MBUU

Private Equity Myths: The allure of private equity is often overstated; successful investments rely on buying small, undervalued companies with debt, not on any magical strategy.

Key Traits for Success: High-performing companies in private equity share traits such as paying down debt, improving asset turnover, and strong profitability, which align with deep value investing principles.

Public Market Opportunities: Individual investors can replicate private equity strategies in public markets by targeting smaller companies with improving fundamentals and favorable valuations, without the associated fees and restrictions.

Candidate Companies: Five companies—Sun Country Airlines, Heritage Insurance, Malibu Boats, Core Molding Technologies, and John Wiley & Sons—exemplify the characteristics of private equity replication candidates, offering potential for significant returns through operational improvements and financial leverage.

CFO Resignation: Malibu Boats, Inc. announced the resignation of CFO Bruce Beckman, effective November 12, and appointed David Black as his replacement immediately.

Financial Guidance: The company reiterated its fiscal 2026 guidance, expecting net sales to be flat or down mid-single digits year-over-year, with an Adjusted EBITDA margin of 8% to 9%.

Stock Performance: In pre-market trading, Malibu Boats shares were down 0.53%, priced at $26.40 on the Nasdaq.

Management Background: David Black has been with the company since November 2020, serving in various financial roles, including Vice President of Finance and interim finance chief.

Consumer Spending Concerns: The podcast discusses the decline in consumer spending on big-ticket discretionary items like boats, pools, and RVs, with stocks in these sectors hitting multi-year lows due to rising interest rates and falling earnings.

Value Investing Insights: Value investors are advised to assess earnings estimates and outlooks rather than just relying on low price-to-earnings (P/E) ratios to determine if a stock is genuinely a value opportunity.

Company Highlights:

• Malibu Boats: Despite a challenging market, it reported a 13.5% sales increase but has seen a 29% drop in shares year-to-date.
• Winnebago: Experienced a 7.8% revenue increase in its latest quarter and has a P/E ratio of 15.3, making it attractive, but investors should consider more than just P/E.
• Pool Corp: Celebrated 30 years as a public company but has faced declining sales post-pandemic, with shares down 27.6% year-to-date.

Expert Recommendations: The podcast features insights from Zacks Investment Research, including their top stock picks with potential for significant returns, encouraging listeners to tune in for detailed analysis.