to ~$33M). MOB has 70+ platforms deployed across 16 countries, 34 patent claims, and faces competition from Silvus (MSI subsidiary, MANET mesh networking, drone certs only arrived Dec 2025) and Persistent Systems (large-scale MANET), but argues no direct peer offers its drone-native, SWaP-optimized, cybersecurity-first small-UAS datalink package with Program of Record incumbency. On valuation, the company estimates ~$10M revenue in 2026 (turning profitable around $12M) and the larger inflection of $30M+ in 2027; against sector comps (AeroVironment ~13.5x EV/sales, Kratos ~12x, and the May 2024 MSI/Silvus acquisition at $4.4B upfront / up to $5B on ~$49M revenue, ~90x), applying a conservative 10x to $30M 2027 revenue implies a ~$300M cap (~$16-17/share, ~3.6x current), a mid-case 15x implies ~$450M (~$37/share, ~7.5x), and a bull case 20x implies ~$600M (~$50+/share, nearly 9x), with the gap framed as a 'discovery lag' that re-rates as production orders, new Programs of Record, OS3 licensing deals, NATO wins, and U.S. manufacturing materialize. Key risks are immaterial trailing revenue today and execution dependence on confirmed customers scaling into orders and OS3 attaching as recurring licenses.

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Temairazu (2477.T) is a Japanese hotel-software company with a ¥13.9bn market cap, trading at 4.6x forward EV/EBIT with net cash equal to ~46% of market value. Its core product, TEMAIRAZU, helps hotels and ryokan manage rooms and prices across booking channels (Rakuten Travel, Jalan, Booking.com, own websites) from one screen, charging a monthly fee (~75% fixed, rest reservation-based) that is sticky and recurring. With only ~41 employees, minimal capital needs, and a ~73% operating margin, it resembles SiteMinder but as a founder-controlled listed company; founder vehicle 68k Inc. owns 52.4% and his total insider bloc is ~62-66%. The thesis is that the founder now has stronger reasons to care about the share price: the company completed a ¥793mn buyback, announced a new ¥300mn buyback (June 5, 2026), and raised the dividend from ¥30.5 to ¥40. Because the founder doesn't sell into buybacks, his stake has risen from ~62% to ~66% while lifting per-share value. However, buybacks are hitting the Tokyo Stock Exchange's 25% free-float requirement—JII estimates free float has fallen from ~31% (Sept 2025) to ~24% now (treating Hikari Tsushin's ~7% stake as strategic), at or below the limit, making buybacks a short-term tool. The next lever is dividends: with ¥6.4bn cash, lifting the payout ratio from 22.5% toward 100% of earnings would raise the dividend from ¥40 to ~¥176/share (~8% yield vs. 1.9% today), and a special dividend returning ¥2-3bn excess cash would add ~¥340-510/share, implying a one-time yield of ~35-43%. Dividends are also tax-efficient for the founder, as 68k Inc. can receive them nearly tax-free via Japan's dividends-received deduction versus ~20% capital-gains tax on selling. The key risk is that minorities cannot force this—the company is founder-controlled—so the thesis hinges on the founder wanting a higher, more liquid share price, which becomes more likely as the shrinking free float makes the listing less useful to him.

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Baron SMID Cap ETF New Position: Waystar Holding Corp. (WAY). We initiated a position in Waystar Holding Corp., a provider of revenue cycle management software to health care providers with an AI driven, end-to-end suite that saves clients massive working capital costs by getting claims submitted quickly and correctly and automating insurance appeals when necessary; trading at under 11 times adjusted cash flow and growing cash flow in the low teens, we believe the company is competitively advantaged and very inexpensive.

Read the full article here. Read time: 1 min