Yesterday afternoon I had George Baxter on the podcast for the first time to talk about a very interesting opportunity, Turning Point Brands TPB 0.00%↑. George is the portfolio manager at Sabrepoint Capital Management in Dallas, and his fund is a large shareholder of TPB (I own a couple shares, so we are both biased). We got into the background for the stock, Tucker Carlson’s involvement with the ALP JV, why the stock has been cut in half over the last couple months, and why the opportunity is attractive if management can execute and continue to grow both FRE and ALP.
Podcast Summary
The 30,000 foot view of the different segments of the business and the 50/50 ALP JV with Tucker Carlson.
How Turning Point compares to other CPG stocks and other tobacco stocks that have outperformed in the past.
Why the situation with the FDA is the main risk to be aware of.
The rapid growth in sales, new marketing agreements, and the quickly growing number of stores where you can find ALP and FRE.
Why that growth is temporarily squeezing margins but it will show up in the growth numbers in the future.
How the domestic manufacturing buildout will dramatically reduce costs and improve margins, and why that should be complete by the end of this year.
Recent analyst adjustments and why the stock has sold off violently in the last couple months.
The long term upside for people looking out until the end of the decade.
Book Recommendations: Understanding Behavioral Bias, A Guide to Improving Financial Decision Making by Daniel Krawczyk and George Baxter, The Sleuth Investor by Avner Mandelman, Engines That Move Markets by Alasdair Nairn.
