The Market Maven - Week 26
Cogent, Laurent Perrier, Civeo Corp
Cogent Communications 🇺🇸 (NASDAQ: CCOI, EV: $4.6B, Last Close: $49.08)
Cogent is the lowest-cost provider of fiber internet to corporate customers and hyper scalers. Founder and CEO Dave Schaeffer assembled the business through a series of savvy telco acquisitions. For example, over its first decade of operations, cogent acquired companies that had raised and invested over $14b of capital for only $60m in cash.
High incremental margins and declining capital intensity allow for FCF to grow well in excess of revenue. However, lower than expected synergies and cross selling from their Sprint wireless acquisition has seen shares trade down to an 8% dividend yield.
Recurve Capitals Cogent Thesis from Their Q4 2024 Letter (Link, pg. 9).
A Yet Another Value Podcast with Aaron Chan on Cogent (Link).
A Writeup from Elevator Pitches (Link).
Laurent Perrier 🇫🇷 (EPA: LPE, EV: €753M, Last Close: €96.40)
Laurent Perrier owns five champagne houses across the upper-middle to ultra-high-end quality range. Every aspect of production, yields, and designation in the Champagne region of France is regulated by the Comité Champagne which insulates producers from competition.
Interestingly, at EV/EBIT’s of ~10x, champagne stocks trade at half the price of other beverage companies.
A Writeup from Zeljko Obrenovic (Link).
A Writeup from Johan Lunau (Link).
East 72’s Writeup from Their YE 2024 Letter (Link, pg.5).
Civeo Corp 🇺🇸 (NYSE: CVEO, EV: $382M, Last Close: $22.54)
Civeo provides lodging and hospitality services to remote coal and iron ore mines in Australia, and to the oil sands in Canada.
Civeo’s Canadian business operates with a lot of excess capacity after a boom earlier in the decade and is marginally profitable. They’re Australian business on the other hand, is in much better shape driven by Civeo’s participation in the Bowen Basin.
Civeo has room to grow through continued M&A in Australia and has room to streamline it’s cost structure. In a response to activist Engine Capital, they’ve also pledged that at least 75% of it’s FCF; which should be ~$50M+ going forward, will go towards buybacks.
Engine Capital’s Letter to Civeo’s Board (Link).
A Writeup from Leahi Capital (Link).
A Recent VIC Writeup (Link).
Northeastern University Student Value Fund’s One Pager (Link).
Check Out: Why Generalists Own the Future
Disclosure: This newsletter does not provide investment advice. Information presented is for informational purposes only and should not be considered a recommendation to buy or sell securities. The author may or may not own the securities discussed.