De-Risking FMCI Selling STUPID RICH Put Premium
Hey All-Access Subscriber,
Based on the 25+ All-Access texts/emails/Drift message I get every day (and I LOVE THEM--REALLY helps us understand your questions and trading needs/ideas--again I am most responsive to my personal text number is 301 412-8622--feel FREE to use it!), I know we have a LOT of All-Access Put Option sellers in who, like our TR Wealth Management managed accounts and me, are HOOKED on selling PUT OPTIONS on stocks we own like FMCI that we would LOVE TO BUY MORE OF in a sell-off (like the wild FMCI sell-off in the confusion about the merger vote!).
Now FMCI is primed for take-off into the post-merger news flow as Tattooed Chef ticker TTCH. Here is what we know for sure:
1) The Merger Vote Date (after the insane shareholder vote debacle--DOH!) is October 15 and the units will be separated by your BROKER into TTCH warrants and TTCH stock the next day. Options will change ticker as well.
PS--you can also vote your warrants. Call 1-800-460-1014 to vote YES on merger.
2) The TTCH fundamental secular growth story just keeps getting better and better. Today after the market close, TTCH announced pretty stunning sales growth in Q3 and 2020 in total:
Itella International (“Tattooed Chef” aka "TC" ) announces preliminary revenue of $41M for Q3 ended September 30, +71% Y/Y. "Given this and increased distribution to our tier-one customers, we believe we are well-positioned to meet or exceed our full-year 2020 revenue expectation of $148 million and Adjusted EBITDA expectation of $17 million,” said Sam Galletti, President and CEO of Tattooed Chef."
I'll get to why $150+ million in 2020 TTCH sales is a REALL big deal for us shareholders (full disclosure: Transformity Wealth Management managed accounts own 152,000 shares/warrants and TWM principals own TTCH shares/warrants as well.)
3) But the BIG news is TC is now in TARGET stores in higher income and education demographic Zip Codes all over North America (Like WM Sam's Club/Costco) which is at least 60% of their 1900 stores. Those sales have not yet hit the "tape" as we say but will show up in Q4 and Q1 2021.
3) TC's Walmart penetration is just 7% of WM's 4750 US stores and 12% of WM's 599 Sam's Club--but with Target and Costco adding multiple Tattooed Chef SKUs ("SKU" means "Shop Keeping Unit" aka the unique identifier stores use to track inventory and order) TC SKU market penetration in WalMartWorld is certain to grow. When one competitor adds a new TTCF SKU, the sales folks tell the OTHER guys.
4) The NEXT national retail nut to crack in 2021 in North America is Whole Foods (a no brainer IMO) and grocery giant Kroger (in its premium store brands) along with BJ's 216 warehouse locations.
5) E-commerce DTC ("Direct-to-Consumer) sales are just about to begin--check out all the SKUs they will have for e-commerce sales
6) Annualized revenue growth is still over 104% year-over-year--and that is before all the new store carriage above.
7) TC just hired two European frozen food brokerage managers to open up Europe (remember a lot of their raw plant materials come from Italy already).
8) More North America greenfield meat replacement categories open up in fast food/fast-casual pizza, egg and breakfast dishes, plant-based lunch/dinner dish ingredients.
The BIG Story--Insanely LOW Valuation for TTCF Vs. The OTHER Public Plant-Based Food Comparables
The relative FMCI valuation now that plant-based IPOs Laird Superfoods (LSF) and Beyond Meat (BYND) are trading at astronomic multiples relative/versus to the 100%+ annual grower TTCF at an insane ONE TIMES 2020 sales.
How insane? Here is the last 4 quarters of REVENUE for new IPO $380 million market cap Laird Superfoods
LFS Revenue 12 Month Trailing
Q2 2020 (Jun 2020) GAAP EPS of -$0.93 Revenue of $4.29M (137.41% YoY)
Q1 2020 (Mar 2020) GAAP EPS of -$0.70 Revenue of $3.83M (134.02% YoY)
Q2 2019 (Jun 2019) GAAP EPS of -$0.64 Revenue of $1.80M
Q1 2019 (Mar 2019) GAAP EPS of -$0.56 Revenue of $1.63M
Cap Table on $11.5 million trailing 12-month revenues LFS Market Cap $379.93M
LFS Valuation Multiple: 33X trailing revenues Beyond Meat BYND Valuation Multiple: 28X trailing revenues at $28 BILLION
FMCI/TTCF Trailing 12 Months Valuation Multiple: 1X TRAILING REVENUES @$149 million market cap!!!
Our year-end 2022 price target is still $72
Perhaps the ginormous valuation disparity is TTCF is $17 million cash flow positive--that puts the valuation at 8.7X EBITDA...the other comps do not HAVE positive EBITDA. TTCH is a true SPAC Value Unicorn at this $149 million valuation!
Action Plan:
Let's SELL the 11/20 $22.50 PUT Option for $4 or better (if you are even more bullish, you can get $6 a share for selling the $25 11/20 Put Options for a total cost basis of $19 if the shares are put to you!)
BUY the $25 10/16 call for $1 or lower looking for a POP into the 10/16 TTCF merger completion. We will also buy a longer-term call option after the merger and
I will crack a VERY nice bottle of wine (or two) with my TTCF cauliflower pizza and veggie bowl on October 16. All in this has been another incredible SuperSPAC trade with the warrants at $7.20 leading the way of course. I know via texts that many of you have the Units and Warrants in VERY big size--awesome
Cheers