Sneak Peak at First Deep Value Polish Play

We’ve spent the last two days discussing where we’re looking for deep value plays and what type of company we want to buy when we get there. With both factors in place, it’s time to chat about my first Polish idea.

I can’t give away the name of the company because I’m writing about it in my Value Ventures report. But after reading this you find yourself interested, check out this page to learn more. We’re keeping access open until Sunday at midnight EST. There’s also a 60-day money-back guarantee, so there’s no risk to try it out.

Alright, let’s dive in!

Boring Business On Sale With 22% Free Cash Flow Yield

This first company is a very boring business. They make iron castings for various end-markets. The company specializes in painting, thermal processing, assembly and distribution of their castings. They sell to seven different markets, all which are boring on their own.

So, this is a boring business that no 18-25 year old wants to do. In other words, it passes that initial screen with flying colors.

There’s a few things I like about the business:

    1. Super cheap (2x EBITDA with 22% FCF yield)
    2. Monopoly on Cheapest & Strongest Product
    3. Growing Margins & Revenues
    4. High insider ownership

Not only do you have a cheap price, but you get growth with it.

The company’s averaged 20% revenue growth over the last ten years. During that time, they’ve nearly doubled EBITDA margins (7.5% to 13.7%). They’re able to increase margins and revenues because of two things:

    1. Monopoly on cheapest & strongest iron casting product
    2. Internal R&D department providing new efficiencies

Both these things translate into lower costs of production, which they can pass on to their customers in the form of lower prices. And to their shareholders in the form of higher profits, margins and dividends.

Speaking of dividends, let’s talk about capital allocation.

Skin In The Game & Capital Allocation

Management’s putting their money where their mouths are. The directors own roughly 11% and through various buybacks / tenders, the company itself owns 28% of common stock. Along with opportunistic buybacks, the company pays a healthy 6.50% dividend.

In other words, you can receive about the average market return in dividends from holding this stock, with all the potential upside from its discount.

Potential Downside

I always start my analysis with how much I could lose. If I know that, the upside should take care of itself. In this case, the company trades at around 20% premium to its net asset value. So our downside should be around 20% or so from current prices. Maybe a bit more if you discount some of their balance sheet items (like inventory and PP&E).

Potential Upside

Here’s where things get interesting. The current price indicates low expectations for the future. Mr. Market’s pricing in zero top-line revenue growth and no margin expansion. On top of that, Mr. Market’s assuming a continued rise in cap-ex as a percentage of revenues beyond their five-year historical average.

We don’t think the future will look like that for this company. And if we’re right, we should win big.

Remember, the company’s averaged 20% annual growth over the last ten years. If we assume a fraction of that growth and a slow EBITDA expansion (given monopoly on that product), we’d get 150% increase in shareholder value.

And those are conservative assumptions!

If we projected double-digit revenue growth over the next five years, the discount becomes downright silly.

Wrapping It Up

Tomorrow we’ll chat about another Polish company that caught my eye. In similar fashion, tomorrow’s company offers low expectations for the future. It’s a boring business led by its founders who have massive skin in the game.

Once again, if you’re interested in knowing exactly what companies these are, check out this page. We’re only keeping enrollment open till Sunday at midnight EST. After that we’ll be closing the service. There’s also a 60-day money-back guarantee. So you can try out our value research service for a few months and if it’s not for you, we’ll give you your money back. No problem.

I’ll see you tomorrow!

That’s all I got for today. Shoot me an email if you come across something interesting this week at

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.