Calendar:

Available Now:

●$VSTS: “Sandbagged guide and new CEO’s turnaround plan could be a catalyst + high short interest” Now available on all streaming platforms.
●VSTS Earnings Preview Checklist Filled Out! (for monitoring positions)
●VSTS Variant View Checklist (for new positions)
●$TUSK: Chart with the value walk from $2.81/share in unrestricted cash to $6.00/share NAV vs the current $2.54 share price.  Now available on all streaming platforms.
●Variant View Checklist Explained

Coming Soon:

🔜 From Fidelity PM to Hilliards Chocolate - inspired by a car ride with chauffeur Warren Buffett!
🔜 Semi Analysis roundtable discussions with Doug O’Laughlin, President on all things semi-conductors and AI

$VSTS Earnings Preview Checklist

In the next episode of Pitch The PM dropping tomorrow, I pitch Hugh Anderson (former SAC and Lombard PM) and founder of Independent Center for Analyst Development on buying VSTS into the print using the Variant View & Earnings Preview Checklist. 

The core Variant View Investment Checklist is designed for initiating new positions in the book whereas the Earnings Preview Checklist is designed for quarterly diligence around earnings to maintain the thesis rigor and optimize for prints when most alpha is generated. Earnings are frequently a catalyst on the path to getting paid as that is when management updates the business performance and their outlook, but having a good earnings hit rate is an output of the Variant View Investment Checklist. Yes, everything has a process/checklist!

As one of many students of Buffett, I find it noteworthy to point out that Berkshire bought a similar business, Fechheimer Brothers in the mid 1980’s and reportedly had a full payback within 7-8 years and then the business declined as the founding family transitioned out. It was an understandable business at a reasonable price, but in the long-run the barriers to entry and management continuity prevented it from being a top performer for Berkshire. 

The Earnings Preview Checklist:

1) What do I want the PM to do? (fill out after you do the checklist and prove you have done the work)
Buy – favorable set-up after last quarter’s guide down, pulled annual guidance and dividend cut that was 2 days before the new CEO’s stock grant pricing.

2) SET-UP:
How has the stock performed into the print (residual if possible)?
- Underperformed the XLI by 37%in the last 90 days since and is down 28% with a 25% negative EBITDA revision for FY-26 since last quarter.

What has the short interest done?
- Short interest has increased to 9.6 MM shares from 8.3 MM shares at 5/30/25 and is 8% of float, 3.8 days to cover. Short squeeze potential

What are expectations?
- Sell-side thinks this is a broken company whereas I think this is likely a self-inflicted speed bump caused by incentivizing the sale force for retention and issuing too many credits.

3) NUMBERS:
What is your forecast for the quarter for the main KPI’s like Revenue, EBITDA, FCF, (differs based on sector and company)?
-3Q FY EBITDA $63 MM is flat QoQ and vs $81 MM in 1Q FY, I think closer to $70 MM of EBITDA ($8 MM credits issued last quarter and April back to December weekly levels per last call)

What do you expect the guide to be for 4Q FY?
-$70-$75 MM range (based on 3Q results, but still conservative with new mgmt team to beat). This is the key # that will move the stock if they guide or if Analysts triangulate on it during the call. 

What do you expect the revision to be for 2026 FY?
-$280-$320 MM vs cons $278 +8% (no guide, just flow thru from the 4Q guide) Risk is is it conservative out of the gate with new CFO/CEO to establish credibility.

What is the stock worth?
- $300 ‘FY 26 EBITDA *8x EV/EBITDA = $7.87/share +23%;
- @ $320  = $9.08 +42%,
-@ $280 MM = $.6.66 + 4%

Risk is there are more credits and new CEO raises capex.

4) OUTLOOK:👓 
What do you expect management’s outlook to be?
-Have not spoken to new CEO, but do think the credit issue is transitory 

Their tone?
- A new CEO should have a solid plan out of the gate, doubt he’ll quantify it this early though. 

Longer-term plan change?
- New CEO is 64 and retired a few years ago from the UPO COO role. This is likely a few years to fix and flip IMO.
- He does have a history of high capex at UPS, so capex spend is a risk to the downside.

5) Where do you want to be after the print?
- Long, new CEO can improve the operations and route density. Plus, it is a take-out candidate with the 2 year spin anniversary approaching in October.

*Not Investment Advice. For educational purposes only. I am biased. I own shares. High leverage, may not be suitable for you.

VSTS 10 Step Variant View Investment Checklist

💥Do I UNDERSTAND this business?
Doug draws on his industrial’s experience from Citadel and Millennium, 

Is the stock available at a REASONABLE price today?
VSTS trades at ~8x EV/EBITDA vs. Cintas at 29x. Doug argues valuation is fair for a fixer-upper and notes that upside lies in earnings revisions, not rerating.

Why is this stock MIS-PRICED?
Street views VSTS as broken due to management stumbles, two major guidance cuts, and high leverage. Doug sees it as a speed bump, not a structural issue.

What is the VARIANT VIEW vs the street?
Doug believes recent underperformance and sandbagging have lowered the bar, setting up a potential beat. The April run-rate already matched December’s, suggesting Q3 upside.

What is the EVIDENCE?
The last conference call lays out the rebound in weekly sales back to December levels in April. Plus, the excessive narrative on credits helps explain the high decremental margins during the recent shortfall that could be transitory.

What are the CATALYSTS for the street to realize my view?
A Q3 beat followed by a Q4 guide above consensus could lead to higher earnings revisions and thus a higher stock price. Plus, the CEO’s turnaround plan could be positive. And there is high-short interest. 

What is it WORTH if the bet is right?
With steady growth, the multiple discount vs peers could narrow too.  Re-rating to peer levels (0.8x–1.3x EV/revenue) from 0.3x could also happen as profitability improves.

What is the OTHER SIDE of the bet?
Management may invest heavily, hurting near-term FCF. Credit covenants may linger. CEO could have a conservative stance out of the gate on the 4Q guide. 

Is management ALIGNED with ownership?
Jim Barber’s equity was granted two days after  last quarter’s miss, guide pull, and dividend cut. He has a good starting point.

Why $TUSK Made it on my 20 Slot Buffet Punchcard…

The chart below outlines Doug's first "Buffett Punchcard" – $TUSK and its value proposition. The stock is currently trading below unrestricted cash of $2.81/share and its NAV of $6.00/share represents over 2x the current share price of $2.60/share. There is 47% upside to the line of sight cash of $1.02/share that should hit the balance sheet in the next nine months. Then there is the current business value and the capital allocation potential targeting 15%-35% IRR's in better industries than before.
⁠
"In the near-term the stock market is a voting machine. In the long-run, it is a weighing machine." –Benjamin Graham

The market has low expectations for TUSK with it trading below its unrestricted cash level (pro forma for the T&D sale) of $2.81/share. This is likely because the company was FCF negative last year and in 1Q'25. Plus, the company has had a volatile/cyclical history driven by its oilfield services investments and the future investment process is not apparent to the market.⁠
⁠⁠
Given the choppy history and limited market attention to this stock, I understand why the market is not giving the stock credit for these line of sight items (some from Puerto Rico) until they have occurred. The company seems pretty likely to collect most of that cash, if I had to bet. And I am. ⁠
⁠
Then there is the appraised value (third party, not accounting, but mark to market) of the business assets from YE-2024 that is about $2.50/share. Some of these assets are in businesses that are operating so I do not expect everything to be liquidated, but there are some underutilized assets. Like land rigs, that are held for sale as of 1Q'25.
⁠
My view is that:

1) the company should be just about FCF neutral going forward with the public company overhead offsetting the business EBITDA and interest income,
2) should do a better job outlining their capital allocation strategy that recently generated an >3x MOIC on an industrial exit,
3) and should collect most of the “line of sight" cash items. ⁠
⁠
I am bias as I own shares. Do your own work.

💥⁠⁠Not Investment Advice💥

What is the Variant View Investment Checklist?

After a decade at Citadel and Millennium, I’ve developed my own Variant View Investment Checklist

I get pitched many stocks each week from friends and colleagues in a few casual sentences - the elevator pitch. When I invest myself, I go through the time-tested Variant View Checklist below to make sure I fully understand the investment bet I am making.

0️⃣ What is your BIAS?
Understanding where people are coming from is very important. If someone made a lot in the name in the past they are likely to be bullish. If they had success shorting it, they are likely bearish. If they are a management team, not only do they own shares, but it is their “job” to paint a positive picture.

1️⃣ What ACTION do I want the PM to take?
Don’t dance. Get to the point.
Buy? Sell? Trim? Double down?
Make the call.

2️⃣ Do I UNDERSTAND this business and industry?
If you can’t explain it to someone smart in 90 seconds, you don’t understand it.
No buzzwords. No BS.

3️⃣ Is the stock available at a REASONABLE price today?
Great business, wrong price = bad trade.
Price always matters. Even with a long time horizon. 💸

4️⃣ Why is this stock MIS-PRICED?
The market isn’t dumb. Show me where the inefficiency is.
What’s the dislocation? What’s everyone else missing?

5️⃣ What is my VARIANT VIEW vs. the street?
If your idea looks like consensus, it is consensus.
Be specific: how is your forecast, framework, or angle different?
No edge = no trade.

6️⃣ What is my EVIDENCE?
Your opinion doesn’t matter.
Your work does.
Show me the receipts. Bottoms-up segment forecasts, channel checks, notes from management, customers, alternative, data — whatever proves the case.

7️⃣ What are the CATALYSTS?
How and when does your view get proven right?
Earnings? (most new info and thus alpha comes out on earnings), a strategic realizes the value in a take-out?, a pre-release, a peer earnings report, sentiment starting to turn on the conference circuit, etc…
Don’t pitch without a clock. ⏰

8️⃣ What is it WORTH if I’m right?
Map the upside. Understand what you are playing for.
If this works, what’s the reward? How long will it take?
We’re here to compound. Know your math.

9️⃣ What’s the OTHER SIDE of the trade?
Define the downside and potential loss with a probability
Know what the people on the other side of the bet are thinking and know why you disagree with them. Be humble, they are smart too and you are not always right (recall 54% hit rate is great per Ken Griffin)
If you can’t explain the other side, you’re not ready to make a bet.

🔟 Is management ALIGNED with ownership?
Skin in the game or passengers on a gravy train?
Check the proxy, is management incentivized for growth or returns?

“Show me the Incentive, I’ll show you the outcome” - Charlie Munger

About Us

Pitch The PM is the Professional Investor's Podcast that provides a deep-dive into a stock's investment case using the Variant View Investment Checklist. It is an open exploration of the research process in real time using high-conviction ideas from top PM’s and Analysts. Join the journey as Doug fills out his Buffett advised, 20-slot lifetime punch card. We learn and laugh together. 

The Variant View Investment Checklist is the process that combines:

• A decade of experience managing $1B at Citadel & Millennium, 

• Studying the great investors like Buffett, Munger, Lynch & Greenblatt, 

• and the latest AI tools to improve idea velocity, accuracy and conviction.

Westport Alpha Group is a family office consortium of like minded finance professionals. Individuals may engage in Special Purpose Vehicle’s (SPV’s), Separately Managed Accounts (SMA’s) or act as an Independent Sponsor for a private company or in a public company take-private. This is not a solicitation to sell/buy any security or engage in any services. This is not an attempt to form a group.

Pitch The PM is hosted by Doug Garber, a former Citadel Analyst and Millennium Senior Portfolio Manager. Doug was initially trained at Citadel by a former SAC/Point 72 Analyst who worked directly for Steve Cohen before becoming a PM at Citadel. Doug was ranked as a top five analyst while at Citadel’s Surveyor Capital and was the only one to receive that designation twice during his tenure. He managed a multi-sector, multi-strategy team at Millennium under Katahdin Capital. Prior to his buy-side career, Doug worked in sell-side equity research honing modeling and primary research skills. Doug is currently the CIO and DoR at the Westport Alpha Group.

Doug graduated from Tulane University with a BSM and Master of Finance. He was selected to participate in the Darwin Fenner Student Managed Endowment Fund that utilized quantitative factors to outperform its benchmark and be an Investment Research Manager in the Burkenroad Reports “Stocks Under Rocks” equity research program. Doug has a passion for iterating on the investment process and a quirky sense of humor. He lives in Westport, CT with his wife, Lexi, and three kids. When he is not reading a 10-K, you can find him coaching youth soccer, inverted on his yoga mat or on an eFoil looking for Zuck.

Disclaimer

Past performance is not indicative of future results. Neither Pitch The PM nor its author (s) guarantee any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed in this material or on the show. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned on this website or on the show may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned on this letter, on the website or on the show. Before acting on information on this website, in this letter or on the show, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

The author (s) of this report may have positions in the securities discussed. The positions may change at a future date and neither Pitch The PM nor any authors are under any obligation to update you. The information may not be accurate and you should do your own research.

This is for educational purposes only. This is not investment advice. Please contact your financial advisor to see what is suitable for you. Please see disclosures at PitchThePM.com