market folly

We're posting up notes from the Sohn San Francisco 2018 investment conference.  Next up is Daniel Kozlowski of Plaisance Capital who pitched a long of Pure Cycle (PCYO).


Daniel Kozlowski's 's Sohn San Francisco Presentation: Long Pure Cycle (PCYO)

Company

•    Pitched long Pure Cycle (PCYO), which is an asset-rich, vertically integrated, emerging water utility located in the Denver, CO metro area
•    3 components of the business: 25k acre feet of water, 930 acre zoned master plan community and also selling water for hydraulic fracking and oil and gas royalties

Thesis

•    Believes that there is tremendous underlying value in the company’s three businesses/assets that is not recognized by the market given that the company is underfollowed and underappreciated (and not represented in ETFs)
•    Value of 25k-acre feet of water = ~$1.6Bn+ based on water connection fees and service fees
•    Residential land value = ~$420mm+.  Net cash of $20m
•    Water for oil and gas fracking = free call option; currently selling water for $100k-200k per well
•    Market Cap = $219M versus a total un-discounted value of $2.0Bn+


Be sure to check out the rest of the Sohn San Francisco 2018 presentations.