My Biggest Position: A Monopoly Priced for Failure

~65% upside in a conservative deleveraging case. 130%+ if execution improves. Segment sale optionality on top.

A former value investor darling is down 50% from its highs, and in my opinion, the risk/reward looks materially better now.

This discount exists because the previous management team made questionable capital allocation decisions. However, I argue that with a new team and an activist now on board, the company should no longer be punished for past behavior.

Furthermore, a unique and strange set of macro-headwinds that plagued the company in recent years has finally turned into tailwinds.

The business itself has two segments: one is an actual monopoly, and the other is a high-quality “razor-and-blade” model with high recurring revenue.

The Math:

• Conservative case (~65% upside): No growth, no multiple expansion — returns come primarily from free-cash-flow-driven debt pay down (≈19% IRR over ~3 years).

• Base case (130%+ upside): If margins normalize even partway and valuation re-rates toward its historical mean (~12x EV/EBITDA), equity value can more than double within the next three years (≈33% IRR).

The kicker: We don’t need a sale to win. But the CEO is explicitly incentivized to pursue a segment sale. Notably, a pure-play industry comp was acquired in a strategic transaction at a premium multiple (~20x EBITDA) less than a year ago.

This is why I have made it my biggest position.