Paul Cerro's avatar
$27m follower assets
$XPOF: Unit Growth the Driver of Operational Leverage
Was great speaking with Chit Chat Money about Xponential Fitness $XPOF and its growth potential.

To help visually understand the operational leverage XPOF has, we released a new post this AM to coincide with our original research and the podcast

Check it out below!
Brett Schafer's avatar
$10.4m follower assets
Deep Dive: Xponential Fitness
Today we released our interview with @paulcerro on Xponential Fitness $XPOF

The company is a roll-up of boutique fitness brands including Pure Barre, Club Pilates, and Rumble. It is a fascinating model that may be the long-term solution for the fitness industry as it is building an omnichannel model for its customers (as opposed to something like Peloton). It also is potentially insulated from the trendiness of the fitness industry given its diversification across studio concepts.

All and all, this feels like an intriguing business to study. Stock also not expensive at all. Listen to the full interview to here all the details!

Nathan Worden's avatar
$319.4m follower assets
Paul Cerro on Xponential Fitness
I love video pitches, check out @paulcerro's pitch of $XPOF here:


Transcript below:

Hey everybody. Paul Cerro here— Cedar Grove Capital.

Today I'm pitching Xponential Fitness. It's a fitness name that specifically revolves around

boutique fitness studios, and the concepts that flow into these studios.

These can be fitness concepts from HIIT training, yoga, pilates, strength training.

There's bunch of different concepts that are rolled up into one.

I actually like this company because it's a fitness ETF.

They have 10 different brands within their portfolio, which actually allows them to not only capitalize on different fitness concepts in the space, but it also helps them mitigate any type of risks associated with just having one type of fitness concept.

So it's not like a gym where it's either go to the gym or you don't.

It's, "Hey, if I want to do pilates one day," great. I can do yoga the other day.

They have capitalized on a new fitness approach for a hybrid model—

meaning that they can support people who want to go in-person to work out and exercise,

people who want to stay home and do it themselves.

And then also they can do this other omni-channel approach where you can actually do live on demand classes,

from the comfort of wherever you want to be.

They offer this subscription called an X-pass,

which allows you to actually be able to have one membership and have access to all different kinds of fitness concepts within their brand.

So again, like if I want to do yoga one day, with this membership I can do pilates the next, I can do boxing the next, etc. etc. etc...

And also what I love about them is that they are very cognizant of new fitness concepts that come up. That's why they've actually closed on their 10th acquisition just last year.

Very quick with financials they've been growing at double digits. They're doing really well creeping back up to pre COVID levels.

Adjusted EBITDA is actually positive for this company.

So they actually are profitable on an adjusted EBITDA basis.

And with operating leverage plan scaling up over time, because this is a fitness franchise, their corporate SG&A can basically stay relatively the same while they're growing their revenue. So you're going to see that more of a margin expansion going on in between that.

And what I'm really excited about is that while they're still growing domestically, international white space is immense.

They have over 2,000 studios in the U.S.

With the potential of over 7,000.

If you're thinking about what they could possibly do— we're looking at least 3X to 4X, the physical location store footprints that they can have.

International: A lot. And they're literally just starting hitting the surface. They're guiding towards double digit growth in both revenue and EBITDA margins, and actually planning on growing EBITDA margins from 17% in 2021 to over 30% in 2022.

So that's over 1,200 basis points, 1,300 basis points in the span of one year.

So very bullish on the stock.
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Paul Cerro's avatar
$27m follower assets
SBC is a scam to adj. EBITDA and you're getting diluted
Stock-based compensation (SBC_ has gotten out of control with some companies that utilize the line item top boost adj. EBITDA for profitability but can also dilute you.

Prime example is $TWTR. Market Cap >1.5x since IPO while price only up ~2% in the same time

The link below shows this weeks "Chart of the Week" for the following names


The numbers are quite shocking. If you're interested in receiving content like this, hit the subscribe button (it's free!).

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Paul Cerro's avatar
$27m follower assets
CGC Q1'22 Quarterly Letter - Can you relate?
Cedar Grove Capital released its Q1'22 letter last week and wanted to share it with you all here.

While the quarter was a challenging one, we ended the quarter with 18% in cash and are strategically positioned to continue the rest of the year deploying dry powder in opportunistic areas.

Our holdings are included below - would love anyone's thoughts on them if they have any to share.

Current:

Closed:

Paul Cerro's avatar
$27m follower assets
Cedar Grove Capital Q1'22 Investor Letter
Hi all,

For anyone interested, Cedar Grove Capital will be releasing its first investor letter next week for Q1'22.

This letter will encompass our holdings, position sizing, returns, my thoughts for the portfolio going forward and select commentary for certain positions.

Click the link below to subscribe and get it when it comes out. cedargrovecapital.substack.com

Paul Cerro's avatar
$27m follower assets
For new investors to Commonstock - read below!
Good afternoon!

For those of you that just joined Commonstock or followed me, welcome!

A little about me, I run a L/S US equities portfolio, called Cedar Grove Capital based out of NYC, focused on the consumer(tech) and cannabis industries.

I'd highly recommend you check it out 👉🏼 https://cedargrovecapital.substack.com/

What you get when you subscribe to our newsletter:
  • Weekly-ish Chart of the Week emails where I break down a chart into a few summarized key points to help inform you or keep you up to date on certain topics (ex. How Much is Each "Subscriber" Worth?)
  • Deep dive analysis into an industry that has significant growth potential (ex. Vertical Farming: Don’t Sleep on this Opportunity)
  • Trend I’m Watching which dives into a trend that peeks my interest enough to look into companies that can either benefit or be hurt by such trend (ex. Coffee Prices Getting Squeezed)
  • 1-2 monthly deep dives into a stock I either have a position in or am considering taking a position in. These posts are not short (avg. word count ~3,000), and include many aspects including interviews with users, product reviews, and my model output for valuations (ex. FIGS: Not the lululemon of Healthcare )
  • Personal Thoughts where I express my opinions about a certain topic related to finance, the stock market, or investing. (ex. Uh, Tesla is Worth How Much Now?)
  • Full transparency of my portfolio so you can track my performance and weighting within my portfolio. This can be used, to an extent, to help formulate your own portfolio management.
  • Quarterly updates on my portfolio that highlight my buys and sells, if any, as well as fund commentary and thoughts going forward.
  • BONUS: All my posts will be accompanied by an audio option (2022 onwards). For any reason you cannot read the posts, I’ll record a ‘read aloud’ of the same article so you can listen.

Companies that I've publicly published research on are below:


Companies that I've held/hold positions in but did not provide public research are below:

  • $BRCC - Black Rifle Coffee Co
  • $DPZ - Domino's
  • $ORLY - O'Reilly Automotive
  • $RENT - Rent the Runway
  • $FXLV - F45 Fitness
  • $WRBY - Warby Parker
  • $ELF - e.l.f Beauty
  • $AQUA - Evoqua Water Tech

If you're interested in getting detailed coverage of the space, deep dives into single names and industries all while accompanied by an audio version, I highly recommend you click below and sign up for the newsletter. It's completely free! 👉🏼 Newsletter + Website
Paul Cerro's avatar
$27m follower assets
Equities Roundtable Tonight - $TMDX and $XPOF
Join us tonight at 6:30pm EST as @pat_connolly and I talk about two companies and our thesis behind them.

We'll take questions from other members of our roundtable @youngmoneycapital & @mos_capital and from the audience.

Paul Cerro's avatar
$27m follower assets
Don't ignore C&R - $XPOF up ~39%
I know tech is what most talk about but there are a lot of consumer and retail names that are killing it.

While I had a position before posting, $XPOF is up ~39% since I published my research.

Expand your horizons and take a look at this fitness name

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Paul Cerro's avatar
$27m follower assets
Need stock new ideas? Check below
Good morning everyone!

For those of you that don't know or just followed me, I run a L/S US equities portfolio focused on the consumer(tech) and cannabis industries.

I'd highly recommend you check it out 👉🏼 https://cedargrovecapital.substack.com/

What you get when you subscribe:
  • Weekly-ish Chart of the Week emails where I break down a chart into a few summarized key points to help inform you or keep you up to date on certain topics (ex. How Much is Each "Subscriber" Worth?)

  • Deep dive analysis into an industry that has significant growth potential (ex. Vertical Farming: Don’t Sleep on this Opportunity)
  • Trend I’m Watching which dives into a trend that peeks my interest enough to look into companies that can either benefit or be hurt by such trend (ex. Coffee Prices Getting Squeezed)
  • 1-2 monthly deep dives into a stock I either have a position in or am considering taking a position in. These posts are not short (avg. word count ~3,000), and include many aspects including interviews with users, product reviews, and my model output for valuations (ex. FIGS: Not the lululemon of Healthcare )
  • Personal Thoughts where I express my opinions about a certain topic related to finance, the stock market, or investing. (ex. Uh, Tesla is Worth How Much Now?)
  • Full transparency of my portfolio so you can track my performance and weighting within my portfolio. This can be used, to an extent, to help formulate your own portfolio management.
  • Quarterly updates on my portfolio that highlight my buys and sells, if any.
  • BONUS: All my posts will be accompanied by an audio option (2022 onwards). For any reason you cannot read the posts, I’ll record a ‘read aloud’ of the same article so you can listen.

Companies that I've covered are also listed below

You’re naturally doing what commonstock promotes - transparent advice. I love how you show your holdings to demonstrate skin in the game. Way to go!
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Commonstock is a social network that amplifies the knowledge of the best investors, verified by actual track records for signal over noise. Community members can link their existing brokerage accounts and share their real time portfolio, performance and trades (by percent only, dollar amounts never shared). Commonstock is not a brokerage, but a social layer on top of existing brokerages helping to create more engaged and informed investors.