GameStop (GME): optically cheap special situation, but passing

Situation overview GME is the leading specialty video game retailer in the world. Most are aware that the company has endured tremendous secular pressures over the last several years. It’s been common for 40%+ of the float to be sold short at any given time, yet the company continued to produce solid levels of FCF for many years. With that said, it appears that industry pressures have finally caught up with GME – the stock is down ~75% over the last 2 years. I’ve followed the company at a high level for some time, but decided to refresh my work […]

OneMain Holdings (OMF): a misunderstood subprime lender, but waiting for an entry point

Idea introduction Consider the following question: what would you pay for a company that produces ~30% returns on tangible equity, possesses a durable competitive moat, and is growing ~5-10% (leading to ample reinvestment opportunities)? With only those facts, you’d probably say ~20-25x earnings. If I clarified that this company is cyclical and moderately levered but comfortably profitable at the bottom of the cycle, you would become more conservative and might suggest something closer to ~15x mid-cycle earnings. If I further clarified this was a subprime lender, most would probably laugh me out of the room. The brave might suggest ~8x […]

COOP: some quick thoughts on the stock

I don’t plan to frequently comment on short-term price movements in ideas that I’ve posted, but I wanted to provide a few quick thoughts on COOP following the 8-K this morning. COOP’s stock has been weak since my initial post and is down -20% thus far. This would be a large move for most stocks, but it’s less material for COOP given the (1) high operating leverage in this business, (2) high financial leverage, and (3) positive skew of outcomes (in my opinion). I don’t think much has changed on my thesis, but I did want to address recent macro […]

Mr. Cooper Group (COOP): An extremely mispriced call option

As a value investor, I generally try to find situations with easily understood business models, predictable results, and limited risk of capital impairment. Mr. Cooper Group (COOP) checks none of these boxes, so this will naturally be my first post! An 86 page investment presentation is included below. In my opinion, COOP represents a separate and potentially compelling opportunity set for value investors: options. This includes both (1) listed option instruments (call options, warrants) and (2) securities with call option-like characteristics (levered equities with small market caps relative to asset values). In either instance, there exists large upside if sentiment […]