Recent Moves continue to humble

Ben Graham’s advice is soothing at a time where speculation yields short term profits while buying out of favor and generally what I believe to be undervalued ownership stakes in overlooked companies yields short term losses.

As I write this the President just announced he is pushing for a Crypto Currency National Reserve that will hold Bitcoin, Ether along with smaller cryptos such as Cardano, Solana et al. Unsurprisingly the Trump “crypto Czar” owns these “coins” and stands to make a pretty penny as do others related to Trump. Putting aside the ethical and moral issues, IF this actually happens, I believe we might have opened Pandora’s box in relation to the value of Fiat currency, the USD. The mechanics of how this would happen should be ringing alarm bells in anyone’s head. We as a nation have the largest Federal debt load in relation to our GDP in our history and we are borrowing to finance the government. The Federal Reserve has printed trillions to prop up the borrowing of the Federal Government. In essence we are PRINTING USD to buy digital “assets” with it that as of now don’t have any sizable practical uses. This is speculation at its finest and screams loud and clear that our USD is worth little as we will print to buy speculative assets with it, making it a speculative asset of its own. If I am sitting in Beijing and Tokyo right now and have $1T+ in US Treasuries that have just been printed to buy cryptos, what would I be thinking about the value of those USD Treasuries…

I am hoping sanity returns and none of this comes to fruition. but if it does, run don’t walk, and purchase as many tangible assets as you can with your USD as its value will be permanently changed forever. Moving on…

It has been a fairly difficult year for me this year. Despite what I believe to be solid values when purchased, in most of my investments, the stocks have continued to move lower and given my lack of dry powder or cash, I am hamstrung to add to my positions.

My portfolio has changed over the past few months and the major changes have been new positions in TRIP, TSVT, CMRE and much larger position in AMPY using funds from dramatically reducing my BBIO position which worked out quite well and is still a wonderful investment IMO and, more importantly, selling my entire position in AIV. I like AIV but view it as an 80-cent dollar and so I sold it to purchase what I view as 40-cent dollars in my other names. My top positions are NMM, IMMR, AMPY, FEC, RMTI, followed by smaller positions in HRBR, SCOR, TWM, VET, NRDE, TORO and a few smaller positions that won’t move the needle much either way.

NMM

NMM reported earnings last month and they turned another decent qtr. Their dry bulk exposure will cost them in the 1st qtr as rates have plunged over the past few months although they have recently recovered. Their tanker business will also be weaker in Q1 although rates have recovered to some degree there as well. Their containers continue to have mostly long-term contracts and limited spot exposure. Shipping is very cyclical, and I feel I am holding shares near the bottom of the cycle for dry bulk and tankers, when stock prices have receded dramatically. I have purchased my NMM stake at an avg of $46 and it is at $41. I don’t expect to pick the bottom but mastering the inner Ben Graham and ignoring short term declines is not easy for someone with my personality. Perhaps it has a lot to do with my growing up in the Hedge Fund world where mark to market is what matters and long-term value is secondary as you can lose your assets if mark to market is ugly for a year or two. I am fortunate to only manage my own capital and not have to worry about mark to market. NMM has been busy updating its fleet with newbuilds in the tanker and container segments. It has made deposits on ships yet to be delivered that are not currently earning anything. Some of these boats hit the water over the last few months and more will arrive over the next 18-24 months that will augment its earnings power dramatically. The supply and demand outlook for tankers and dry bulk in 2026 and beyond is excellent in my view and the current weakness is a gift for long term holders as it allows for incredibly value accreting share repurchases. The pace of repurchases this calendar year has picked up noticeably (100K shares in 18 non blackout trading days this year as of Feb 7th). I would hope that it picks up even more at these prices. The valuation is truly absurd from any measure. Additionally, NMM checks the box with regards to my desire to own real assets in the face of what I view as a troubling potential devaluation of the USD.

IMMR

IMMR has traded down roughly 10% over the past couple of months. I have added a sizable call spread to my position as I see this as an opportunity to purchase a bunch of cash and securities and a patent business with lumpy but long-term valuable cash flows at a sizable discount to the $12-$14 per share I believe it is worth. Their stake in BNED is worth ~3-4 per share of IMMR. I believe BNED is cheap on its own and it could merge with Follett or Ingram Corp, its primary competitors as anti trust would likely not be an issue under the current administration. Any such merger could create enormous value. The risk/reward asymmetry here where we are buying liquid assets and a patent business at a deep discount with the opportunity of further value creation in BNED is extremely compelling. Mark to market losses here are of no consequence to me.

AMPY

I have dramatically boosted my position in AMPY and am now one of the largest holders. The hate selling since its announcement to merge with Juniper Assets in the Rockies along with general weakness in oil and gas names has knocked the shares down to a current standalone EV to ~$305M and $560M on a pro forma basis. Standalone AMPY is projected to generate $40M in FCF in 2025 and this is with an 8% gain in production as Beta ramps up. On combined basis the company will generate ~$80M in FCF. In addition, the pro forma company will also save $5M+ in cash taxes as AMPY was set to become a cash taxpayer going forward. Overall, it seems clear the deal will get approval despite questionable logic of diluting Beta by issuing ~26.7MM shares vs. current 40MM outstanding to Juniper for run of the mill shale assets. AMPY is likely to sell one or more of its assets post closing to quickly delever. It has received a lot of interest in its two large gas assets OK/Lime and E TX which have appreciated in value given the nat gas curve is 50 cents higher in 2026 ad beyond and $2 higher in 2025 vs. 2024. Selling one or both at PV12 would yield ~$240M on a combined basis making the company debt free. There are plenty of logical buyers for both assets. Meanwhile Beta can be grown substantially with the additional FCF from Juniper and then be sold to someone like SOC which has a MUCH Higher valuation. At these prices, and with Beta growth in the next two years, I believe AMPY will be worth $12-$15 per share. I am happy to have gotten the chance to add a lot of shares in the $5 range as I believe this price is cheap even at $60 oil given Beta’s enormous profitability. Furthermore, I believe that corporate governance will improve with the addition of Juniper principals to the Board and hopefully one other board member who represents current shareholders.

FEC

Frontera has drifted down to US$5 after it has just conducted TWO tender offers for ~4% of each shares outstanding each time at US$9. It has 78MM shares outstanding now and $200M in net debt at the HoldCo for an EV ~$590M. The company is clearly in blow down mode as its controlling shareholders are anxious to liquidate what has been a disastrous investment due to a ~$350M investment in Guyana that is now largely worthless. The debacle here was blessed by Gabriel DeAlba who once worked at controlling shareholder Catalyst Group. He is no longer with Catalyst and has formed his own firm and as such I believe the writing is on the wall in terms of this heading for a liquidation. The value here is incredible in my opinion. The top 5 shareholders control 75% of the shares here making the float tiny. This coupled with the fact it is primarily in business in Colombia has rendered the shares largely uninvestable for institutions. As a result I have been able to build a large stake over time.

So what is worth? The company’s infrastructure assets which are being auctioned off in a process that is expected to end in the next month are generating ~$130MM on a go forward basis as its Reficar project is now complete and operational but didnt produce and EBITDA in the first two months of the year. Given the assets are in Colombia the multiple it will get in a sale of these assets will be anyone’s guess. Similar US or Canadian infrastructure assets would sell for 7-9x EV/EBITDA. What is a fair multiple for Colombia is very difficult to say. There are so few precedent transactions to point to. What we do know is that potential buyers such as Brookfield Infrastructure Partner, Macquarie Infra Partners, Blackstone Infra et al have very low cost of capital and have raised huge sums with the promise of delivering mid single digit returns. Buying these assets at 5x EBITDA given very little need for cap ex going forward would be very accretive for them. At 5x $130M in EBITDA we would get $650M for these assets. The infrastructure Sub has ~$100M in debt so the net proceeds would be $550M. Less about $80M in taxes by my estimates, the company is likely to net ~$470M in proceeds or ~$6 a share vs a current price of $5. Shareholders would then own the remaining upstream business which is producing 42K Bbls per day an generating more than $100M in FCF! This business can then be merged with one of the other Colombian E&Ps like GPRK or Parex and cut out a lot of G&A. This is likely in a potentially improving political environment as the hugely unpopular far left Pres Petro is on his way next year. In my view, this E&P business is worth $700M or $500M net of $200M in debt. That equates to another ~$6.50 a share. Lastly there is also some outside shot some value can be recovered from the Guyana misadventure which is a free option. I love my position here.

RMTI

RMTI has round tripped the big move higher from 2024 as investors have largely given up on the company. I have become one of the largest holders once again in the last few months adding a lot of shares. The company was firing on all cylinders last year and the was shocked as its 50% customer Davita said they would move $31-$35M of their ~$50M in business away from the company. I have since learned that Davita made this decision in 2021 when it had to put $15M into the company to keep it afloat before the current M. Strobeck management team was hired. Understandably, Davita did not want to have to rely on a tiny financially unstable company for an essential component of its business. albeit a low valued in terms of dollars but not in operational performance. In its current state it’s unlikely Davita would have made this move as they are getting a lot of these products from RMTI at zero or negative margin on some products and low single digit margins on others. However, it has been running a parallel process to diversify its supplies and as such RMTI will need to deal with the revenue loss and the loss of potentially improving margins on this revenue. This is short term pain but long-term gain as it does the company no good to sell 30% of its capacity to a customer at next to nothing in terms of profit.

The company has expanded its relationship with Fresenius which is its primary competitor but also its second largest customer. Furthermore, it has expanded its product line to include cartridges to fill a product hole and gain more share. The company is positioning itself to become a large supplier to the home dialysis space where it should be able to generate much better margins. It is expanding overseas as well as its investments to improve its manufacturing operations yield much lower Cost of Goods Sold allowing it to turn profitable at price levels where in the past it could not have supplied product profitably.

I am expecting to start 2025 with $70M in sales, 20-25% gross margins and $11-$12M in G&A. This indicates $15-$17.5M in gross profits and $3.5M-$6M in EBITDA. I think this is conservative and they will likely exceed these sales numbers and margins as well. They have been busy signing new customers and that should bear fruit this year. The company has 31MM shares outstanding and $10M in net cash ($8mm in debt and $18M in cash). At $2 we are buying this at a $62M mkt cap and $52M EV. This is less than 10x midpoint of EBITDA which is very cheap IMO because I believe the company will double EBITDA in 2026 and this is before any other value accreting acquisitions the mgmt team is likely to make over time. There is also a lot of optionality in Davita eventually bringing a lot of business back to RMTI over time at better margins given they maintain a strong relationship and RMTI is the only significant producer of bicarbonates in the US. The company in the longer term is likely to be acquired by Baxter or B Braun once it is a solidly profitable operating business in 2027 or beyond. I still see potentially $250M+ in equity value here in the long term.

All my other positions are too small to make a huge dent with the exception of HRBR which I continue to hold and am anticipating filing all their updated financials this month based on my conversations with their attorney. I hope the shares trade below $1 so that I can add a lot more shares.

TWM is smallish position which has been a loser as its business took a nasty turn last year. However, last week it got a reprieve in Canada which ruled US based biofuels will no longer be eligible for Canadian subsidies. This should reverse the decline in value of its renewables unit. In addition, with the recovery in AECO nat gas prices in Canada, especially as we inch closer to LNG Canada becoming operational, its Nat gas gathering assets which has been partially shut down should recover. Meanwhile its cash cow Prince George BC refinery should also benefit from the Canada/BC ruling as it was suffering to some degree from too much US Renewable Diesel in BC. This is still a very leveraged company but even after the rally Friday this is still a potential 5-10x bagger in my view albeit with significant risk that was greatly diminished last week.

TSVT - New Position

TSVT was brought to my attention by my friend Matt who is a wonderful event driven investor that has the most incredible stomach for risk that I have seen. The thesis here is simple. This is a biotech that has sold its entire pipeline and has one approved called Abecma for Multiple Myeloma (MM). MM has a number of treatment options with first line (1L) being transplant and drugs like Revlimid, second line (2L) being another class of drugs which are either daratumab based or Lenolimide based.

Third line or 3L treatment last year was the following:

Third-Line Treatment (Second Relapse and Beyond)

Patients refractory to both lenalidomide and bortezomib (double-refractory) require newer agents, such as:

1. If prior therapy included an anti-CD38 monoclonal antibody (Daratumumab or Isatuximab):

• Selinexor + Pomalidomide + Dexamethasone (SPd)

• Belantamab Mafodotin (BCMA-targeting antibody-drug conjugate)

• CAR-T therapy (Idecabtagene vicleucel or Ciltacabtagene autoleucel, if eligible)

2. If BCMA-targeting therapy was already used:

• Venetoclax + Dexamethasone (for t(11;14) patients)

• Clinical trials with bispecific antibodies (Teclistamab, Elranatamab – BCMA x CD3

4th line treatment or 4L was the following:

1. CAR-T Cell Therapy in Multiple Myeloma

CAR-T therapy involves genetically modifying a patient’s T cells to target BCMA (B-cell maturation antigen) on myeloma cells.

FDA-Approved CAR-T Therapies

1. Idecabtagene vicleucel (Abecma, Ide-cel)

   • Target: BCMA

   • Indication: Patients with ≥4 prior therapies

   • Efficacy: ~73% response rate (sustained for ~11-12 months)

   • Side Effects: Cytokine release syndrome (CRS), neurotoxicity, cytopenias

2. Ciltacabtagene autoleucel (Carvykti, Cilta-cel)

   • Target: BCMA

   • Indication: Patients with ≥4 prior therapies

   • Efficacy: ~97% response rate, median PFS ~27 months

   • Side Effects: CRS, neurotoxicity, delayed neurotoxicity (Parkinson-like symptoms)

Abecma is 50% owned by TSVT and 50% by BMY. It competes against Carvykti which is a superior drug head to head and does $1B+ in sales vs. less than $300M for Abecma. Last year Abecma was approved as 3L therapy for MM which will hopefully provide a sales boost in 2025 and beyond. The shares were trading in the $4-$5 for most of last year but dropped to ~$2.50 after weak Q4 Abecma sales and the failure to sell the company as some had hoped for.

I have built a sizable position at ~$2.50. The company has $3.50 in net cash. It will burn about tiny amounts of that cash in 1H 2025 and hopes to turn profitable in 1H 2025. It has the ability to Put the drug back to BMY in exchange for mid teens royalties if it chooses. The playbook here is simple; give Abecma 6-9 months to see how it does with the 3L designation and assuming a strong result negotiate a payment from BMY for its 50% stake. Any positive NPV payment will be added to the $3.50 in cash and that should be more or less the payout. If they can’t come to terms the company can use its PUT option and give the 50% stake to BMY for the aforementioned royalties which should have positive NPV as well. So we are paying $2.50 and getting $3.50+ NPV of Abecma in the next 12 months or so. This is a fantastic risk/reward in my view and ignores assigning any value to the NOLs which are substantial as well. I love this position and would buy a lot more if it dipped back down..

SCOR

Comscore remains a deeply discounted option on survival and eventual corporate governance resolution assuming the business can overcome the decline in linear TV and pivot to Streaming and newer media. I believe it can and will although at this point the stock is pretty much univestable as a public company and its equity value will either be trivial or will be multiples of current value in private or public hands. This has been an ugly loss and has thought me a valuable lesson I should have already knows, never invest in ugly corporate governance situations unless there is a clear path towards improvement which ironically is the thesis I believe is playing out in NMM. From these levels SCOR can still be an impressive investment but thus far this has been a disaster.

NRDE

I have continued to add to NRDE, the reorg of the Lordstown Motors bankruptcy. It is a cash shell with a huge potential payoff in its litigation against Foxconn. The company has huge NOLs from Lordstown and is looking for an acquisition to utilize the NOLs. If it wins a significant sum in the Foxconn lawsuit i believe this can be a 5-10X and at current levels, we are paying $18MM for the company and it has $55M in cash plus any lawsuit proceeds. It is extremely illiquid and again univestable for institutions but is an uncorrelated bet that has huge upside with not much downside unless they get some catastrophic lawsuit result and spend all cash litigating for years. A number of very strong board members tell me this is highly unlikely.

P.S.

This Substack should be called My Trading Journal but I don’t know how to change the title (I have tried a few times unsuccessfully). This is not a newsletter. I appreciate anyone who has offered to pay for this, but I am not interested in a paywall newsletter. I am happy to receive feedback and hopefully wise advice from other investors on top of my original purpose of chronicling my investing decisions in the hopes of not repeating the same mistakes. Lastly, I don’t always go back and check my grammar and such many times as it doesn’t really serve any useful purpose for me