YB new stock pitches (Wed, Jun 24)

Kingstone Companies ($KINS), a NY specialty coastal insurer with a $220M market cap, trades at 6x FY26 EPS estimates despite posting the best year in its 17-year history with a 43% ROE, 75% combined ratio, and $40.8M net income, while peers with similar ROEs trade at 12-15x. The ex-Bridgewater CEO and former Ray Dalio advisor rebuilt the near-bankrupt company, cutting the expense ratio from 41% to 30%, shifting 60% of the book to a new product with 33% lower claims frequency, growing direct written premiums 15% to $277.8M, making the holding company debt-free, and reinstating the dividend after a three-year pause. The market is pricing structural ROE at the old management's 16-17%, but management guides 24-30% ROE for FY26 (assuming above-average catastrophe losses), with the thesis arguing structural ROE sits at 22-25% with line of sight to 30%+. Growth is multi-year structural (16% organic premium growth in Q1 2026 ex-acquisitions), with the AmGUARD non-renewal alone delivering an estimated $25-35M of premium over 2025-2028 (NY policies are three-year terms) and a five-year $500M DWP target implying a 15.8% CAGR, near its 14.7% historical pace. The California E&S entry differs from the failed 2017 admitted-lines expansion via mid-policy non-renewal rights, a modified Select product, a cap of less than 5% of 2026 premium, and a 30% quota share, targeting a $15B homeowners market twice the size of New York where major carriers are exiting. Shareholder alignment is strong: an activist with a 7.6% stake ($12.3M) filed a 13D in March demanding a strategic review including a sale, the chairman bought $200K in shares, and insiders plus the retired founder hold over 11%; there is also a buyback for 7% of shares. Investment income is a tailwind, with portfolio yield up from 3.7% to 4.3%, $34M of low-coupon bonds rolling into ~5% reinvestment rates through 2026, and net investment income up 44% in FY25 and 63% in Q1 2026. Base case: structural ROE confirmed and multiple re-rates to 10-12x forward EPS for $25-30/share (+65% to +100%); bull case: California works and multiple expands to 14-15x for $35-45 (+130% to +200%); bear case: ROE normalizes to 17-18% with roughly -20% downside.

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D'Ieteren (DIE.BR, €172.40/share, ~€9.2bn market cap, 53.7mn shares), a 220-year-old, seventh-generation Belgian family-controlled holding company (Nicolas D'Ieteren owns 50.1% via Nayarit), trades at a ~50% discount to an estimated NAV of ~€342/share, where ~80% of NAV is concentrated in Belron, the world-class global leader in Vehicle Glass Repair, Replacement and Recalibration (DIE owns 50.3%); Belron operates Carglass, Safelite (55% of revenue, ~35% North American share, ~10x nearest competitor) and Autoglass across 40 countries, benefits from a powerful moat (procurement scale as the world's largest windscreen buyer, technical ADAS recalibration expertise, and a sticky 'friendly middleman' insurance relationship with ~70% of revenue from insured jobs and all top 25 US insurers using it), and is riding the structural ADAS tailwind (recalibration rate up from 2% in 2017 to ~47% in 2025) with a market growing ~7% CAGR; Belron has compounded revenue ~9% since 2000 with adjusted EBIT margins expanding from 5.4% (2017) to 23% today, ~80% cash conversion, EBIT compounding 16% from 2021-2025, guides mid-to-high single-digit 2026 revenue growth toward a >25% 2028 margin, and is deleveraging (~4.5x net leverage/€8.4bn net debt at YE25, falling ~0.8x/year toward ~3x). The core catalyst is a credible Belron IPO (reported €24bn equity/~€32bn EV, possibly Amsterdam or New York by end-2026), driven by CD&R's (20.4% stake) eight-year hold and continuation-fund pressure, which would force price discovery, re-rate NAV, and compress the Holdco discount; the author values Belron at 19x 2026e EBITDA of €2,017mn (~€38bn EV, ~€30bn equity, consistent with the 2021/2024 transactions both near 19x and comps like AutoZone, O'Reilly, Rollins, Cintas), implying buyers acquire Belron at just 10x EBITDA through DIE today. Other segments (D'Ieteren Automotive, the legacy VW distributor with ~23% Belgian share and €232mn 2025 EBIT but in a cyclical downturn; PHE, 91%-owned aftermarket distributor, €2.9bn revenue/9.1% margin, performing well; TVH, 40%-owned, disappointing post-cyberattack at €223mn EBIT; and Moleskine, 100%-owned and a clear €500mn+ failure now loss-making) are mixed, with capital allocation outside Belron underwhelming. Probability-weighted scenarios give a ~21% two-year IRR: base case ~19% (€30bn Belron, 8% NAV CAGR, IPO with discount narrowing to 40%), bull case +132% (top-of-range Belron, discount to 25%), bear case -10% (no IPO, discount stays 50%). Key risks include no/delayed IPO, poor post-IPO capital allocation of ~€15bn of liquid Belron stock (Moleskine cautionary tale, though small cheque sizes and special-dividend history—e.g., €74/share in December 2024—favor cash returns), single-controlling-shareholder governance, macro/tariff/FX/energy exposure, cyclicality, and longer-term autonomous-vehicle/EV risks. The author has taken a core long position and may add further into the potential Belron IPO, viewing this as an asymmetric 'heads I win, tails I don't lose much' setup.

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LuxExperience (NYSE: LUXE), a Munich-based luxury e-commerce holding company operating Mytheresa, Net-a-Porter/Mr. Porter, and Yoox at a €2.5B run-rate, trades at $8.60 (market cap ~€1B, EV ~€700m assuming €300m cash), or just 0.3x EV/revenue and 0.6x EV/gross profit. The bull thesis centers on its transformational, underappreciated YNAP acquisition: in exchange for ~1/3 of its shares, Richemont gave LUXE four banners (~€2B sales) plus €555m cash, vaulting LUXE from <€1B to ~€2.75B revenue overnight and making it the well-capitalized global leader and last man standing as rivals collapse (Farfetch liquidation 2024, Matches bankruptcy 2024, Ssense CCAA, Saks Global Ch. 11 2026), driving less discounting, lower CAC, and better margins. Synergies (shared tech, consolidated warehousing, unified care, joint procurement) are already lowering group SG&A, and the off-price brands will likely be shed (the Outnet sold for $30M; Yoox at ~€400m sales worth ~€100m+). The luxury industry, in contraction since 2023 (consumer pullback, aggressive pricing, China collapse), is showing signs of troughing amid a major creative refresh across houses and positive read-throughs (LVMH +1% organic with US +3%, Kering ex-Middle East +3%, Brunello Cucinelli citing LUXE by name). Turnaround evidence is strong: NAP/MRP net sales +6% cc (vs -10.8% Q1) with adjusted EBITDA margin -0.7% (vs -6.9% Q1), and Mytheresa net sales +11.6% cc, US +22.9%, adjusted EBITDA margin 9.3% (+200bps YoY). Downside is protected by low starting multiples, €300m+ cash, €1.5B NOLs (~€400m or $3/share), and €1B inventory. Base case: ~€3B revenue at 8% margin = €240m EBITDA, ~€160m net income (~$1.30 EPS) plus $2.50/share cash, yielding $22 (15x ex-cash, a double); paying 10x EBITDA for Mytheresa alone (~€70m EBITDA in FY27 on €1.1B sales) gets NAP/MRP/Yoox free. Bull case adds upside at 20x EPS and €3-4B sales. Risks include macro, FX (Euro strength a drag), US/Iran conflict, and Richemont's one-year lockup expiry on its 1/3 stake (sales must be in blocks; some selling could aid limited liquidity). Catalyst: earnings.

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