February Portfolio Review

An overview of Idea Hive portfolio positions

With February coming to an end, I am sharing the monthly portfolio review. This post provides an overview of the Idea Hive portfolio, including key information on each position, such as elevator pitches and performance to date. It also covers recent updates on each portfolio name and their impact on the underlying investment theses. The aim of this post is to quickly recap the latest developments for each idea and highlight why the portfolio names continue to present attractive investment opportunities.

Let’s dive right in.

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Portfolio Review

Here’s the Idea Hive portfolio as of February 28:

February was an active month for the Idea Hive portfolio. During the month, I introduced two new ideas, IPCO-TO and THRY, and closed one position, MGPI short (+59%). Regarding the other active portfolio ideas, most companies reported quarterly results, which I discuss below. As for portfolio idea performance, ARE-TO (+37%) and PPSI (+24%) remain among the top performers.

Last month, I highlighted ARE-TO and WOW as the most actionable ideas, given that both had the strongest likelihood of near-term catalysts materializing—namely, a potential definitive buyout agreement for WOW and the imminent completion of several legacy projects for ARE. While I continue to view these as the highest-priority setups, I would add PESI to this group, given the recent stock sell-off and the anticipated start of nuclear waste treatment in the near-term.

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Portfolio Idea Updates

Below is a list of recent updates and thoughts on active and recently closed Idea Hive portfolio positions.

EXITED: MGP Ingredients (MGPI)
I closed my MGPI short position following the company’s weak Q4 results and revised 2025 guidance. The original short thesis was as follows: MGPI is a whiskey supplier that presents an interesting way to bet on the expected downturn in the whiskey industry following a historic super-cycle, partially driven by a COVID-induced consumption boost. The setup has played out exactly as expected, with a substantial deterioration in MGPI’s operational performance and outlook since the Q3’24 results amid industry headwinds, including elevated whiskey inventories and softer-than-expected consumption. With the stock down 59% from the write-up levels, I believe the anticipated revenue and profitability declines are largely reflected in MGPI’s stock price. Now, it is certainly possible that I am leaving some upside on the table. Given the revised outlook, I think it is reasonable to say that management has limited visibility into contracts. This, coupled with the massive oversupply in the whiskey industry (currently over a decade of consumption is sitting in barrels), suggests there might be plenty of room for MGPI’s operational performance to continue deteriorating, even beyond management’s already-weak 2025 guidance. However, considering that MGPI generates around a third of its revenue from the Branded Spirits segment—which has held up much better than the key Distilling Solutions business, partially due to premiumization trends—I believe the easy money on this trade has already been made.

Aecon Group (ARE-TO)
No major updates on ARE, but the company will report Q3 results on March 5. I am looking forward to the earnings release for an update from management on core business operational performance and the status of the three remaining legacy projects. Until then, I continue to find the setup compelling. ARE is currently trading at an undemanding 5.2x TTM normalized EBITDA compared to the low/mid-teen EV/EBITDA multiples at which peers are trading. As I have noted ad nauseam, a near-term catalyst that could help close the valuation gap is the anticipated completion of the legacy projects. I would highlight that Ontario’s premier recently stated publicly, for the first time, the completion timeline for one of the three projects, Eglinton, with the project set to be completed this year. The two other legacy projects are also scheduled for completion in mid-to-late 2025. Given that Aecon’s work on these projects will be finalized slightly earlier than the official project completion, we might be just a few quarters or months away from ARE moving past these legacy projects. Once this happens, ARE will finally be in a position to showcase its normalized earnings power, which I expect to drive a significant stock price re-rating, potentially to peer multiples.

Pioneer Power Solutions (PPSI)
The key update from PPSI in February was the release of preliminary Q4 results. The previously anticipated revenue inflection was fully on display during Q4, with quarterly revenues growing 250%+ year-over-year and 50%+ versus already outstanding Q3 levels. Let me be clear: PPSI’s revenues are clearly lumpy, and Q4 was likely an extraordinary quarter that will be hard to replicate consistently. That said, the growth trend is set to continue, with 2025 shaping up to be another year of rapid revenue expansion for the company. Management has reiterated this year’s revenue outlook, with revenues set to grow at a solid 22% clip. PPSI shares temporarily spiked after the earnings release due to solid results and outlook but quickly retraced to below pre-announcement levels. The company remains too cheap, trading at only 0.5x 2025E revenues and 5.4x 2025E EBITDA—a valuation far too low for a fast-growing business on the cusp of profitability. I would highlight that the company’s 2025E revenue growth guidance might be too conservative, given: 1) it assumes no contribution from the soon-to-be-launched HOMe-Boost product, and 2) the substantial further growth runway given the rapid expansion of the EV market. I will be waiting for the full Q4 results and conference call for an update on the company’s most recent backlog figure, as well as commentary on potential new contract wins and capital allocation in 2025. For now, with the investment thesis intact and substantial upside potential, I continue to find the setup compelling and have maintained my position.

Summit Midstream Partners (SMC)
SMC’s share price has continued on an upward trajectory over the past month, driven by rising natural gas prices. Despite the share price increase, SMC remains inexpensive, trading at 7.3x 2025E EBITDA compared to 8.5x+ multiples for peers and 10x+ multiples seen in comparable transactions. What makes SMC interesting is the number of catalysts that could help close the valuation gap, including a potential dividend reinstatement, the continued influx of institutional investors following the C-Corp conversion, and the ramp-up of SMC’s crown jewel asset, Double E. SMC is set to report Q4 results on March 11, when I expect to hear from management about the potential dividend reinstatement and the ongoing ramp-up of Double E. Until then, with SMC trading at a low multiple and several catalysts on the horizon, I continue to like the setup.

International Petroleum (IPCO-TO)
Highlighting my write-up on IPCO in case you missed it. I think IPCO presents a compelling opportunity to invest in a cheap O&G producer with interesting growth optionality—a large, development-stage asset expected to go online in 2026—for which investors are currently paying little. With the anticipated significant ramp-up in production and a substantial decline in growth capex, we are likely to see a major inflection in the company’s free cash flow generation in the coming years. While many O&G exploration and production companies trade at undemanding multiples with potentially large growth assets, what makes IPCO stand out is that its major shareholder-operator is the prominent Lundin family which boasts an impressive value creation track record within IPCO and the broader industry,

SUTL Enterprise (BHU-SI)
This week, BHU reported H2’24 results. I’d describe the results as broadly in line with recent trends and my expectations: the business remained highly profitable and cash flow generative despite a slight revenue decline due to lower hospitality, food, and yacht servicing revenues. BHU’s stock has barely moved since the earnings announcement and currently trades at 7.5x 2024 net income and a 7% dividend yield—undemanding valuation for a growing, high-margin local monopoly with strong pricing power. With nearly the entire market cap covered by the company’s net cash, investors are essentially getting free optionality on significant further growth and/or substantial capital returns to equity holders. A potential catalyst for a stock price re-rating is news on the potential lease renewal—I would expect updates on this front in the near to medium term. While there is no certainty that the lease renewal will be successfully negotiated, even in the unlikely scenario that it is not, I believe the downside is well protected by BHU’s net cash position and the fact that the company is likely to generate the majority of its current market cap in free cash flow before the lease expires in 2034.

Thryv Holdings (THRY)
THRY reported Q4 results with no major updates on the operational performance front. The SaaS business continued to chug along, performing in line with management’s guidance (23% year-over-year revenue growth), though it’s worth noting that segment performance was slow sequentially due to Q4 being a seasonally weaker quarter. During the conference call, management highlighted that the Keap acquisition integration has been successful so far, with the company already realizing $10m in EBITDA synergies compared to the $80m acquisition price. Solid performance in the core SaaS business, coupled with Keap’s contribution, allowed THRY’s SaaS revenues to exceed legacy Yellow Pages business sales for the first time during the quarter. So, I would describe the results as mostly positive and confirmatory of the investment thesis. Despite the business transition progressing nicely, the market remains asleep at the wheel. To illustrate how cheap THRY is: valuing the legacy Yellow Pages segment at zero, the SaaS business is currently trading at 2.3x 2025E revenue and 15x EBITDA. I think these are undemanding multiples for a capital-light, high-margin, and rapidly growing business (consistently achieving 20%+ revenue growth each quarter since 2021) that generates recurring, sticky, and non-discretionary revenue. I would also highlight that these multiples are likely to compress quickly in the coming years, given the substantial growth runway—both through ARPU expansion (upselling additional services to existing customers) and client count growth (converting legacy Yellow Pages customers). With conservative assumptions, THRY can generate north of $130m in 2027E EBITDA, implying an 8x multiple. A much more reasonable 15x EV/EBITDA valuation would imply c. 130% upside from current stock price levels. As the business continues transitioning to SaaS, I expect the market to start perceiving THRY as a higher-quality software company, which should drive a stock price re-rating.

SunOpta (STKL)
STKL released Q4 results which I’d describe as ‘slightly positive’ for the short thesis. While the company displayed solid operational performance in the quarter, revenue and volume growth came in materially below recent quarter levels, while pricing remained firmly in negative territory. Moreover, unlike in previous quarters, management did not comment on foodservice channel growth, which it has previously described as the key performance driver. This, coupled with the rapid growth in non-plant-based milk categories (e.g., fruit snacks), might indicate that the strong volume growth in the foodservice business seen in recent quarters is finally slowing down. I think these are signs that we may be nearing the anticipated negative inflection in the plant-based milk industry, given normalizing consumer demand alongside increasing production capacity. While STKL stock has sold off sharply since the earnings release, there remains significant upside for short positions in a negative inflection scenario, with STKL trading at 10x 2025E EBITDA. I continue to believe that forward EBITDA does not reflect the company’s normalized earnings power. Nonetheless, even on an elevated 2025E EBITDA, the multiple seems too high for a business that has consistently struggled with profitability and cash flow, has a volatile growth history, and operates in an industry likely facing a downturn. With the investment thesis intact, I continue to view STKL as an attractive short and have maintained my position.

Enav (ENAV-MI)
Nothing new to update on ENAV. The investment thesis remains unchanged: ENAV is an undervalued air traffic concession operator poised for a re-rating as it recovers reimbursements for the negative impacts of traffic declines due to COVID in 2020-2021 and higher-than-expected inflation in 2022-2023. Adjusted for the cash owed to the company by airlines, ENAV is currently trading at 5.5x 2024 EBITDA—an undemanding multiple for a high-margin, regulated monopoly. This valuation is also substantially below 10x+ peer multiples. I expect ENAV shares to re-rate much closer to peer levels as the company continues to recover accrued payments. ENAV is set to report Q4 results in late March, at which point I plan to reassess operational performance and progress on the recovery of accrued payments.

WideOpenWest (WOW)
WOW's share price is up 14% over the past month, with no news or announcements from the company, and the stock is currently trading just above the $4.80/share non-binding offer. Despite the slight stock price jump, I continue to believe that WOW’s "takeover by major shareholder" situation remains wildly mispriced from a risk/reward perspective. Valuing the core business at the current multiple and simply adding the capex spent on fiber assets would imply a price target of around $7/share, or a 40%+ upside. As for the downside, using the pre-announcement level as the deal-break price would imply a 20% downside. I would emphasize that both my upside and downside estimates are likely too conservative, considering that, for example, WOW’s peers have risen substantially since the non-binding offer was announced. Aside from the favorable upside/downside math, what makes WOW asymmetric is the high—likely above 80%—probability that both sides will agree on a price bump, given that there have been no indications takeover negotiations have ended, along with Crestview and DigitalBridge’s strong reputations and clear interest in acquiring cable assets. So, between the positively skewed risk/reward and the high probability of a substantial price bump, I continue to like WOW and have maintained my position.

Warrior Met Coal (HCC)
Several important developments at HCC: Q4’24 results and an update on the development-stage Blue Creek asset. As expected, Q4 was a weak quarter, with met coal prices reaching their lowest levels since 2021, driven by the same factors as before, including weaker demand and excess Chinese steel exports into HCC’s customer markets. Management expects these downcycle industry conditions to "persist for a prolonged duration," including through 2025, with met coal prices expected to be only slightly better. On the positive side, the Blue Creek update was strong, with management highlighting that the asset’s nameplate capacity has increased by 25% compared to initial estimates. Another key takeaway was that development is progressing on time and on budget, with longwall operations set to commence "no later than" Q2 2026. So, I would consider these developments mixed: while the transformative Blue Creek project is progressing as expected, the near-term met coal price outlook remains challenging. Nonetheless, while the near term will likely be rocky, I continue to expect met coal prices to recover closer to mid-cycle levels over the medium term, given that, at current met coal prices, marginal producers—primarily U.S.-based ones, excluding HCC—are operating at or near break-even levels. At current stock price levels, HCC’s core business remains cheap, trading at 5.7x my estimated mid-cycle EBITDA less capex before any contribution from Blue Creek. Once ramped up, the development-stage asset would lower the valuation multiple to just 2.2x. Given the cheap mid-cycle valuation, I continue to think HCC remains an attractive setup.

Perma-Fix Environmental Services (PESI)
PESI stock has seen a significant sell-off recently, with the share price down 22% over the last month. The sell-off appears to have been partially driven by already announced and potentially further DOGE-related staff layoffs at the Hanford site. The market may be concerned that the layoffs could negatively impact the status or timeline of the nuclear waste treatment program. However, as highlighted in this article, the layoffs have so far been insignificant and have affected only federal employees, who make up a tiny portion of the total Hanford site workforce—c. 300 compared to around 13k contractor employees. This, combined with the publicly announced continued progress in preparing for nuclear waste treatment (e.g., see here) and the massive investments already made in the Hanford site cleanup, suggests that any delays to the August 2025 nuclear waste treatment start deadline are unlikely. So, I believe the market’s reaction has been significantly overblown, and the recent sell-off might present a nice entry opportunity for those not already involved. To illustrate how undervalued PESI is at the current stock price levels, I would highlight that the company’s current EV is c. $130m, whereas the company is likely to generate about $100m in annual EBITDA from contracted and anticipated Hanford nuclear waste and nuclear byproduct treatment volumes. Beyond the Hanford opportunity, investors are also getting optionality in PFAS treatment. PESI’s management recently outlined that, given positive results and strong customer demand, the company will expand PFAS treatment capacity. With conservative assumptions, PESI could generate well north of $20m in high-margin annual revenues from PFAS treatment alone, yet at the current stock price levels, investors are essentially getting this optionality for free.

Sun Corporation (6736-T)
Sun Corp’s stock has been on a downward trajectory over the last month, broadly in line with CLBT’s stock price move, leaving the discount to NAV wide at 48%. The setup has admittedly been quite disappointing so far: Sun Corp’s management has yet to announce any measures to address the discount to NAV, despite several activist investors having been on the company’s shareholder register for over six months now. In mid-February, Sun Corp reported quarterly results with no language on potential actions that might help close the discount, namely either a distribution of the CLBT stake to Sun Corp equity holders or a CLBT strategic review that might lead to a sale to a third party. This is somewhat concerning, and I am unsure about the reason behind the prolonged timeline. However, given the activists’ reputations and previous public communication, I would have expected them to have already come out with public pushback against Sun Corp’s management if a potential transaction or distribution was not in the works or was outright rejected. So, I continue to believe that we are likely to see some form of value realization, likely in the near term.

Amplify Energy (AMPY)
No major updates on AMPY, though I would highlight the Juniper merger proxy, which came out earlier this month. The proxy indicates that, with fairly conservative oil and natural gas price assumptions, the assets were acquired at a reasonable sub-8x FCF multiple, suggesting that the transaction might not be as value-destructive from a cash flow generation perspective as I previously thought. Make no mistake: I would still be hard-pressed to call the acquisition value-accretive, and furthermore, I think it shows that a company sale is off the table for now. Yet, despite this, I continue to believe AMPY remains a compelling setup given the Beta development optionality—for which investors are currently paying little, if anything, given the cheap valuation of the core business. If the Beta development program continues in line with recent results, the asset’s value might easily exceed AMPY’s current EV. I will be eagerly awaiting AMPY’s Q4 results, set to be published on March 5, where I expect an update on the Beta drilling program and core business operational performance.

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Open Portfolio Ideas

Below you can find links to the initial pitches and latest update posts for each active portfolio idea.

• Aecon Group (ARE-TO) — initial post here, last update here

• Pioneer Power Solutions (PPSI) — initial post here, last update here

• Summit Midstream Partners (SMC) — initial post here, last update here

• International Petroleum (IPCO-TO) — initial post here

• Japanese Net-Nets — initial post here

• SUTL Enterprise (BHU-SI) — initial post here

• Thryv Holdings (THRY) — initial post here

• SunOpta (STKL) — initial post here, last update here

• Enav (ENAV-MI) — initial post here, last update here

• WideOpenWest (WOW) — initial post here, last update here

• Warrior Met Coal (HCC) — initial post here, last update here

• Perma-Fix Environmental Services (PESI) — initial post here, last update here

• Sun Corporation (6736-T) — initial post here, last update here

• Amplify Energy (AMPY) — initial post here, last update here

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Closed Portfolio Ideas

Below you can find links to the initial pitches and latest update posts for closed portfolio ideas.

• Montero Mining and Exploration (MON-V) — initial post here, last update here

• MGP Ingredients (MGPI) — initial post here, last update here