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Napkin Reports #3
NasdaqGM:BLBD and NasdaqCM:HTCR
Hello. This week, I took a closer look at two more stocks. One of them is among the few Japanese companies listed overseas. For context on recent equity market trends in Japan, I recommend reading Bireme Capital’s recent letter, which discusses how “decades of poor corporate governance obscure recent encouraging developments.” The following excerpt is particularly relevant to the Japanese company covered below:
“In Japan you can find enterprise software companies with miniscule churn, double digit revenue growth, and large addressable markets for <20x unadjusted net income. This is absolutely unheard of in the US, where they would likely trade for 50x or 100x profits. […] The common theme of our Japanese investments is that, if they traded on a US exchange, they would comfortably trade at a multiple several times higher than the price we paid. This is a simple recipe for outperformance.”
The second stock is a high-quality, counter-cyclical business with a strengthened balance sheet, set to report its seasonally slower quarter next week.
Thanks for reading, and I hope you find this valuable.
REPORT #1
BLUE BIRD CORPORATION | NasdaqGM:BLBD

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MONITOR. BLBD, a school bus manufacturer, had long operated under a fixed-price contract model, which resulted in short-term margin erosion during the post-pandemic inflationary surge. In November 2021, Phil Horlock, after a decade at the helm, was succeeded by Matthew Stevenson, who implemented cost cuts and price hikes through a lean transformation, leading to multiple upward guidance revisions. Now, as the dominant player in the non-diesel school bus segment, operating in a highly regulated, consolidated oligopoly with high barriers to entry, the company stands to benefit from fleet electrification and elevated replacement volumes amid an aging school bus fleet. However, it faces pressure from concerns over the potential non-extension, or even reversal, of the EPA Clean School Bus and Clean Heavy-Duty Vehicles Programs under the new administration. To mitigate reliance on direct federal funding, BLBD recently formed a JV with Generate Capital, offering a fleet-as-a-service solution to school districts and bus operators, removing upfront investment hurdles in exchange for a fixed monthly fee. Last week, history repeated itself: Phil Horlock, who returned as CEO in May 2023 following Stevenson’s resignation, has now handed the reins to John Wyskiel, an automotive industry veteran with over 35 years of experience. As electric buses cost several times more than traditional diesel models, all eyes are on how the new leadership will navigate the still shaky regulatory environment.
REPORT #2
HEARTCORE ENTERPRISES INC. | NasdaqCM:HTCR
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Until next time,
The Tiger’s Prey