@strat

Strat Becker's avatar

$4.5M follower assets

Incoming Prudential intern - Class of 2023 - I write a newsletter detailing my research into small cap stocks and contrarian takes: https://dueyourdiligence.substack.com/
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Strat Becker's avatar
$4.5m follower assets
Black Rifle Coffee Sued for Stock Manipulation
Three months ago I wrote critically about $BRCC. I zoned in on its CFO, whose last role ended with him being sued for stock manipulation and lying to investors about the health of the business, as well as the CEO and co-founder for his role in propagating a toxic workplace environment for those on the content side of the business.

While the stock is down 50% since my short report detailing a $9.5 price target was published, the stock first soared to over $34 per share at its peak in March and April. According to an open letter and lawsuit from 1791 Management, this rise in the stock was done illegally and orchestrated by the company with ill intent for shareholders to line the pockets of insiders. The open letter specifically cites Iverson as potentially coming up with the idea:

"We would not be surprised if the original idea came from your CFO, Greg Iverson, who was the subject of a securities fraud class action lawsuit alleging he participated in "artificially inflating" Overstock's price while he was their CFO."

To those who did not research the company deeply, this would come as a surprise considering the sell-side analysts who initiated coverage around the de-SPAC claimed that the management team was "uncharacteristically seasoned for a new public company" as claimed by Roth Capital.

The management team may be uncharacteristically seasoned, but it seems to be in regards to ripping off investors rather than running a successful business.


You can read my original short report highlighting major issues here: https://dueyourdiligence.substack.com
Strat Becker's avatar
$4.5m follower assets
Unique Merger Arbitrage
Despite its massive short interest and “meme” esque price action, $RDBX is one of the more unique merger arbitrage opportunities for the fact that it’s merger price is at a massive discount to its current trading price.

Redbox is being acquired in a stock-based transaction by $CSSE where each Redbox share gets 0.087 shares of the combined company. At $CSSE’s current closing price of $6.36, this would imply an acquisition value for Redbox of just $0.55, an over 85% discount from its current price.

How is this possible? Because Redbox is about to go bankrupt. In the merger agreement it’s stated that Redbox will default on its debt if either
A) the merger agreement with $CSSE is terminated… or
B) The merger is not completed before October 31st, 2022 (unless creditors give an extension)

This creates a unique scenario where Redbox has to merge at a value of $0.55 before October 31st or go bankrupt, eliminating the normal risk of a merger not being completed (since the alternative is going to $0 by defaulting).

The stock is ripping in the meantime anyways but will be very interesting to look back in six months!
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$4.5m follower assets
The Niche Sporting Goods King
Escalade ( $ESCA ) is a sporting goods equipment producer that has a dominant market share across several niches. It also has the largest market share in the rapidly growing pickleball market and can ramp capacity to not lose this position as the sport grows

The company also has one of the most transparent management teams I've seen from a public company. They admit when they've not lived up to expectations and have a spectacular handle on capital allocation.

I believe the market is significantly discounting the potential this company has. You can read my full report here: https://dueyourdiligence.substack.com/p/opportunities-at-escalade?s=w
Strat Becker's avatar
$4.5m follower assets
My First Bullish Idea Since January
Tomorrow morning I’m publishing my first long idea on my newsletter since January. I’ve gotten in person channel checks, done extensive industry and company research, as well as talked to management and shareholders.

It’s also my last post until August as I have to go quiet during my internship. I’ve thoroughly enjoyed writing as it’s furthered my learning process and I hope it’s been helpful to others!

You can get the report straight to your inbox by subscribing to Due Your Diligence right now! https://dueyourdiligence.substack.com/subscribe
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$4.5m follower assets
$BRCC Earnings Flop
$BRCC earnings report showed its core DTC business has slowed to no growth and that management cannot effectively control costs.

The stock is now down almost 50% since my report highlighting major issues facing the business and went below the $9.5 price target I modeled earlier today.

While my price target has been lowered since publishing, the risk/reward to be short is no longer as dramatically appealing as it was when I first released my analysis. My updated end of 2023 price target is $7.5 at this time

Strat Becker's avatar
$4.5m follower assets
A Facebook Post-Mortem
With my last deep-dive until August coming out in a week, I wanted to take the chance to look back at the most contrarian thesis I’ve made public, being negative on $FB in early January and remaining so despite the stock dropping over 30%

A prelude: While the key components and reasoning I had to say Facebook was a bad stock were correct, there were many details and finer points where I was wrong, and I’ve been able to recognize flaws in my own process as a result. I hope that I’m able to continue improving and come back better than ever when August comes.

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$4.5m follower assets
A Facebook Post-Mortem
Coming tomorrow, A Facebook post-mortem. The prelude to my last deep dive before I go dark, I'm using this time to reflect on my most prominent thesis and discuss how statements have played out, and more importantly, discuss where I was wrong and why.

I hope seeing my learning process can be a helpful experience and look forward to sharing this piece tomorrow!
Reflection on past thesis’ is like my favorite thing. Often most of the learning is done in the reflection phase.
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Revisiting Nextdoor
I wanted to revisit the short report I made on $KIND 3 months ago. Since highlighting material issues with the company in February, Nextdoor has lost over 44% of its value and fallen over 10% below the bear price target I initially modeled.

While in tracking my aggregate performance I covered the “position” on April 26th due to the risk/reward from my initial target shifting to neutral/unfavorable, the stock falling this much further is reasonable considering the company’s primary growth driver was expansion in Europe. Considering they generate revenue from ads, the war in Ukraine has caused material decreases in European advertising spend, impairing the company’s growth substantially.

I’d recommend taking a look at my original post, I still believe the original ideas hold true

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$4.5m follower assets
My Last Deep Dive Until August
Next Monday I'll be publishing my last deep-dive until August as my posts will be limited due to my internship... and it's my first official long idea since January too!

Can't wait to finish putting all the pieces together. Let's just say it fits the theme of the weather turning towards summer ;)