TPB - 1 Main Capital - Turning Point Brands: Set Up For Higher Top-Line And Even Faster Bottom-Line Growth

2024-05-02 11:25:00 ET

Summary

• Turning Point Brands has had a somewhat hectic past, with a few strategic pivots and three CEOs over the past few years.
• Nearly everyone I've spoken to seems to have a negative opinion/story about Turning Point; however, therein lies the opportunity.
• Turning Point is going to generate a good amount of cash over the next two years.
• Given Turning Point's growth opportunities and very low cyclicality, a 10.00x EBITDA multiple (HSD FCF yield) seems fair for TPB.

The following segment was excerpted from this fund letter.

Turning Point Brands ( TPB )

Turning Point Brands is a manufacturer, marketer, and distributor of branded consumer products. The business has three segments, which we'll discuss shortly: Stoker's, Zig-Zag, and New-Gen.

Turning Point Brands has had a somewhat hectic past, with a few strategic pivots and three CEOs over the past few years. This is not a well-loved company, and many investors have gotten burned since its 2016 IPO. As a quick anecdote, nearly everyone I've spoken to seems to have a negative opinion/story about Turning Point. However, therein lies the opportunity, and we believe the company is now set up for MSD or higher consolidated top-line growth (excluding its new-gen segment) and even faster bottom-line growth....

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