Yet Another Value Podcast

Limbach spent three years turning itself from a general contractor into an owner direct services business, and the market loved it right up until this summer. Then organic revenue went down mid single digits, EBITDA fell 30%, guidance came down from $90m to $80m, and the stock lost half its value. Yaron Naymark of 1 Main Capital pitched me this name in June 2023, watched it 6.5x, sold most of it, and is back buying it after a 75% drawdown.
His argument is that the EBITDA decline is fixed cost deleverage on a demand air pocket, not a broken business, and that the bigger story is the one Limbach missed. While FIX and EME compounded on data centers, Limbach stayed singularly focused on owner direct work and ended up with effectively zero data center exposure. The CYMCOR acquisition announced alongside Q2 is the first real move to fix that. I push back on the bear case that management knowingly bid a pile of low margin work, on whether owner direct is just general contracting by another name, on whether wage inflation from the data center boom is quietly eating them, and on whether a 2016 de-SPAC ever escapes the gravity of $10 per share. We finish on how Yaron invests around AI without pretending to know who wins: Limbach, IWG, and why he re-initiated KKR.
Yaron's first Limbach pitch, June 2023: https://www.youtube.com/watch?v=m7GzW0ahswg
This episode is sponsored by Trata: https://www.trata.com/lmb. If you like this podcast, you are going to love Trata. It is two buysiders getting on the phone and talking through a stock they are both interested in, the reasons they want to get long, the reasons they are worried about it. They have a Limbach call from six months ago that holds up really well, and I asked one of its questions on this episode.
Chapters:
(00:00) Intro
(00:56) Sponsor: Trata
(01:50) Yaron Naymark, back for round six
(03:09) What Limbach is and why he is double dipping
(03:40) Enron, a SPAC, and the shift from general contracting to owner direct
(06:32) Called a data center winner when management said otherwise
(07:48) The air pocket: tariffs, Medicaid cuts, and paused projects
(09:29) Why the stock is down 50% when EBITDA is down 30%
(12:14) Organic versus headline revenue and the Pioneer Power deal
(12:40) Double dipping on a stock you already made money on
(16:57) The bear case: low margin bookings and general contracting by another name
(22:31) Why FIX and EME ran and Limbach did not
(24:42) Wage inflation, technicians, and whether owner direct contracts trap them
(27:01) Did management get caught off guard between Q1 and Q2?
(30:35) The $50m buyback nobody has touched
(31:18) Why M&A beats buying back stock at six times EBITDA
(33:55) The math behind a $200 three year price target
(35:18) Could Limbach be the seller instead of the buyer?
(38:09) Josh Horowitz, insider ownership, and the de-SPAC stigma
(40:50) CYMCOR and the data center pull through
(42:52) Investing around AI: Limbach, IWG, KKR, and the mega-alts
(50:29) Wrap
Yaron Naymark / 1 Main Capital: https://www.1maincapital.com
Links:
Yet Another Value Blog - https://www.yetanothervalueblog.com
See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

Every new car sold in Europe now has to watch the driver's face. Two companies in the world can actually do it, Seeing Machines and Smart Eye, and they spent twenty years and hundreds of millions of dollars getting there. Hugo Navarro's argument is that the market has not repriced what happens next: a roughly 55 million dollar fixed cost base, automotive production going from 488,000 vehicles in Q4 2025 to 2.1 million in Q4 2026, and 20 to 40 million of free cash flow in fiscal 2027 against a 330 million market cap. If Japan and the US follow with their own mandates, close to every incremental dollar of revenue drops straight to free cash flow.
I push back hard in a few places. There is a 55 million dollar convertible due in October that this company has let get within two months of expiry, and my view is that no healthy business does that. Receivables are up 120% against 45% revenue growth. The fleet business, Guardian 3, is running trials that keep not converting, and "we are in a trucking recession" is the kind of management excuse I have learned to distrust. We also get into whether a new entrant can just build this now that the market is 16 million vehicles, why no tier one ever bought them, and whether full autonomy eventually kills the whole thesis.
Hugo's write-up on Seeing Machines: https://smallcaptreasures.substack.com/p/a-cheap-tech-duopoly-posts-333-growth?r=1od1d5
This episode is sponsored by Fiscal.ai: https://fiscal.ai/yav. Fiscal.ai is the modern financial data provider for global equities, and I am a customer who pays with my own money for the API. Two things I use it for constantly: a huge database of fund letters wired into the API, so the first thing I do prepping for a podcast is pull every recent letter on the company, and audit-linked financials where every line in the model clicks through to the source. Use fiscal.ai/yav for 15% off their AI connector.
Chapters:
(0:00) The setup: a duopoly Europe just made mandatory
(0:54) Sponsor: Fiscal.ai
(2:49) Why Hugo kept pitching this one
(3:56) What Seeing Machines does, and why DMS is harder than it looks
(5:13) The math: fixed opex, Europe now, Japan and the US later
(8:06) The seatbelt manufacturer analogy
(10:25) My pushback: what stops a new entrant or an in-house build?
(11:47) Naturalistic data, Mitsubishi Electric, and the accuracy gap
(14:54) The elephant in the room: a $55m convertible due in October
(17:46) Footnote 21 and the accelerated royalty payment
(20:06) Can the regulation slip or get watered down?
(22:00) Robotics: $20 of silicon versus $20,000 chips
(24:39) Smart Eye versus Seeing Machines: software only or full system
(27:38) Why no tier one ever bought them
(29:16) Fleet: Guardian 3 and trials that keep not converting
(35:04) The balance sheet: receivables up 120%
(37:37) How much operating leverage is left in Europe alone
(40:10) Does full autonomy kill the DMS story?
(42:39) Chinese OEMs selling into Europe
(44:14) Licensing the fleet software to telematics players
(46:34) CEO incentives and the overpromising track record
(48:30) My last pushback: at some point it is them, not you
(50:14) Why the stock reacts slowly, and where the risk really sits
Hugo Navarro / Undervalued and Undercovered: https://smallcaptreasures.substack.com/
Links:
Yet Another Value Blog - https://www.yetanothervalueblog.com
See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

Rates just screamed to 20 year highs and stocks have barely blinked. That looks to me like the mirror image of the mid-2010s, when Treasuries yielded 2%, the math said stocks should trade for 25x, and they sat in the mid-teens instead because the equity risk premium quietly widened from 4% to 6%. If the premium can widen when rates fall, why would it not widen again when rates rise? That is the double whammy running in reverse: earnings that got a decade of help from the Trump tax cuts and the AI boom, multiplied by a multiple heading the wrong way.
The other thing I cannot stop chewing on is what higher rates do to the AI data center buildout. These are 15 year leases where the NPV of the payments roughly covers the build cost, which means the developer is really underwriting the terminal value 15 to 25 years out. Move rates from 4% to 5% and you have to jack the lease rate up 5% to 10% just to stand still, and you discount that terminal value harder, right as the tenant credit gets scarier. If the AI trade cracks, you get hit twice: your tenant may not be around, and the release in year 15 goes from a $100m NOI lease to whatever the next best bidder pays. I do not think we are there yet, but finance 101 says investment gets crowded out eventually.
Then two management questions. UWMC and Cogent both ran capital allocation that looked designed for the CEO's personal balance sheet rather than for shareholders, and I want a way to spot that before the blowup rather than after. And a friend's text about a CEO everyone was calling the next Mark Leonard got me wondering how you would ever know, because a real compounder and one great bet with hidden leverage look identical for the first ten years.
I wrote the rates piece up this morning: https://www.yetanothervalueblog.com/p/rates-are-screaming-and-stocks-arent
The UWMC post: https://www.yetanothervalueblog.com/p/uwmc-lost-600m-hedging-a-deal-theyd
The Cogent episode with Aaron Chan: https://www.yetanothervalueblog.com/p/recurve-capitals-aaron-chan-on-cogent
This episode is sponsored by Trata: https://trata.com. Trata is two buy siders talking to each other about a name they both follow closely. Trata records it, anonymizes it, and publishes it. It is the fastest way I know to get up to speed on something new.
Chapters:
(00:00) What is on my mind this month
(01:07) Sponsor: Trata
(01:41) Rates screamed higher and stocks did not listen
(04:39) Should the equity risk premium rise with rates?
(06:29) Rising rates meet the AI data center buildout
(09:33) What a 15 year data center lease is really betting on
(13:03) Does higher for longer start crowding out AI capex?
(14:11) UWMC, Cogent, and CEOs who run capital allocation for themselves
(18:45) How would you know if someone is the next Mark Leonard?
(23:01) One great bet, or actual genius?
(24:37) Wrapping up
Links:
Yet Another Value Blog - https://www.yetanothervalueblog.com
See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

School is starting, which means a dozen college and MBA teams are about to email me asking how to win their stock pitch competition. So I made the answer. The core of it: a pitch is a game, and most people lose it before they open their mouth by picking an idea that does not fit the contest rules or the judges in the room.
From there it is three things. Design the pitch for the timeframe the contest actually asks for and for the people judging it, because what wins with a concentrated-book judge is not what wins with a pod shop. Lead with the one thing only you know, not a sell side price target or a multiple that has compressed. And make your bull case the base case instead of hedging yourself into a 15% price target that reads as average. Then the three traps I see every single year: burning five slides on a DCF nobody will ask about, drowning the room in risk factors, and death by background. I also walk through the La Quinta pitch that won me Ira Sohn in 2018, and why the CSL and DoorDash teams at the Pershing Square Challenge won on legwork rather than modeling.
Fair warning: I had AI build the slides, so do not hold the exact wording on any of them against me.
If you are pitching to get hired rather than to win a contest, the companion episode is here: https://www.yetanothervalueblog.com/p/how-to-get-a-job-in-investing-podcast
This episode is sponsored by Trata: https://trata.com. Trata is two buysiders swapping thoughts on a stock they are both involved in. If you are prepping a pitch, go on and say you are thinking about pitching company XYZ, and they will find you someone to talk to about it. It is a very good way to hear the other side of your idea before a judge hands it to you.
Chapters:
(00:00) Why I made this one alone, with a deck
(01:57) Disclaimer and a word from Trata
(03:02) Why this matters even if you never enter a contest
(05:20) Who am I to talk about stock pitches
(07:18) Why a pitch is a free lottery ticket
(08:51) Rule one: know the game you are playing
(10:12) Know your judges: concentrated books, event funds, pod shops
(12:19) Rule two: tell a story, and lead with something only you know
(14:14) The La Quinta pitch that won Ira Sohn
(16:07) Be bold: make your bull case the base case
(18:04) Do the legwork: hard hats, expert calls, customer checks
(21:43) What to avoid: excessive modeling
(23:17) What to avoid: drowning in risks
(25:08) What to avoid: death by background
(26:22) Formatting is table stakes
(27:48) Go win the thing
Links:
Yet Another Value Blog - https://www.yetanothervalueblog.com
See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

El Al ($ELAL), Israel's flag carrier, has spent three years as close to a monopoly on flying in and out of Ben Gurion as an airline ever gets. Turkish and Pegasus left and aren't coming back, Ryanair lost its Terminal 1 slots, Delta and United keep pushing their return, and El Al has used the windfall to go from a levered balance sheet to net cash, buy nine planes off lease, and start returning capital. It trades at about 2x EBITDA. Adam Buckstein of ASB Partners (back after his Stride episode) thinks you're buying a hard-asset-backed airline (roughly $1.3B net cash, $1B+ of owned planes, a $700M-ish loyalty program valuation) for less than the parts, with two more quarters of gushing profits still to come.
My pushbacks: every "delevered on wartime profits" story I can remember (steel, energy after 2022) didn't work as a stock; a chunk of the cash is customer float that vanishes if flights get canceled; the $40M competition-authority fine for wartime pricing plus the state's right to make them fly uneconomically looks like the worst of both worlds; and El Al flies 24/6 (no Sabbath, no holidays), so should you haircut the EBITDA, or does that create a moat nobody else can copy? We close with a Stride ($LRN) update: the abrupt CEO exit, the Canvas LMS disaster, the lost Texas school, why fall enrollments are the fulcrum, and whether AI is a real threat to virtual public schools.
Adam's El Al write-up: https://adambuckstein.substack.com/p/el-al-israel-airlines-ltd-elal-write
This episode is sponsored by Fiscal.ai: https://fiscal.ai/yav. Fiscal.ai is the modern financial data provider for global equities, and it's what I actually use: their fund-letter database is wired into their API, so the first thing my AI does when I prep a podcast is pull every recent letter on the name, and every line in the models it builds links back to the source filing. Use fiscal.ai/yav for 15% off their AI connector.
Chapters:
(00:00) Intro and Fiscal.ai sponsor read
(02:33) Adam Buckstein / ASB Partners joins
(03:38) What is El Al: flag carrier, October 7, a monopoly on Ben Gurion
(05:52) What the market is missing: underfollowed, delevered, Turkish and Ryanair gone
(09:36) My pushback: delevering on wartime profits, and the customer-float problem
(11:48) The balance sheet: $2B liquidity, air traffic liability, 2023 as the clean year
(14:22) Valuation: net cash, owned planes, loyalty program vs a $2B EV
(16:49) Slots: the New York City analogy for Tel Aviv
(19:28) State of Israel risk: golden share, the $40M pricing fine, mandated security
(24:23) The right comps: Wizz, Jet2, United at 6x vs El Al at 2x
(26:12) Flying 24/6: should you haircut EBITDA, or is it a moat?
(30:38) Stride ($LRN) update: the CEO exit and the prelim guide
(34:01) Fall enrollments as the fulcrum, Canvas LMS, the lost Texas school
(37:47) Pearson's read-through and in-year enrollment
(40:16) The new CEO's contract and expert-call feedback on the old one
(41:32) AI risk to virtual public schools, Alpha School
(46:02) Long school choice; would Stride get taken private?
(49:29) Disclaimer
Links:
Yet Another Value Blog - https://www.yetanothervalueblog.com
See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer