Opinions on stocks, which are not investment advice.
Fairfax, VA
Joined April 2021
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Okay guys, growth is "accelerating" again that's what matters right? $EVC
You have to answer "are they trying to sell themselves" with a pretty definitive "yes" after today. Remaining question is there value in excess of current EV, which I also think is a pretty strong "yes"
Getting an update from $MNRO tomorrow, here's my expectations:
seekingalpha.com/article/495…
Kingdom Capital retweeted
Yes it's a $10-11 stock if no sale so if you interpret the new credit facility as meaning no sale then you absolutely sell at $12. That's just not my interpretation based on the comments by the cfo about needing to refinance the existing one by early November anyway. And more importantly, the ceo went out of his was to preemptively counter the no sale interpretation--he didn't have to do that, they could have killed the process and said they now have a financing partner for a 4 year turnaround plan. Plus from an operations perspective the supplier financing agreements would be great for $MNRO if they are going alone in an organic turnaround. So it would make no sense to pay off these balances early and stop the program if that is their plan. It makes a lot more sense to do it as a cleanup operation before a sale. CFO also confirmed they can pay the regular dividend in December which eliminates another bearish concern. I could certainly be wrong here, but I'm not selling any stock today and I tried to buy a lot below $12.50 but only got 3k shares filled those prices didn't last long.
Similar to Q3-25 $NVRI print, stock initially sold off, then recovered as people realized sale process was likely to result in a premium to where they were trading. New credit agreement gives more flexibility to sell piecemeal, which would maximize value. Icahn lurks
Monroe $MNRO is selling off on a weak Q2, down around 9% premarket. I think most of the market is reading the headline and missing what's buried in the new credit agreement.
The Oct 23 refinancing with Ares ($250M term loan + $125M revolver, EX-10.23) runs well over 100 pages. Deep in the definitions is a "Permitted Change of Control" clause, and it's very specific:
- One sale to a private-equity sponsor can happen without triggering a default
- It must happen by Oct 23, 2027, a 12-month window
- The sponsor needs $1.5B+ AUM, can't be on a disqualified-firm list that Ares and Monro pre-agreed, and must be in an approved jurisdiction
- Pro forma lease-adjusted leverage must be 5.50x or less
- Sponsor equity must be at least equal to all funded debt, including finance leases
- Lenders get a 0.50% fee, and the sponsor can add back up to $2M/yr of management fees
Lenders don't negotiate a provision this detailed (a named AUM floor, a pre-agreed blacklist, a fixed window) for a scenario nobody is considering. Meanwhile the board's strategic review, which includes a possible sale, has been open since May.
None of this means a deal is coming. No transaction has been announced, and the same agreement also restricts the dividend and adds real interest cost. But headline-driven selling is pricing Monro as a standalone story. The credit agreement says the lenders are planning for a sale to PE and that deal is close.
Getting an update from $MNRO tomorrow, here's my expectations:
seekingalpha.com/article/495…
If link isn't working/showing up on mobile, dm me an email and I can send it over
seekingalpha.com/article/495…
Kingdom Capital retweeted
I think what ppl miss here and why the value will end up higher than what ppl think is the following: I see $MNRO as 5 buckets - 1) 330 owned RE stores 2) California ops (and other western states) 3) Tire Choice 300 stores 4) Monro banner 300 5) Mr. Tire banner + other banners 400. 1,2, and 3 are "A" assets imo. The owned RE is A asset bc this stuff trades for 6s/low 7s cap rates, this is a 13-14x segment ebitda asset. North of $350M gross and $300M net value there 2) CA locations are in good shape and are a strategic asset, this is a good market and tough to break into due to cost, entitlement, etc. This would be a strategic asset for someone like Mavis who is set on breaking into the CA market so they can build a very strong national business. So CA ops is clearly an A asset, probably worth 12-15x 4 wall EBITDA, probably $200M in value there. Tire Choice looks like an A to A- asset to me, these are nice looking stores in good markets such as FL. I think this Tire Choice bucket should be worth 10-12x 4-wall EBITDA, we could be talking $300M or close to it as the true value of Tire Choice. and then the 4/5 buckets which are Monro banner and Mr. Tire plus other indy banners are 700 stores these are more along the lines of B- assets, these are dense MSO brands and i would categorize these assets as on par with Pep Boys (no EBITDA Pep Boys just went for 600k a box equivalent when using P/S) i see these as worth no less than 400-450k a box so that is $300M of value. So when you peel back the onion, $MNRO's assets are better than ppl appreciate. When you add this up you get - RE $350M gross, CA $200M gross, Tire Choice $300M gross, Monro/Mr. Tire/other $300M = 1.15B in gross value, haircut this by 20% to be conservative and you get 920M in value, subtract out the $90M net debt and you get 830M in equity value, across 31.3M shares is $26.50 per share. Perhaps it isn't a coincidence that the CEOs PSU incentives (struck less than a yr ago) start at $25 per share. Mavis rolling up the space has been a massive success, there are many many PE firms that will want to try and replicate that success. $MNRO is the last asset on the board with scale that is going to be for sale anytime soon at a reasonable price. Discount Tire's only whole is in the NE which is where MNRO has a strong presence, imagine how long and how costly it would be to build out that footprint on your own... why did Discount Tire buy Dunn Tire literally right on top of MNRO's HQ in Western NY? moderntiredealer.com/retail/…
Didn’t even get 30%
Another one right now is $WEN. If it turns you get taken out by Pelz for 30-40% and you eat all the downside till then
They can shut this thing down, extract value from the remaining real estate, and start really cutting into those NOLs…
$ECRO
wyofile.com/kemmerer-coal-mi…
"May shut down in about a decade without new customers"
usatoday.com/story/news/nati…
That's very different from "2028" in the latest annual report, for a stock trading at 2x FCF... $ECRO
And now, $MLCI putting a nice backstop on common shares with a $1.5m purchase plan:
Today’s $MLCI deal probably adds $3m of run rate FRE, ramping next year. So up to $15m, which normally would put the Asset Mgmt piece over $150m EV. You also have insurance with $120m book value.
Current market cap/EV is $40m/$100m
They also closed 720 for $7.9m in September:
Slightly under my number unless they got a lease buyout, nice to see $NLOP sell something
bisnow.com/news/boston/offic…
Slightly under my number unless they got a lease buyout, nice to see $NLOP sell something
bisnow.com/news/boston/offic…
Kingdom Capital retweeted
Huge congratulations to @AndrewYAVB on his new job at Bridgewater Associates.
His podcast and blog are an insane source of value.
Additionally, Andrew was one of the first people to respond to my request for a podcast interview when I started Value Hive.
So stoked for you!
Bunch of thoughts going into earnings season, in no particular order:
I think a good setup for $NVRI - business momentum should carry forward and any rail contract update should reveal Q2 was kitchen sink
Wouldn't be surprised if $MNRO ends up like NVRI Q3 last year, with nothing strategic but "advanced discussions" and a deal a few weeks later
I think poor setup for $AMR $METC after $CLF said domestic pricing flat Y/Y. Feel better about $CNR w/ buyback and thermal strength
Hoping for but not really expecting much from $NLOP. Redevelopments are progressing but nothing clearly sold inside Q3.
$FTK $LFTO 2H guides seem extremely sandbagged
Assume the $EVC whale quit in Q3 and they do a consolidated $150m revenue and $25m operating income. That's still extremely cheap with the rest of the ad business growing, and they should break corporate political revs record this year
All three above and $PESI have some improvements to make in IR over last quarter
Will probably be tough for $NN to talk right around when NPRM can get moving again post election
$AKA seems set up well on their Obsession viral moment
Super curious if $CCXI can get it together enough to avoid significant redemptions
Expecting $MAGN EBITDA guide ahead of street, esp with FCF
$REAX first report post merger should be interesting, trying to decide if cheap enough vs $COMP to get me involved
Kingdom Capital retweeted
$EVC you now have both the former CEO of Intel and a former Google exec instrumental in the early days of the adtech space on the board of a $600m market cap company