High Conviction: The Iceberg

An investment with most of the value hidden beneath the surface.

Not investment advice: First, read my full disclaimer here. This specific company is small and illiquid.

This investment trades at ~1.75x EV/EBITDA for a hidden minority interest, which grew organically 20%+ last year and is set up for more growth.

In a market full of gambling, constant all-time highs and a powder keg of uncertainty, downside matters. That is why the first question I ask myself is: how far can this investment drop? It’s damn hard to predict and I’ve had to walk away from several names because the forecasting is just too difficult.

So what am I looking for: earnings predictability, an inflection point I perceive tips earnings toward an upward trajectory and hard assets.

I believe this investment carries these characteristics with it in ways that bring asymmetric upside.

Why does it exist? First, it’s too small for anyone to care. Based on the exchange, you would expect this not to be the case, but sometimes value hides in plain sight… or so I hope.

The real benefit of the mispricing lies in the fact that a lot of the value is masked by accounting. Not in a misleading way, but through rule based applications that can create inefficiencies for investors willing to go the extra mile. One of these is obscured completely, while the other doesn’t show in most lines on the reported financials.

Paired with good execution, I expect this to be a multi-bagger in the coming years.

Introducing…