2024 Review
Recapping the past year for the Idea Hive blog and portfolio
As we close out 2024, it's time to reflect on the past year for Idea Hive. Before diving into the annual portfolio review, I want to thank Idea Hive subscribers for reading my work, participating in discussions, and sharing investment ideas. I am truly privileged to lead such a large community of value-focused investors.
2024 Review
2024 was a productive year for Idea Hive. Since May, when I relaunched the blog, I have published 50 articles, including:
12 new portfolio idea posts
25 update articles
5 monthly portfolio reviews
7 ad-hoc posts, including a series on the met coal industry and Japanese net-nets
As for performance, 2024 marked a solid start for Idea Hive, with several ideas performing well since I incorporated them into the portfolio (see the table below). The standout performers were:
ARE-TO: +62%
MGPI short: +50%
PPSI: +41%
Equally important, I have managed to avoid significant losses, with STKL short (-33%) and 6736-T (-29%) as the only notable losing positions. Now, less than a year is too short a timeline to fully evaluate my investing performance. Nonetheless, I believe it’s fair to say that my strategy of focusing on setups with a solid margin of safety and downside protection has been working quite well so far.
I won’t speculate on how 2025 might unfold for the broader markets or the Idea Hive portfolio. What I do know is that I will continue to follow my bottom-up approach to identifying compelling investment ideas. Here are my plans/guidelines for 2025 regarding idea selection and portfolio management:
I plan to keep my portfolio relatively concentrated, with 15–20 positions. This means I will need to remain highly selective with new ideas, as incorporating them will likely soon require exiting existing positions.
I intend to limit the number of short positions, given the inherent risks of shorting, particularly in the current market environment.
As in 2024, I will continue to focus on situations with near- to medium-term catalysts that could help close the gap between intrinsic value and stock price.
Portfolio Idea Overviews
Below are brief overviews of the active portfolio ideas, including the underlying investment theses, key developments during the year, and a discussion of why I believe each idea remains attractive going forward.
Aecon Group (ARE-TO)
ARE has been the best-performing stock in my portfolio in 2024, with a 62% gain.
The investment thesis has been pretty simple: the company is a construction and infrastructure services contractor on the cusp of an earnings inflection as it completes legacy projects that have significantly dragged on profitability.
In the back half of 2024, ARE’s core business continued to chug along while the company made progress on the legacy projects. One of the four legacy projects has already been completed while the remaining projects are advancing according to plan, with two set to be completed shortly, likely early this year.
Despite the significant share price re-rating in 2024, the company remains cheap, trading at just 6x normalized 2024E EBITDA, well below peer multiples of 10x+.
Given the substantial remaining upside and near-term catalysts, I continue to think that ARE remains an attractive setup.
MGP Ingredients (MGPI)
I pitched MGPI as a short back in May’24, when the stock was trading at levels 100% higher than the current share price.
MGPI is a whiskey producer offering an attractive opportunity to short American whiskey prices as the industry emerges from an epic supercycle.
The investment thesis has unfolded as expected so far. In October, the company released weak preliminary Q3 results, announcing significant downward revisions to revenue and profitability for Q3 and the remainder of FY24, driven by softer-than-expected trends in company’s alcohol categories and elevated whiskey inventories across the industry. The outlook for FY25 is even bleaker, with management expecting to lower whiskey put-away and scale down production this year given the challenging industry environment.
While MGPI share price has declined significantly since my pitch, I believe there is substantial further upside for short positions as the company is currently trading at multiples above its replacement cost. A potential re-rating from the current enterprise value of $1.1bn to the tangible book value of $0.3bn—still above where MGPI traded before the industry upcycle—would imply a potential downside of over 70%.
Pioneer Power Solutions (PPSI)
PPSI has performed well since I pitched the idea in mid-2024, with a 41% return in 2024.
The company is an electrical equipment manufacturer that offers a compelling way to bet on EV infrastructure growth.
The major development in 2024 was the divestiture of one of its two key segments, the e-Bloc, leaving PPSI with the faster-growing e-Boost business.
While PPSI shares have partially re-rated in 2024, I believe the setup remains attractive, as the RemainCo is still undervalued. Pro forma for the segment sale, the remaining e-Boost business is valued at c. 0.4x 2025E revenues and 5x EBITDA—conservative multiples given the segment's impressive recent growth (e.g., 100% in 2024). The growth runway for e-Boost remains significant, with the company announcing several new customer orders, including a pilot program with a Fortune 100 retailer, which appears to be Amazon.
With the investment thesis intact and substantial upside potential, I continue to find the setup compelling and have maintained my position.
Perma-Fix Environmental Services (PESI)
PESI was up 12% at the end of the year since I pitched the idea in Sep’24.
The investment thesis centers on several large contracts under which the company will treat significant volumes of nuclear waste and nuclear waste byproducts from the decommissioned Hanford site.
Since incorporating PESI into the portfolio in September, there have been no major developments on the two key contracts/awards.
At current stock price levels, PESI is valued at c. $200m in EV compared to an estimated $100m in estimated 2027 EBITDA from the Hanford site-related contracts. I believe the current implied valuation multiple is far too low for a highly visible, recurring, and long-term (10+ years) revenue stream. Applying any sort of conservative multiple to this recurring, long-term earnings stream—say, 6x—would imply a multi-bagger upside.
I would expect PESI’s stock to re-rate as we approach H2’25, when the company is expected to begin treating nuclear waste from the Hanford site.
Enav (ENAV-MI)
ENAV was trading at €4.13/share as of the end of the year, compared to €3.93/share when I wrote up the idea in May’24.
The company is an air traffic concession operator positioned for a re-rating as the company is reimbursed for the negative impacts of: 1) traffic declines during COVID in 2020–2021 and 2) higher-than-expected inflation in 2022–2023.
While ENAV continued to receive accrued payments throughout the year, contributing to some stock price re-rating, the company remains undervalued. At current stock price levels, ENAV is trading at 7x 2024E EBITDA—a valuation that is too low given that ENAV is a regulated monopoly with contractual cash flows and 25%+ EBITDA margins. This valuation is also significantly below the average multiple of around 10x for other European airport concession operators and Italian utility companies.
I would expect ENAV shares to re-rate closer to peer multiples as the company continues to recover accrued payments. Even a modest re-rating to an 8x multiple would imply 20%+ upside from current levels.
Japanese Net-Nets
To gain exposure to undervalued Japan-listed companies, I added a basket of four Japanese net-nets—7292-T, 7296-T, 2415-T, and 8023-T—to my portfolio in November. The basket was up 9% by the end of the year.
While Japan has historically had many undervalued companies, what sparked my interest in this area are the recent positive corporate governance reforms in the country. Although Japanese equities have generally surged since the reforms were announced, I believe there are still plenty of opportunities, particularly within the subsegment of the cheapest companies listed in Japan.
All four basket companies boast large net cash positions and operate profitable, growing businesses. In addition to their low valuations and strong balance sheets, a common theme among these names is the recent significant improvements in capital allocation, including increasing dividends and stock buybacks. While these capital allocation improvements could be isolated events rather than indicative of a positive trend, I would expect them to be sustainable on average, especially given the growth profiles of these companies.
Summit Midstream Partners (SMC)
SMC was the first portfolio idea shared on the blog in early May’24. The stock is currently trading roughly at the same level as when the write-up was published.
Here’s the investment thesis: SMC is an undervalued natural gas gathering-focused midstream company, with numerous catalysts that could drive a stock price re-rating.
2024 was an eventful year for SMC, marked by several non-core asset divestitures, a C-Corp conversion, and, more recently, the value-accretive acquisition of Tall Oak assets.
Despite these mostly positive developments/catalysts, SMC stock has not re-rated and the company remains cheap. Pro-forma for the Tall Oak acquisition, SMC is currently trading at 7x 2025E EBITDA, compared to 8.5x+ multiples for most of its peers and 10x+ multiples seen in comparable industry transactions.
I continue to expect this valuation discount to narrow, driven by several potential catalysts, including the continued ramp-up of the crown jewel Double E asset, a potential dividend reinstatement, and the increasing presence of institutional investors following the C-Corp conversion.
Given SMC’s high leverage, even a relatively modest, say 0.5x, multiple re-rating would imply a 30%+ upside from the current stock price levels.
Montero Mining and Exploration (MON-V)
I pitched MON in Aug’24. The stock is currently trading at around the write-up stock price level.
Montero is a C$17m market-cap Canadian junior miner that has pursued a C$90m arbitration claim against Tanzania for the expropriation of its mining license in 2018.
As anticipated, given two prior precedent litigations, the company reached a settlement with Tanzania, albeit the announcement came slightly earlier than expected—in November, rather than the previously anticipated early 2025. The settlement amount was broadly in line with my expectations, coming in at a 12% discount to my estimated “realistic” claim value.
I believe the setup remains attractive from here, as MON equity holders are likely to receive all of their capital back soon, potentially by the end of Q1 2025. With conservative assumptions, I estimate the company will have C$20m in net cash available for potential shareholder distributions, or an 18% premium to the current market cap.
Given the involvement of activist Jeremy Raper, I would expect management to return most, if not all, of the available cash to equity holders.
While the upside in the base case scenario is modest, the short timeline to potential capital returns and the sufficient margin of safety make holding the shares worthwhile to see how the situation unfolds.
SUTL Enterprise (BHU-SI)
BHU is the latest addition to the portfolio—I shared the pitch in December, and the position ended the year with a flat return.
SUTL Enterprise is a Singapore-listed nano-cap company operating One°15 Marina, aka "Monte Carlo of Singapore." BHU is a high-quality business with strong pricing power, given limited marina supply in Singapore and inelastic, growing demand for marina services. Despite these favorable characteristics, SUTL is currently trading at just 8x P/E, with 90% of the current market cap in net cash. This implies that investors are effectively paying nothing for the cash-flow-generative operating business or getting the operating business at a low valuation while paying zero for the company's net cash.
There have been no new developments since I shared the pitch in early December.
I would expect an update from the company regarding the One°15 Marina lease renewal in the near/medium-term, which could spark a stock price re-rating.
Amplify Energy (AMPY)
I shared a write-up on AMPY when the stock was trading at $6.62/share, compared to $6/share as of the end of the year.
AMPY is a cheap oil and gas producer, trading at c. 3x 2024E EBITDA and 7x FCF. These are low multiples considering company’s low-decline, long-reserve-life assets and the fact that a significant portion of near-term production is hedged. But the key appeal of this setup lies in AMPY’s Beta asset, which, once ramped up, could significantly boost the company’s total production.
While the core business has continued to chug along since I added the idea in May, the year’s major development was better-than-expected drilling results from several wells at Beta.
Using reasonable assumptions, Beta’s value alone could equal the company’s current enterprise value, suggesting the market has not fully appreciated its potential.
As investors increasingly recognize Beta’s cash flow generation capability and value, I expect a significant re-rating of AMPY’s stock price.
Warrior Met Coal (HCC)
I incorporated HCC into my portfolio as part of my foray into the metallurgical coal space. The stock price has declined by 11% since I added it to the portfolio.
HCC is a metallurgical coal producer presenting an attractive opportunity to play the current industry downcycle. The company boasts the lowest cost profile and the highest proportion of low-volatility coal in its production mix among U.S.-based met coal producers.
While weak Q3 results and commentary from peers and management indicate that the short term may be rocky, I continue to expect a recovery in met coal prices over the medium term.
At current met coal prices, marginal producers—primarily US-based ones, excluding HCC—are operating at or near break-even levels. Historically, met coal prices have bottomed at marginal producer cost levels during downcycles before recovering, driven largely by supply exiting the market. I see no reason to expect this cycle to differ, as prolonged pricing at current levels could lead to mine closures.
HCC is trading at c. 6x estimated mid-cycle EBITDA less capex, before accounting for the potential contribution from company’s development-stage Blue Creek asset.
WideOpenWest (WOW)
I wrote about WOW in Aug’24, and the share price had declined by 12% as of the end of the year.
WOW is a cable and fiber overbuilder that received a non-binding takeover proposal in May at $4.80/share from a buyer consortium led by its major shareholder, Crestview Partners (owns 39%). The investment thesis is straightforward: the bid appears low, based on several reference points, including peer valuations, comparable transactions, and replacement cost estimates, and thus I would expect the consortium to significantly bump the offer.
There have been no major updates on the pending takeover since May, apart from solid Q3 results, during which management confirmed that negotiations remain ongoing.
WOW’s stock price has recently drifted lower (trades at a 1% premium to the bid currently), partially reflecting market concerns about the prolonged time since the non-binding offer. However, given that WOW’s management has reiterated the sale process is ongoing, and considering Crestview and DigitalBridge’s solid reputations, I do not believe the extended timeline is indicative of any significant negotiation difficulties.
Conservatively valuing WOW’s fiber assets at cost suggests a price target of around $7/share, implying 40%+ upside from current levels.
Sun Corporation (6736-T)
While Sun Corp's stock price has nearly tripled since I published the investment pitch in May’24, the gain has been more than offset by the upward move in CLBT’s share price, resulting in a -29% return for my hedged position.
Sun Corp is a Japan-listed company trading at a wide 40% discount to its NAV, largely comprised of a 49% stake in the US-listed digital forensics software company Cellebrite (CLBT). While many Japanese companies trade at discounted valuations, what sets Sun Corp apart is the involvement of multiple activists, including Leopard Activist Management, which has been pressuring the company's management to distribute its CLBT stake.
The most notable development since adding this idea to the portfolio was the tender offer and subsequent stake accumulation by another activist, the PE firm True Wind Capital.
While Sun Corp’s management has yet to announce any measures to address the discount, the presence of three activists on the register indicates that some form of value realization is likely.
Potential outcomes include the distribution of the CLBT stake to equity holders or an outright sale of CLBT to a third party. Either scenario could result in 30%+ upside from current stock price levels.
SunOpta (STKL)
STKL short was the worst-performing portfolio position last year, with a negative 33% return.
STKL, one of the largest plant-based milk producers in North America, offers an opportunity to bet on the anticipated negative inflection in the plant-based milk industry. Historically undersupplied, the industry experienced explosive demand growth during the pandemic, which spurred a significant increase in production capacity. The investment thesis is that with this increased capacity and demand normalizing, the industry is poised to shift from undersupplied to oversupplied.
So far, the short thesis has not played out as expected, with STKL reporting strong Q2 and Q3 results driven by rapid growth in plant-based milk volumes.
However, I continue to anticipate a near-term negative inflection in the industry. The rapid volume growth appears to have been driven largely by market share gains, which might taper off as STKL already holds c. 70% of the market.
An industry inflection would likely lead to pricing pressures, negatively impacting STKL’s revenue growth and margins in the coming quarters. So, I am inclined to hold the short position for another quarter before reassessing the situation.
List of Portfolio Ideas
Below you can find links to the initial pitches and latest update posts for each active portfolio idea.
MGP Ingredients (MGPI) — initial post here, last update here
Pioneer Power Solutions (PPSI) — initial post here, last update here
Perma-Fix Environmental Services (PESI) — initial post here, last update here
Japanese Net-Nets — initial post here
Summit Midstream Partners (SMC) — initial post here, last update here
Montero Mining and Exploration (MON-V) — initial post here, last update here
SUTL Enterprise (BHU-SI) — initial post here
Warrior Met Coal (HCC) — initial post here, last update here
Sun Corporation (6736-T) — initial post here, last update here
Thank for sharing, it's enjoyable & lot of learning from your works.
Thank you! Looking forward to 2025.