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Hidden Value Stocks Q4 2017 Small-Cap Roundup: HHMC, MOMO And More

We present our Q4 summary of small cap ideas from VALUEWALK LLC’s wholly owned small cap website HiddenValueStocks.com – see below for a teaser and get a free 7 day trial right here to see the full copy and much more 

As part of our goal to bring subscribers the best small-cap ideas from hedge funds around the world, we’ve compiled this list of small-cap value picks profiled in some of our favorite funds’ year-end letters.
We’ve chosen these ideas in particular because they stand out for their simplicity and value. This is by no means a comprehensive list of value ideas, it’s just a collection of some of the best, designed to be a starting point for further research. Some ideas have already been profiled in Hidden Value Stocks, but we have included insights from different funds to provide a fresh perspective.

We welcome any comments you may have.

Sincerely,

Rupert Hargreaves & Jacob Wolinsky

jacob@valuewalk.com

rhargreaves@valuewalk.com

Contents

1. Corsair Capital: Houghton Mifflin Harcourt Co.
2. Hound Partners: Credit Acceptance
3. Greenhaven Road: BlueLinx
4. Kerrisdale Capital: MOMO
5. DG CAPITAL: Contura Energy and Warrior Met
6. Avenir: Motorcar Parts of America
7. Hypotenuse Capital Management: Total Energy Services
8. Frazis Capital: Cooper Energy
9. Laughing Water Capital: Greenhill & Co. Inc.
10.Maran Partners: Clarus Corp
11.Wiedower Capital: Parks! America

 

This is just a teaser: To access the rest of the ideas, as well as four new in-depth ideas from two value-focused hedge funds every quarter, and exclusive access to all funds profiled, sign up to Hidden Value Stocks today!

Corsair Capital: Houghton Mifflin Harcourt Co.
Houghton Mifflin Harcourt Co. (“HMHC”) declined 23% during Q4. In October, a competitor warned the market about slowing sales driven by school districts deferring textbook purchases until the next major overhaul of curriculums is released in 2019. The market reacted as if there was a new structural problem and that these sales were permanently lost. While the delayed sales are disappointing, we believe these sales will ultimately occur. Further, the market does not appear to appreciate the prior successes of the new CEO and his ability to refocus HMHC into a more profitable company with a growing emphasis on the remedial, enrichment and assessment side of the business. HMHC should
generate ~$1/share of annualized free cash flow through its cycle and should be worth towards 15x. We see additional upside through HMHC’s substantial tax assets, yielding a stock that could trade in the high teens. HMHC closed the quarter at $9.30.
Hound Partners: Credit Acceptance

 

Continues in the PDF here -> small-cap roundup – Teaser