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Lake Cornelia Research Management, Inc.

Note: Please read the disclaimer and risk disclosures at the end of the memo before preceding.

We wrote up Navios in August 2024. A link to that memo is at the end of this note. Today’s Q2 print and associated announcement of a new $200+ million buyback further confirm our thesis. This is the only energy / commodity name on our two year holds list and we see shares potentially reaching $250+ in a few years (closed last night at $83.60). We are attracted to: (1) large discount to NAV, (2) strong growth of NAV, (3) exceptional capital allocation on both newbuilds and share buybacks, (4) minimal dividend – too many shipping companies overpay, (5) accelerating earnings and (6) alignment with control shareholder – rare for a Greek shipping company.

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Lake Cornelia Research Management, Inc.

Note: Please read the disclaimer and risk disclosures at the end of the memo before preceding.

In December, we wrote a long piece on the credit markets (link at the end of this note) titled “[The Potential] Return of the Angry Men of Credit..”, highlighting the risk from SaaS loans as we transition to AI. Our focus was on the private credit markets. As time has progressed, and the scale of the AI buildout has expanded, the risk now appears to be far larger.

Tuesday’s market action saw a wholesale sell-off across the “AI Capex” chain as investors are increasingly skeptical of the ability for the plethora of neocloud companies to finance the buildout. This comes on the heels of the $500 Billion investment commitment by NVDA, and several major investment houses. We have been somewhat skeptical for months about the sheer number of companies with the same business plan. It seems implausible to us that every bitcoin miner can successfully pivot into a neocloud, to say nothing of the larger companies like ORCL, trying to win an arms race against the Mag7. But, now we are at an even scarier junction in the road: The AI capex needs seem to have already exhausted even the FCF generation of the greatest monopolies of all time, plus, increasingly the capacity of the investment grade bond market.

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Lake Cornelia Research Management, Inc.

Note: Please read the disclaimer and risk disclosures at the end of the memo before preceding.

We update on our largest position, STLN (former TOI), post its milestone Q2 print.

STLN is a Growth Stock

This is the takeaway from the print and associated guide. Tape it to your screen, hang it from the rafters, shout it in the hills: “STLN IS A GROWTH STOCK.” Just look at the progression of 2026E and 2027E street estimates for revenue:

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Lake Cornelia Research Management, Inc.

Note: Please read the disclaimer and risk disclosures at the end of the memo before preceding.

Updating Thoughts on our Two Year Holds List. As a reminder, we view the hurdle rate is 50% total return over 2 years (not guaranteed, what we think you get if we are right). Please read the associated research on all names and note that when you are buying / selling will have a large impact on overall realized returns.

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Lake Cornelia Research Management, Inc.

Note: Please read the disclaimer and risk disclosures at the end of the memo before preceding.

ASTH reported another solid quarter last week. We are now a year removed from the Prospect acquisition and execution is ahead of schedule. As we highlighted in our original note, ASTH is run by an owner operator executing a robust growth strategy (see link at end of note).

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Lake Cornelia Research Management, Inc.

Note: Please read the disclaimer and risk disclosures at the end of the memo before preceding.

Another day, another covid bubble SPAC meets its fate. This is our first take on the situation. We are likely to follow up with more detailed analysis as things evolve.

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Lake Cornelia Research Management, Inc.

Note: Please read the disclaimer and risk disclosures at the end of the memo before preceding.

We have done no less than 4 notes on PRCH, plus a long section of a podcast, explaining one of our top picks. Shares have rallied from $8-9 to over $16 this quarter, but recently traded down to $12. Shares are trading ~$15 after hours on a thesis defining quarter. The beat and raise will lift sell-side estimates and likely lead to a refinancing of PRCH’s restrictive debt – which will open the door to larger buybacks.

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