Engineer and investor. Looking for companies with inflecting earnings and a margin of safety. ~28.5% annualized TWR since Jan 2023. Not investment advice.
Joined February 2016
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Sellside doing some catchup
Great Q and bullish call from $RELL with beats and growth across every segment, not sure why analyst estimates are so comically low but next couple Qs should be easy beats. Backlog expected to continue growing FY27 and cash flow starting to show after finishing inventory build. BESS also starting to show some traction - order coming from a large California energy company, ~10-20 projects / ~$10M over two years.
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Great Q and bullish call from $RELL with beats and growth across every segment, not sure why analyst estimates are so comically low but next couple Qs should be easy beats. Backlog expected to continue growing FY27 and cash flow starting to show after finishing inventory build. BESS also starting to show some traction - order coming from a large California energy company, ~10-20 projects / ~$10M over two years.
$RELL Fiscal 1st quarter eps. $.27 vs. $.13, sales +18.9% over last year, GPM 34.6% vs. 31%, backlog ended @ $184.4 mil. up 36.9% over last year. on the quarter +12.2%, operating expenses improved to 26.8% of sales vs. 29.2%. sec.gov/Archives/edgar/data/…
Phenom Capital retweeted
RICHARDSON ELECTRONICS $RELL Q1'27 EARNINGS HIGHLIGHTS
🟢 Revenue $64.9M vs $58.99M to $60.16M est range | +18.9% YoY from $54.6M
🟢 GAAP diluted EPS $0.27 vs $0.09 est | +108% YoY from $0.13
🟢 Gross margin 34.6% | +360bps YoY from 31.0% | ~1.7pts from IEEPA tariff refund
🟢 OpInc $5.1M | +428% YoY from $1.0M | 7.9% margin
🟢 Backlog $184.4M | +36.9% YoY | +12.2% QoQ from $164.4M | highest in 3+ years
🟢 FCF $4.2M | OCF $5.9M vs $1.4M YoY
Power and Microwave Technologies (PMT):
🔹 Sales $46.8M | 72% of sales | +19.7% YoY from $39.1M
▪️ Driven by semiconductor wafer fab engineered solutions plus RF and microwave products
🔹 Gross margin 35.4% vs 31.3% | gross profit $16.5M vs $12.2M
▪️ Mix plus the IEEPA tariff refund
🔹 Main driver of the backlog increase
Green Energy Solutions (GES):
🔹 Sales $9.2M | 14% of sales | +27.1% YoY from $7.3M
▪️ Higher wind sales plus new products, including Battery Energy Storage Systems (BESS)
🔹 Gross margin 32.6% vs 29.6% | gross profit $3.0M vs $2.2M
▪️ Mix included new products
🔹 Backlog +10.2% vs FY26 year end
Canvys:
🔹 Sales $8.9M | 14% of sales | +7.9% YoY from $8.3M
▪️ Higher North America sales
🔹 Gross margin 33.0% vs 30.9% | gross profit $2.9M vs $2.6M
▪️ Mostly the IEEPA tariff refund
Other Metrics:
🔹 9th straight quarter of YoY sales growth | all three business units grew
🔹 Gross profit $22.5M vs $16.9M | +33% YoY
▪️ Gross margin ex tariff refund ~32.9% (implied) | still up vs 31.0%
🔹 Opex $17.4M vs $16.0M | 26.8% of sales vs 29.2%
▪️ Higher pay and incentives from the sales growth, plus more travel
🔹 EBITDA $6.0M vs $3.3M | +80% YoY
🔹 Other expense $0.1M vs other income $1.4M a year ago
🔹 Tax $1.0M vs $0.4M | 19.6% effective rate
🔹 Diluted shares 13.0M vs 12.5M
🔹 CapEx $1.7M vs $1.0M | facilities and IT systems
Financials:
🔹 Net income $4.1M | +112.6% YoY from $1.9M
🔹 Cash $36.9M vs $31.8M at May 30
🔹 No debt on the PNC revolver
🔹 Inventory $103.3M vs $103.0M | receivables $34.9M vs $33.2M
🔹 Accounts payable $22.6M vs $19.6M
🔹 Stockholders' equity $169.2M vs $163.7M
Capital Return:
🔹 Quarterly dividend $0.06 on common | $0.054 on Class B
▪️ Payable Nov 25, 2026 to holders of record Nov 6, 2026
🔹 Dividends paid $0.9M in the quarter
CEO Commentary:
Edward J. Richardson: Fiscal 2027 is off to an excellent start. It was the ninth straight quarter of year-over-year sales growth, with higher profitability and strong free cash flow. Demand stayed strong in PMT, especially engineered solutions for the semiconductor wafer fab equipment market and distributed RF and microwave products, and GES and Canvys also grew significantly.
Backlog ended the quarter at $184.4M, up nearly $50M or 36.9% year over year and the highest in more than three years. The economy remains fluid, but the focus is on adoption of engineered solutions, efficiency, and the long-term growth plan. He expects fiscal 2027 to be another year of profitable growth, backed by that backlog and continued demand across semiconductor manufacturing, power management, energy storage, defense and specialized displays.
$RELL earned triple the street at $0.27 vs $0.09, and taking out the tariff refund still leaves a clean beat. Wafer fab is carrying PMT, backlog is the highest in 3+ years, and this LaFox small cap holds $36.9M cash with no debt while nobody's looking.
A 54-year-old mattress fabric maker with a ~20% IRR path: $CULP
We're in year five of the bedding and furniture downturn. After a pretty painful restructuring, Culp is back to about breakeven, and sales are up two quarters in a row.
• Trading at 0.84x tangible book
• Mgmt values its real estate alone at ~the market cap
• Activist owns 14.6% and holds 3 of 7 board seats
• Insiders buying all year, zero selling
Full thesis in bio.
Phenom Capital retweeted
A 54-year-old mattress fabric maker with a ~20% IRR path: $CULP
We're in year five of the bedding and furniture downturn. After a pretty painful restructuring, Culp is back to about breakeven, and sales are up two quarters in a row.
• Trading at 0.84x tangible book
• Mgmt values its real estate alone at ~the market cap
• Activist owns 14.6% and holds 3 of 7 board seats
• Insiders buying all year, zero selling
Full thesis in bio.
Phenom Capital retweeted
$RELL presented at the Mid-West IDEAS a couple days ago, was very granular and bullish overall and wanted to share some highlights on the setup for FY27/28:
- Semi wafer fab “on fire”: Did ~$32M in FY26 and "fully anticipating" surpassing the $40M FY23 peak in FY27 (with the extremely high margins/op leverage here, virtually all of it will fall right to the bottom line)
- PMT distribution (Qorvo, MACOM to mil/satcom) is now a growth piece too (defense/satellite end markets) and did grow nicely in FY26, though at lower margin
- Wind: still only ~15% of the ~30,000 US GE turbine base using their patented modules; the patents make an alternative solution nearly impossible with a lot of room to run. Also have offshoots for non-GE turbines (SSB, Alstom, Nordex, mostly Europe)
- Canvys at ~$38M, now growing again, is one of their most profitable divisions with almost no capex
- Build-out of power-grid tube inventory (inventory built up through 2030) completed in March, and flips from being a cash drain to cash generator from here
- Backlog up in ALL business segments with no "one-hit wonders"
- Constrained by capacity: running 2nd shifts and beginning to move to a 3rd
- Also flagging setting up FY28 as a "meaningful revenue growth" year, hinting the setup has a longer tail than consensus may be giving them credit for
- Guiding revenue growth, margin, and operating income expansion for FY27
Another new insider buy
Discussed my thesis on $TISI here. Soft Q but stock up 36% from major news on their pref holder buying out Corre partners stake in a transaction valuing the shares at $35.50, 2x> the last closing price of $16.55. Now Stellex holds 35% of the company. Pair that with significant insider buying from the CEO and director the past couple months - seems like high confidence across the company in the turnaround and potential opportunities.
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Phenom Capital retweeted
2026 box office could set the all time record, but a big misconception is that this some one-off "top of cycle" calendar year.
2027 and 2028 actually like to come in even higher. Market doesn't seem to be at all adequately pricing those projections into a number of equities $DBO.TO $CGX.TO $RDI
Here's how the stocks that had been >10% short interest performed 8 months later:
$FOUR −27%
$HROW −20%
$ODD −62%
$THRY −59%
In each case, the shorts were right.
<10% short interest list was another story:
$PDEX +63%
$GTLB +25%
$DLO +1%
$SNAP −32%
$PSIX −45%
Luckily, got out of most of those pretty early as the thesis didn't seem very clear-cut and I had better names. Only hold $PDEX and $DLO now from this list and these have been doing well for me.
I am a big believer in starting with the bear case/downside scenarios of any stock I own. Hence my constant interest in short interest and who's taking the other side of the bet. If they take on a battleground name, they've almost certainly done their homework and there's definitely a good bear thesis on the stock. Would prefer to play underfollowed and under-researched names rather than fight the market with one that everyone has a thesis against.
Of course, not a strict rule, but unless you have a very convincing argument, avoiding >10% short interest names would be the right move.
Stocks in my portfolio with >5% short interest and my take on why the market is short:
• $FOUR (19.6%) – lots of competition + poor organic growth, "shady" transactions according to Burry, extremely macro sensitive
• $HROW (15.1%) – optimistic management guidance, execution risk
• $ODD (12.3%) – skepticism around product quality / commercial viability
• $THRY (11.4%) – declining legacy business, weak SaaS metrics (sub-100% NRR?), leverage
• $PSIX (8.5%) – insider selling, shady past, China ownership, slowing growth
• $DLO (8.1%) – declining take rates and gross margin pressure, political risk
• $GTLB (6.8%) – growth deaccel, broader SaaS multiple compression in an AI-driven market, unprofitable, pricing model change
• $PDEX (6.5%) – customer concentration, questions around margin/growth durability
• $SNAP (5.1%) – mixed execution history, heavy SBC, growth challenges, ads competition
This is just my perception of what market may be thinking. If you’re long or short any of these, would love to hear pushback.
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Phenom Capital retweeted
Added 72 new stock write-ups to the site (pt 2):
@phenomcapital - $XLY.TO, $OCC, $ADBE, $SPT, $CGX.TO, $DLO
@stpioc - $CXDO
@wolfofharcourt - $UBER
@InvestInAssets - $AMZN
@kejca - $BRK-B (earnings)
@stonkmetal - $RMD (overview)
@KylerJohnson411 - $CPS (earnings)
Discussed my thesis on $TISI here. Soft Q but stock up 36% from major news on their pref holder buying out Corre partners stake in a transaction valuing the shares at $35.50, 2x> the last closing price of $16.55. Now Stellex holds 35% of the company. Pair that with significant insider buying from the CEO and director the past couple months - seems like high confidence across the company in the turnaround and potential opportunities.
