Winter 2013

Aiful is a Japanese consumer finance company that provides micro-loans. The company faced significant challenges due to legal issues regarding interest rates, which led to a drop in bond prices. However, the current valuation presents an opportunity as the market has been overly pessimistic about its recovery potential, and the company's assets are largely unencumbered, allowing for potential upside.

Leap Wireless is a distressed equity trading at around $6 per share, representing a small fraction of its total enterprise value. The investment thesis is based on the belief that the liquidity profile is decent enough to limit downside risk, and the assets should create enough value for the bank debt to recover to par. The market has been overly cynical about the company's operational recovery, presenting a potential upside.

JDA Software is a high-quality company trading at a low valuation relative to its sustainable free cash flow. With significant cost-cutting potential and a strong position in the supply chain management software industry, a strategic buyer could extract substantial synergies, leading to a pro forma EBITDA multiple that is highly attractive compared to industry peers.

The company has a strong business model with high-margin long-term contracts and low churn, making it a compelling investment. The ongoing integration of an acquisition and the introduction of new products are expected to drive better results going forward.

The CEO, Willis Johnson, has a unique vision for creating a national company and has successfully integrated multiple acquisitions to build a significant business. Copart has transformed into the largest online seller of automobiles globally, showcasing its strong market position and growth potential.

The auto salvage industry is fragmented, and Copart operates auctions on behalf of insurance companies for damaged vehicles, which presents a significant opportunity for growth and value creation.

The investment thesis for Leap Wireless is based on the potential for significant upside due to its valuable spectrum assets and subscriber base, which are not fully reflected in its current stock price. The company has a liquidity runway and options for restructuring if necessary, making it a compelling opportunity for investors willing to accept some downside risk. Scenarios indicate that investors could see returns of two to six times their investment if the company successfully navigates its challenges.

Gentex has demonstrated strong performance during economic downturns, and despite recent negative news regarding their rear camera display option, the company remains fundamentally sound. The stock price became too expensive, but after a recent decline, it presents a buying opportunity again.

The company is developing a land parcel into residential and commercial space, and it has an asset value substantially greater than its current market value. However, there are concerns about whether this asset value will be realized for minority investors.

Brazilian homebuilders are currently trading at or below liquidation value, with no value ascribed to the ongoing value of the business. As new construction launches have declined, profitability may return to high levels, making them an attractive investment opportunity.

Consumer-focused companies in Brazil are benefiting from powerful tailwinds such as rapidly rising wages and standards of living. Investing in these companies at reasonable valuations is a favored theme in developing markets.

The beverage company has substantial market share but faced distribution issues that impaired profitability. Historical analysis suggests that the company is likely to recover and pass through incremental costs, making it a good investment opportunity.