8/26/24 - $myps - Buy. Definition of free option ~$1.50's/shr

26 thg 8

8/26/24 :: VROCKSTAR :: MYPS
Buy. Definition of free option ~$1.50's/shr

- reviewing my green flagged names on a weird day like today when i'm a bit tail between legs but still show up to do the work (consistency and don't let one bad move affect you - size mgmt matters - not my best day, but i've had worse and i will have worse).

- so i came back to this one today. it's been a while since i took a look (May's results) and boy has it gotten even cheaper after less than ideal results in early Aug and sales don't look stellar.

- on paper, this would be a classical value trap. but i think there's more than meets the eye that merits a starter 1% position in my portfolio.

- first and foremost, the cash generation isn't purely stock comp, it's actual cash gen. average is about $10 mm a quarter, but we could argue if it's 5 or 10 mm going forward (in the comments). for a name that's $200 mm enterprise value but $100 mm in net cash =>> so it's a $100 mm value company... that's some pretty great cash flow dynamics. if it's really $40 mm a year cash gen, you're getting VIPS style FCF returns without the chinese-style up-yours-delights.

- also the holders list is pretty solid. blackrock, vanguard, capital (was suprised to see my old friends in the cap table), clearbridge too - interesting.

- haven't taken the time to get to know mgmt, or the product so i'll have to reply to this post when i do with an update and would probably substantiate my growing size or remaining small.

- but for a 1% position, this seems like the literal definition of a great option that doesn't expire. these guys bought back $25 mm of stock from what i can see last quarter, the cash gen should substantiate continuing to do this. will need to pay attn to trends but i'd consider it a "long short"... let me get into that bc it's important to how i think:

- "long short" - i need a better phrase. but it's always better to find longs than shorts in a world where the denominator (fiat) continues to inflate. you can make way more money on the upside. unless you're using leverage (dangerous!) e.g. puts, downside on something is 100% max. and you better know what you're doing. ANYWAY, something that i consider a "long short" is something that is a play on a trend that you'd otherwise short but you can go long a vehicle that benefits from the trend going poorly. so this is a "long short" on the economy. they make games. cheap thrills. netflix is somewhat similar. facebook. digital stuff. the own nothing and be happy economy. so the poorer we all become, the less we want to pay 30% tips at the coffee shop. we make coffee at home. we play more games. i don't mean to end this on a sour grapes/ pessimistic note. anyway, a "long short" is just that. i think MYPS counts in this potential bucket.

- downside should be fairly limited given 1/2 of the capital stack is net cash, they generate cash and trends are not truly awful (but let's be real - they ain't great hence the stonk px action).

- what do you think?

V

26 thg 8

Ghi chú

ceo is legit. great. fam - you don't typically get good CEOs in these size co's.

2% position for me. i won't be trading this around, only adding (at least that's the intention). think it's really a diamond in rough name. also checks possible M&A box i've been writing about in the 2H context. not just another game house but also PE buyer.

for whoever engages with this post, lmk if you've looked at the name
i will be downloading/ playing some of these games in the coming weeks while i'm in line etc to really test drive their offer.

V