Cavallo Capital

$MSFT $GOOGL $META $AMZN All 4 report earnings after market close on April 29th. Buckle up.

@TemptInvest undervalued by 50% IMO

I’ve written about $LGCY when it was $6, it ran to $14.70 and has now cooled to $11.80. Legacy Education at $11.80 is still one of the most straightforwardly compelling risk/reward setups in the entire micro cap universe right now. You are paying 1.7x enterprise value to trailing revenue for a company that has grown revenue 40% for 14 consecutive quarters. You are buying a profitable, cash generating business with zero net debt in a sector, healthcare vocational training, where structural demand is not cyclical, not discretionary, and not threatened by AI. You cannot train a cardiac sonographer through a chatbot. At $11.80 per share: •Market cap: ~$148 million •TTM revenue: $75.1 million → Price/Sales of ~2.0x on a 40% growth business •TTM net income: ~$8.5 million → P/E of approximately 17.4x •Cash: $21.1 million with minimal debt → Enterprise value approximately $127 million. They are not burning cash hoping to find a business model. It is profitable today. adjusted EBITDA $3.0 million, up 61.6% year over year. Net income $2.0 million, up 46%. Diluted EPS $0.15, up 50%. EPS of $0.15 beat the consensus estimate of $0.13, a 15.4% earnings surprise. Revenue of $19.19 million beat consensus by 3.48%. This is the pattern: Legacy consistently beats estimates and the stock consistently doesn’t fully reward it, a dynamic that creates the setup for a re rating imo. adjusted EBITDA increased 30.3% to $6.1 million and net income rose 21.2% to $4.2 million. Diluted EPS was $0.30. The margin structure is improving as the new programs launched in Q1 begin generating revenue in Q2 and Q3. Educational services costs as a percentage of revenue actually declined to 53.6% from 54.9% in the prior year quarter, a clear signal of operating leverage emerging as the student population scales across a largely fixed cost base.

@Driller562 Yes, but it gave me the opportunity to increase my position by almost 35% so I’m not complaining.

@CavalloCap1 this was the dumbest correlation ive ever seen

$TMDX decoupling from negative oil correlation 🤔

@DoucheBag168 or overseas revenues, just some rough guidance from the flight tracker to give an idea of how they are executing.

@CavalloCap1 We can’t figure about their ground transport too

TransMedics $TMDX is averaging ~31 flights per day since the start of Q2, on pace for ~$190.7 million in quarterly revenue.

Interactive Brokers $IBKR added 355,000 net new accounts in Q1. Their largest quarterly increase ever. Total accounts now ~4.75 million. Not surprised. I cannot name one discount broker that can compete with what $IBKR has to offer. It's one of those platforms that once you make the switch, you will probably never leave.

@mathlonning @JonahLupton @SingularityRes Noted, thank you.

@CavalloCap1 @JonahLupton @SingularityRes 68k figure is outdated. Please refrain from extrapolating revenue strictly from flight data.

@JonahLupton Possibly! I’m using $68k/flight which I believe is widely accepted and slightly on the conservative side, sourced from the @SingularityRes flight tracker. Thoughts on that $68k figure?

@CavalloCap1 31 flights per day would probably put them at $195-200M in Q2 revenues.

$CELH is one of those names where the shareholder will more than likely be right in the long term, but will continue getting their teeth kicked in in the short term.

On the $PCYO Q2 call, an analyst asked for a follow up on Q1 commentary where CEO Mark Harding said they had engagement with Cushman & Wakefield and were “very optimistic” it could lead to a meaningful opportunity to supply water to data centers. Harding said “It’s not that we’re not continuing to pitch that, but Colorado’s probably not as attractive as a state on some of these larger hyperscaler data center type opportunities, and it’s really twofold. One, the ones that we were very active pitching, really are looking for tax incentives, and so the state has a bill before the legislature. They have two competing bills. They have one bill that is seeking incentives and one bill that’s seeking to disincentivize. Those are the risk elements that some of the data centers that we have been marketing to are sharing with us. We still like the opportunity. There still are data centers that are being built in this area. We’ll compete with that and see where it lands.” The bill Mark is referencing that would offer tax incentives for data center buildouts is HB26-1030. It has a committee hearing scheduled for April 23, where the House Energy & Environment Committee will vote on whether to advance it. The bill that would disincentivize large data center buildouts is SB26-102, which has been stalled in committee since March and is considered unlikely to pass. My takeaway from Harding’s answer is that decisions from hyperscalers to move forward on new projects in Colorado will be highly dependent on state legislation. It’s promising to see they are actively in talks with hyperscalers and continuing to pitch them, but progress will ultimately depend on HB26-1030 passing. From my understanding, the data centers that are active or currently being built in the area that Mark mentioned are generally smaller in scale and don’t consume significant amounts of water and may not justify heavy capital investment to reach them. It sounds like $PCYO is focused on capturing large scale data center developments that are significantly more water intensive and have the potential to drive meaningful revenue rather than competing for the smaller centers in the area.

@AdmiralRisky I recall a mention of dividends some time ago, but I haven’t heard it brought up since. Hopefully they’ve abandoned that thought. One of the worst uses of their capital right now would be distributing it to shareholders.

@CavalloCap1 Mgmt had previously discussed dividends as well. Obviously, back then they wouldn't have thought the price would remain ~$10-11 now. I'm hopeful they significantly up the buyback sooner than later, but the thesis here next 18 months is straightforward. x.com/AdmiralRisky/s…

$PCYO management should prioritize aggressive share buybacks at current levels instead of continuing retained SFR development. Napkin math: 2028 EPS target of $1.63 includes planned SFR development. Pausing that would reduce EPS by about $0.05. At a share price of $11.25, the implied buyback yield is about 14%, which is materially more attractive than the 8 to 10% unlevered returns management has indicated for SFR. Management has repeatedly mentioned it believes the market is mispricing its core asset base. Capital allocation should reflect that.

$TMDX up ~$9 as oil declines. It will rip much higher when the market eventually wakes up and realizes it is pricing in a negative correlation with oil that shouldn’t exist.

13 STRAIGHT GREEN DAYS FOR $QQQ

@ryoneo90 ~10.24%

@CavalloCap1 How much % of your portfolio is allocated to $TMDX?

$TMDX fuel cost concerns are irrational. TransMedics passes through incremental jet fuel surcharges to hospitals. Even in a worst case scenario with no pass through, the estimated impact is only $2.5M to $5M, which is negligible relative to prior quarter net income and largely irrelevant since they are not expected to absorb these costs. I used this opportunity to increase my position by 34.72% today.

How does Netflix $NFLX compete with YouTube, Instagram, and TikTok for attention from a generation raised on short form content? Gen Z, Gen Alpha, and even Millennials have fried their attention spans on short form content and struggle to sit through long form movies and series. Netflix’s biggest risk is that the coming generations may not even be able to use the product. Just some food for thought.

$QQQ is on pace to finish higher for the 12th day in a row, the longest streak since November 2021. Bears are in shambles.

$MYSE We got another AI rebrand runner. Lol!

By building out and deploying their own fleet to 150M MAU on their platform, $UBER will put significant pressure on competing operators such as Waymo $GOOG, Tesla $TSLA, and Zoox $AMZN. Robotaxi operators can’t afford vehicle downtime, and with supply remaining fragmented across multiple providers, they will be forced to compete aggressively for every ride and accept that they may have no choice but to offer bookings through Uber. Waymo already understands this and partnered with Uber to offer bookings in Austin and Atlanta, while Zoox is planning a partnership with Uber in Las Vegas and Los Angeles. I believe in the near future we will see Waymo and Zoox announcing a broad partnership with Uber across all cities that they currently operate in. The negative sentiment surrounding Uber has largely been driven by fear of being squeezed out by large AV players. I believe this move may have almost entirely eliminated that threat.