YB new stock pitches (Wed, Nov 12)

NCI.V is down 30% due to temporary margin pressure from consultant hiring ahead of an anticipated contract ramp, despite growing 40%+ this year with expected 20%+ growth next year. The stock decline appears to be driven by dumb retail investors reacting to FX losses from USD movement and temporary margin pressures in H2 2025, while the company strategically hired consultants in preparation for a significant ramp in new contracts and work that should drive strong performance in 2026. Despite near-term bumpiness from tax issues and margin pressures, revenue and backlog are expected to grow strongly, with management targeting approximately $100M in revenue and $20M in EBITDA for 2026, representing a 4x current EV/EBITDA multiple for a business benefiting from Saudi 2030 tailwinds and insulated from macro conditions. - link

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Heartland Express (HTLD), trading at $7.60 per share, presents a deep value opportunity in the cyclically-depressed trucking industry, with an estimated intrinsic value of $17.70 per share based on normalized conditions. The company, historically generating 10% ROA and operating ratios in the low-80s, currently operates at a 105.9% operating ratio due to industry headwinds that began in 2021, resulting in operating losses of $28 million in 2024 and $51 million over the trailing twelve months. Heartland has aggressively deleveraged by paying down $296 million in debt since 2022, maintaining a conservative balance sheet with only $183 million in long-term debt against $787 million in equity (0.23 debt-to-equity ratio). The trucking industry shows signs of bottoming with spot rates beginning to rise, dry van load-to-truck ratios at balanced 2.7 levels, and capacity exiting through carrier revocations outpacing new authority grants by over 1,000 carriers monthly. Under normalized conditions with estimated $1.05 billion revenue and 20% gross margins, the company could generate approximately $151 million in NOPAT, justifying the premium valuation when capitalized at a 10% discount rate. Key risks include prolonged industry downturn, tariff uncertainty affecting consumption, and the challenge of integrating 2022 acquisitions (CFI and Smith Transport) that occurred at peak cycle timing, though the recovery timeline is expected within 1-2 years as industry dynamics rebalance.

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IP Group (IPO.L) is a British venture capital company trading at a 40% discount to its NAV of 100 pence, specializing in university spin-offs through exclusive partnerships with 17 UK universities plus institutions in the US, Australia, and New Zealand. The company manages an £800 million investment portfolio of approximately 80 companies across quantum computing, cleantech, and biotech, with top holdings including Oxford Nanopore (8.5% stake, £111.8m valuation) for DNA sequencing, quantum computing companies like Oxford Quantum Circuits and Quantum Motion that remain conservatively valued despite public quantum stocks rising 10-50x, and Hysata (37% stake, £73.3m) developing revolutionary hydrogen electrolysis technology. Key catalysts include aggressive share buybacks reducing shares 15% annually as long as the discount exceeds 20%, targeted £250 million in exits between 2025-2027 (nearly half the current market cap), and potentially billions in licensing fees from Metsera's obesity drug IP (formerly Zihipp) now in a Pfizer/Novo Nordisk takeover battle, where IP Group retains exclusive licensing rights for low single-digit royalty percentages that could generate hundreds of millions annually if successful. The company uses conservative IPEV valuation guidelines based on recent financing rounds rather than peer multiples, creating hidden reserves especially in quantum assets, while subsidiaries Parkwalk Advisors (managing £500m+ in EIS funds) and the former Touchstone Innovations provide stable fee income and broader university access. Risks include the binary nature of early-stage investments where most companies may fail, long development timelines exceeding 10 years, and dependence on successful clinical trials and regulatory approvals for biotech holdings, though the diversified portfolio of 80+ investments and patent licensing revenue streams provide multiple shots at transformational returns in high-growth sectors.

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