Capital Cycles, Moats, Margin of Safety + Thoughts on $AAP $TRBR.V with Kenny Chan, Korwell Capital
Summary
Turnaround Opportunity: The guest pitched Advance Auto Parts (AAP) as a turnaround with capital cycle tailwinds, industry consolidation benefits, and fixable integration issues.
Auto Parts Retail Dynamics: He highlighted the resilience of aftermarket auto parts during downturns, noting deferred new car purchases drive repairs, supporting margins and growth.
Industry Structure: Consolidation reduced thousands of mom-and-pop stores to a few scaled players, with peers historically expanding operating margins as scale advantages increased.
Protein Bars Theme: He discussed a women-focused protein bar brand as an attractive niche within a competitive category, citing rapid growth, low trade spend, and brand-led moat potential.
Deal Commentary: A takeover bid valuing the protein bar company around 2.2x LTM sales was viewed as undervaluing long-term brand potential, underscoring the need to understand management incentives.
Capital Cycle Framework: The guest emphasized investing where capital is scarce and competition lighter, enabling margin durability and brand share-of-mind to compound over time.
Comparables and Examples: He referenced AutoZone and O’Reilly as scaled benchmarks in auto retail and cited Costco/GEICO models as templates for low-cost, volume-driven advantages.
Overall Perspective: Preference for Fisher-like businesses at Graham-like prices, focusing on misunderstood compounders and turnarounds with clear paths to operational improvement.
Transcript
This podcast is forformational purposes only and is not an offer or solicitation of an offer to buy or sell securities. SNN network Network, SNN Inc. and the Plano Microcap podcast and the representatives are not licensed brokers, broker dealers, market makers, investment bankers, investment adviserss, analysts, or underwriters. We do not recommend any companies [music] discussed. We may buy and sell securities in any company mentioned and make profit in the event those securities rise in value. We recommend you consult with a professional investment advisor, broker, or legal counsel before purchasing or selling any securities referenced in this podcast. Welcome to the Planet Microap podcast. I'm your host, Robert Craft. Thanks so much for the continued support and for tuning in. If you enjoy the show, please take a moment to rate us five stars on Spotify or Apple Podcast. [music] It really helps more folks discover the Micro Cap community. By the way, I'm recording uh this little intro here on uh Wednesday, November 26, 2025. So listen, just wanted to give a quick thanks to everybody that has ever listened, downloaded, just spent time on listening to Planet Microcap podcast and hearing our guests and and learning more about what's going on. I mean, it's you that really makes this community. So, just wanted to give a quick thank you. Wishing everybody a happy Thanksgiving for those that are celebrating and uh yeah, just truly thank you. Uh, you know, a little quick uh uh uh uh just getting some stuff uh out there as well. You know, registration is now open for the Planet Micro Cap Las Vegas 2026 in partnership with Micro Cap Club. It is taking place June 16th through 18, 2026 at the Bellagio in Las Vegas. It's the premier gathering for MicroAP investors, companies, and allocators. Visit planet microcapshow showcase.com to register, and I'll see you all in Vegas. Now, my guest on the show today is Kenny Chan, founder and portfolio manager of Corwell Capital. Kenny is only 23, but he's built an investing philosophy rooted in the classics, Peter Lynch, Joel Greenblat, Warren Buffett, and adapted with a modern high conviction approach. His north star, and I quote here, by Phil Fischer like businesses at Graham-like prices end quote. Kenny walks us through the four categories that define his framework, misunderstood Buffett like compounders, deep Graham style value plays, capital cycle opportunities and turnarounds. We discuss how he launched Corwell Capital straight out of college and how investing his in his own convictions, not academic theory, drives his process. We dig into two examples that bring this to life. first advanced auto parts where Kenny saw a rare combination of capital cycle tailwinds, industry consolidation and a fixable integration problem creating a classic turnaround at a very cheap price. Uh second uh True Bar which uh we actually recorded this on Monday uh November 24th. So we it actually received the takeover bid uh on the day of the interview. So, Kenny breaks down why he viewed the company as a niche brand uh with the durable moat, why the sale undervalues its long-term potential, and the critical lesson he's taking away. Understand management incentives before you invest. We wrap with Kenny's advice for aspiring managers, especially the importance of writing publicly, testing your thesis, and building a network through the quality of your ideas. We talked about a number of companies in today's episode. Kenny is a shareholder of Advanced Auto Parts and Troubar, and I am not a shareholder in any of the names mentioned. Thank you again for tuning in to the Planet Microcap podcast and please enjoy my conversation with Kenny Chan of Corwell Capital. Kenny, thank you for joining me today. How you doing, man? >> Thank you for having me. >> Absolutely. It's great to have you, man. Well, look, we met for the first time um at recently at our Toronto event. So, firstly, thank you for for coming. That was a lot of fun uh uh to hang with you and uh you know, get to know you a little bit more. I wanted to invite you on because one, you know, you just launched your fund very recently. you know, your young buck getting after it with the with the new fund and everything like that, you know, putting out invest letters, all this stuff. And so, just really wanted to have an opportunity to learn more about, you know, your approach to investing, your philosophy, and um, you know, kind of go through maybe a couple ideas, stuff like I mean, we're recording this on Monday, November 24, 2025. So, I know one of your core holdings probably definitely get into a little bit today. So, [laughter] um, you know, with that, you know, Kenny, for those that, you know, haven't met you before or know your background, you know, where did your passion for investing begin and how did that then lead to, uh, launching and founding, uh, your own fund at Coral Capital? >> Yeah, of course. And Bobby, it was great meeting in Toronto. The event was amazing. Um but uh on me um yeah I I you know I I grew up uh watching my dad open a comic book store. So I think naturally I was always interested in business and you know as I grew up I started reading more business news and eventually caught on to some investing books and so my first investing book was uh Peter Lynch one open Wall Street and it absolutely blew my mind and that led me to start reading other books Joe Greenlats and Seph Clarman's and I had these hourlong train rides and every day from and to school I I I'd spend it reading uh on on investing Eventually uh even even before applying to to college, I knew that I really wanted to work in value investing. And so I eventually got admitted to NYU Stern. And it was a great opportunity there to test my ideas against um classes and in uh in different internship experiences and private equity in the hedge fund space. Um, and I graduated with uh a return offer to private equity, but our fund uh ended up closing before I could uh start. And so I ended up in a small public equity shop and um you know, a couple months into it uh I'd gotten to know my boss very well and um I took the chance to ask him, hey, would you help back me if I started my own fund? And he said yes. >> Thank you. So I mean what you know I mean you know I know you're 23 right when I say young but I'm like this dude man I feel quite old you know already but I mean what what would you say gave you that confidence? I mean, again, you just came out of university. You were at the, you know, public e public small small cap equity shop for four what, three, four months, something like that. And you're just like, you know what? I'm ready to I'm ready to already kind of go out on my own and and get after it, you know? What gave you that confidence to do that? Yeah, I think you know first um I just had the opportunity to do so. My my former boss who I'm great friends with is great person and and he had belief in me. So you know part of it is just it was just opportunity. Um and another part is I think you know going through education on modern portfolio theory and working in private equity you realize that there's most of the industry has a different view of investing than what uh what was taught to me through a lot of these value investors books. And to me, the most important thing um out of my career is is to be able to research stocks in in the way that I believe and ultimately to invest in my own convictions. So it it wasn't uh more so confidence as as though you know. >> Well, do do you think there might be something to that delta? I mean, you know, you talk with investors all the time. They've been doing it a long time. like, "Hey man, there's of course you want to read the books to get the fundamentals, but then once you're once you're now out there, you know, it's different, you know?" So, I mean, is is it a do you feel do you feel that a little bit of like, you know, you kind of you understand what they're saying, but you still are like, "Well, I I get that, but I still have my convictions on how I want to go about doing this." >> You know what I'm trying to say? Um, I would say really everything I'm doing isn't new. I I'm I'm really just copying the insights from from value investors performing, but the difference is that I I I believe I have a different perspective of their insights than than most investors. And so you have your your book like What Up Wall Street and many investors have spawned from that book, but very few invest like Peter Lynch with 3,000 stocks in the portfolio and and um you know and looking at cyclicals the way he does, looking at industry data the way he does. So, you know, even though there's a common theme of uh of education in these books, um it there there aren't many that I'd say invest the way that these investors ultimately did. >> Absolutely. Well, that that's a perfect segue to dig in a little bit further on, you know, your your fund strategy, your philosophy. So, give us the full the full pitch. You know, what is the fund philosophy and then what's the strategy that you are looking to basically enact that? Yeah, I'd say in [clears throat] in a in a high level, the way I invest is using a first principles understanding of business to understand a business beyond just its financial statements. And a lot of this is using what Leelu calls insights, which he says there are maybe 10 or so insights that are why Buffett has outperformed value investors before him like Benjamin Graham. And luckily for for investors a lot of these insights are public and you can learn though. Um and so I I my core thesis is you know buying Phil Fisher like companies at a graml like price. This is something that that uh Warren Buffett said before or you know or buying Graham like companies at at a very very cheap price. And so to be able to do that it's it requires a deep understanding of business to understand beyond the the financial statements to understand uh situations where a company stock price is temporarily depressed although the business model is still very great. And so I I'd have uh I'd say I have four categories if I had to categorize them four categories of investments. I have my misunderstood Buffett like companies, high return on capital and reinvestment opportunity which are very rare um at a cheap price. And then you have your Grahamlike companies that are trading at a huge discount, tangible book value with management that's willing to unlock it. And you also have your what I call capital cycle opportunities uh which which is a methodology of like understanding the cyclicality of industries. And so from these industry dynamics, you can have a company become a Buffetike company or you can have you know your cyclical companies that are trading at gramlike prices and and lastly you know you have your turnarounds that are these buffaloike companies that have a temporary situation that's depressed their stock price. >> Very good. So, I mean, in before we get to some of, you know, because one of the things I wanted to talk to you about today that that you also hit me up on was, you know, how Buffett really inspired you. I mean, and I inspires a lot of, you know, a lot of people who listen in or have been on the pod before, but, you know, there's there's a bit of more even more sentimentality about that, I'd say. you know, where we currently sit today being that he already put out his last letter and kind of going quiet a little bit, but you know, can you give us before we get in into that part of this and maybe it'll dubtail what what would you say is, you know, you don't have to name your best pick or anything like that, but like what is that ideal setup for you amongst maybe amongst all four of those buckets? Yeah, I I you know um really the the best investment opportunity if I could hand create one is really one of these businesses that can not only uh not only has a high return on on capital but can continue to grow its return on capital. And the way that can be done is through pricing power or or structural changes in the industry. And you know an example I can give um is during uh my fund launch I invested and I still own a position at Advanced Auto Parts and the aftermarket auto parts industry is is one that's very interesting. you know, you have uh when you hear cars, you or businesses that know sell car components, you naturally think that it's very cyclical, but there's an insight from, you know, Peter Lynch that kind of explains that the cyclicality is is more so people deferring uh their their new car purchases. And when they defer their new car purchases, what do they end up doing? They they end up, you know, fixing up their old car. And so when when you look at the the businesses um in in the aftermarket auto parts industry, you have your Autozone uh O'Reilly Advanced Auto Parts. These kind of businesses were able to maintain their margins through recessions, through tariffs. And so, you know, I came in during uh liberation day tariffs and uh I saw that auto advanced auto parts was at extremely depressed price and it was a good pickup. But another thing with that industry is that the industry has rapidly consolidated in the last two decades. And if you look at historically, you know, in the 2000s, there were thousands of mom and pop uh aftermarkets, auto parts stores, and all of those got consolidated into these four players today. And what that resulted in is you have your AutoZone and your O'Reilly doubling their operating margins from the 2000s to today. And you know, their stock prices since IPO have compounded at around 25%. Advanced Auto Parts used to be the biggest player, but they had a had a few hiccups really because they failed to integrate their acquisitions. And now there's a manager who's who understands that and is willing to fix those issues. So you have an opportunity to buy a very good great great business, high return on capital potentially at a very cheap price. Very good. So I you know one thing that you know I I guess as we pay homage a little bit to to to uh to Buffett and B some of Bergkshire's best investments were you know him looking at and finding some of these misunderstood micro caps. How are you do you apply that that that I guess you say that strategy that essence you know how do you apply your way to find what you know were those misunderstood micro caps for Berkshire and then say all right these are now my corwell capital you know core ideas. Yeah, I I I think I could break it down um through two insights that uh Buffett had that I think uh is is core to to almost all of his investments. You know, the first being let's talk about Geico and the the insight that I'd call this is uh what Nick Sleep eventually calls shared economy scales. So where a business foregoes um you know quoting the highest price for their product and instead depends on volume to match that uh that decrease in price and these are lowcost operators like Geico itself and you know I we look at Bergkshire's history Geico might be the most important investment uh Buffett's ever made. He bought this initially for Berkshire in 1976. Um, and it's it was going through a terrible time. Uh, almost going into bankruptcy. And at the time the market cap was maybe 100 or 200 million, a clear micro cap. But you know, Buffett understood the reason why uh it got to that point um was that its its managers took on terrible risks that they weren't familiar with. The traditional business model of GEICO was to underlay auto insurance for government employees who were safer drivers, who had higher renewal rates, and they use a direct mailing uh method of distribution. So, their costs were the lowest in the industry. And what they've done is they' expanded to non-government workers and other lines of insurance. Um, and if you look at the financials of Geico, the one year in 1975, uh, wiped out, I believe around 70% of its equity value. So it was such a terrible business that if it had gone, you know, lost, uh, it continued to lose as much for a few more quarters, it would have been out of business. And despite this uh you know Buffett put in at least 25% of Berkshire's equity portfolio into the company in in in the form of a preferred share and common shares. But nonetheless if the company continued to lose you know at this pace his entire position would be wiped. And and so at first glance you you you look at a company like this and you think this is an awful situation. you know, any modern any portfolio manager today that invests like that would probably be fired. Um, but he understood, you know, he he had a good relationship with past managers like Gecko. He understood the core business selling to government employees at the lowest price still was there, still present. And um you know that's you know when when I think about investing um today there there are tons of situations like this where you have a great business model hidden underneath you know a couple years of mismanagement and a new manager that uh is is is understanding of the industry dynamics and can can reverse a lot of the damage that a previous management has done. Absolutely. No, that's I very much appreciate all that. So, that's really cool to hear. Yeah. Hey, listen man, even on the Young Bucks, man, it's that lessons learned from the 50s and 60s are, you know, taking effect and being put into practice. So I mean at do you have any do you have any examples you know let's say other than advanced auto parts where you took those insights and were like all right I see a lot of these similarities and you know in this idea you know again you can say the name of the company if you want to or not it's up to you. Yeah, I'd say, you know, in today's market, today's market, it's hard because a lot of the bigger companies are already priced, you know, Costco's at 50 times. Um, you know, Costco is a very similar model, uh, that Nick Luke found. Um, I'd say today, I I don't own this, but Wise, uh, this the payment company in the UK is a very similar model. uh its price got uh got cut a little bit because they they intentionally decided to lower their margins to better um to to provide a better product for consumers. And that's a textbook example of the share economy scaled, you know, having the lowest cost product out there and allowing volume to overtake the the difference in price. Um and and you know in in micro caps there are a lot of companies that are trying to copy the Costco model, the GEICO model at at a smaller scale. And if you can understand their businesses uh and understand the management team and how they think, you can get these businesses that will will uh develop into you know something like a Geico or Costco at you know hopefully a Graham like price. >> Absolutely. All right. So I have to ask like the today again we're recording this Monday. November 24th, um, one of your core companies, uh, Troubar, uh, uh, announced a bit to be acquired, um, this morning. You know, I'd love to hear what are some of the lessons learned or some of your insights from from that experience because Troubar has has had an is an interesting case study, I feel, in, you know, kind of the micro cap, you know, consumer brand, you know, and it's, you know, attract what what attracts investors to it, you know, the risks that are involved. So, I'd love to hear from your perspective what that experience was like, how you found it, you know, why you had the conviction, and then maybe even some commentary on what, you know, some of the news today. >> Yeah, of course. Um, you know, I I I always like to to read investment reports online and look at insider trading. Um, so true popped up a couple times throughout reading and and screening for insider buying. Uh initially it it looked like a like a special situation out of Joel Greenblat's book. You know this there's this terrible business uh that primarily did cannabis that you know uh got rid of its terrible cannabis business, it's terrible skincare business and is revealing this very promising protein bar business. And you know naturally for these kind of restructuring situations, people are turned away. the old financials don't reflect the the the financials uh of the standalone company. So I took a look I I noticed the high insider ownership. I noticed the incredible growth in this company. If you take the standalone uh revenue by itself, they've been doubling revenues uh for a couple years with no marketing uh very little trade spend. And so when I looked into this company, I I I noticed, you know, protein bars are very competitive uh industry. So how come they've been able to succeed so handedly? You I looked at the history and I realized this protein bar was created specifically for women. You look at the protein bar market today and the the ethos is protein maximization. So you have recently David Bar came out that tried to jam as much protein bar as as they could in food bar. But when you talk to women you realize that they don't want at you know 25 30 grams of protein in their protein bar. They want a good amount maybe you know 16 12 to 16 and then fiber and these other kind of macronutrients. So looking at the market positioning there's very few protein bars. Uh I I believe when I spent time looking uh Troubar was at one of the largest already that was clearly targeting women and so you know they have this great the third party distribution model. um they've already started creating this very promising brand and you know at its price it was it was pricing it as a very speculative uh investment maybe because of the cannabis pass and uh so I I I made that uh position for the fund earlier this year. Um today came out with a takeover offer. Um nothing of the sort has has been mentioned during earnings calls. Uh and it looks like they're trying to push this through very quickly and the price given you know around 2.2 times last four quarter sales is is very disappointing in in my opinion. I I think when you buy a brand like this, the the certainty of the brand succeeding is is due to its market position and what what the promise is to to consumers. So, you know, Warren Buffett always says a brand is a promise. And when you look at, you know, there there's certain anomalies in the branding world. Why did why do people buy Coca-Cola over Pepsi when they essentially taste the same? And in the past, Pepsi was actually uh only in operations because they sold at a lower price. It's because of the marketing and the brand building they've done throughout decades to have this emotion evoked out of you when you buy a can of Coca-Cola. You get this sense of nostalgia. You get a sense of happiness. That kind of branding is a moat. It's not something you can see in a financial statement, but it's an incredible barrier to entry. And when you have a a brand like Troubar where this is a kind of like capital cycle opportunity, all the money is flowing into the protein dense bars. Not much is going into this woman focused niche and they're starting to build this brand that's, you know, clearly the sales are showing that that it's it's resonating with with its pen consumers. And so you you have that margin of safety from the brand positioning, not necessarily from the assets on its balance sheet or the the the the earnings that that it's it's generating right now. And to to kind of cut that story off at, you know, 60 70 million uh in in sales is very disappointing because, you know, this it's my belief that this Troubar will be able to continue to grow and uh by by selling it off so early, you're you're losing a lot of value that could be generated. >> And listen, I I I I respect that, you know, um listen, you you put together a big thesis, right? You you made it a core position. You know, you you thought that there was clearly some more runway there to be to be unlocked, you know, but may I push back? >> Yeah, of course. >> Respectfully. Um, >> no, but I mean, look, I have no dog at this. I'm not a shareholder or any of this stuff. Uh but but it it it's it's interesting and you know having spoken with a number of CPG companies in micro cap over the years and you know look it to push back like for instance on your your Pepsi Cola example with with uh with that like brand's been around since 2019. you know, it's not like this has been around for, you know, for that long. And with >> how quickly and how many, you know, the just how how uh what's what competitive this space is, >> you know, >> it's nice that you kind of carved out this, you know, marketing niche like this is for for but like that can be fleeting as well too, right? Like we've seen many amazing marketing strategies that we thought were brilliant at the time probably generate a lot of revenue but then you know over you know over time and in this day and age it's usually much faster than it was previously you know >> that now thesis or that market just doesn't work anymore you know >> so I'd be curious your thoughts on that front >> yeah absolutely you know when you look at protein bars in aggregate it is very competitive but in this specific niche and This has you know been reciprocated by industry reports like Mintel. There are very few protein bars you know for whatever reason that are focusing on the characteristics that that target women you know taste this lower protein count fiber and it's it's it's really part of the cap capital cycle framework. um you know so the idea that the trendy things that where where capital is being shoved into will will be more competitive and returns will go down you know like looking looking at brands you know despite the the success of Troubar uh past couple years uh it's had a small scale so maybe hasn't caught on uh the attention of the larger players but I I I'm I'm shocked to see that no one else is trying to enter this this you know, protein bars for one niche. And as as they delay that investment into this protein bar uh niche, True Bar is continuing to build a brand, it's continuing to invest in marketing and brand awareness and capturing what Buffett calls share of mind. So, you know, if tomorrow um a huge player came out and said, "Oh, we want to invest into women's protein bar." That that would be a considerable uh danger. But it, you know, but it it it it's not um it for some reason companies just don't focus on on these kind of uh untapped or maybe newer markets and it's it's hard to imagine them >> newer markets. Women have been eating protein bars for years. What do you mean new markets? Come on. >> Yeah. But uh you know the industry reports um talk about all >> people have been eating protein bars for years. Sorry, I don't mean >> Yeah, of course. Of course. Of course. Um and I think that's the the big misconception because when I talk to people um predominantly men who who are investors in uh in they don't understand the differences that appeal to women and I think a lot of companies in general don't understand that. And so that's that's why you know they have this little niche that's been working so success success successfully and um it kind of explains this uh capital cycle miss missed opportunity from the larger players. >> I mean again not and playing devil's advocate too. I mean, but if we're using if it's part of kind of that falls in that bucket of the capital cycle thesis, you know, isn't this then kind of a win? You know, you're kind of you're selling out before the bottom falls out in this trend of, you know, investing in protein bar. They're one product company, you know, they're Yeah. Yeah, I mean look, if you invested in it, you know, when it was pe when it was 52 week highs, like, yeah, that, you know, this sucks. But like, you know, for those that kind of bottom bottom ticked it, you know, this is kind of like a nice win on the on the on the cap on if if that's going to be your thesis, you know, like, yeah, you you're like, all right, the the trend is still very much your friend in this case, but like I mean, really, for how much longer? Yeah, that's a good point. Um, but you know, when I think about the end consumer, you know, women, I think their target audience is really moms. You know, the the the trend of eating protein in aggregate has been very very strong. It's hard to believe that, you know, these women will stop eating protein bars. And another like point point of consideration is the valuation that you're getting this company at. you know when when you look at big investments in the past there are um so I I believe Nick Sleep uh had a big position in Amazon and at the time investors were kind of worried that you know margins are are volatile uh and and that that's being reflected here with with the trade spend and marketing spend so the valuation you're getting um if you consider you know 7 to 8% net margins or operating margins as as a long-term achievable goal. The the the valuation you're getting is very cheap. So you have this huge marginal safety and you know if if you think about the capital cycle and and you're may be putting into consideration that uh this trend will die out which I I don't believe um with women and bars but what if another company comes out for brand right the you know if if you look at the company and its growth was cut in half it's still cheap it's just that margin of safety gives you that uh that that safety that that certainty that you need. >> Listen, I I I'm not even going to try and push back on the because you've done much more work than me on the valuation fundamental side of the business. So like I'm not even going to try and like I'll I'll take you at your word. So you know pro you you know that bring up a point there. I'm just more saying on, you know, I still think this is, you know, probably the best possible outcome in some respects because, >> you know, I don't know. Look, like I just I'm just I'm I'm also just not I I think I think for me, this is my own personal opinion. I just don't I'm I'm not a big believer in like you're just marketing protein bars for for like I think women are are they'll sniff that out a mile away of just like a marketing ploy versus like if this other bar looks healthier for me than this one. I don't care if this is for women, you know, like I'll eat that other bar because it's better for me or tastier or whatever. You know what I mean? Like that's that's really the risk you're running into when you're just you're locking yourself in of like this is a protein bar for women, you know? Like listen, I was in Costco the other day cuz I actually hadn't seen one before. And I finally looked at it and like I had no idea that it was marketed for women or whatever. I was just looking at the the the the ingredients and everything and I was like, "Huh, this doesn't seem like something I would probably" And I showed it to my wife and she said the same thing, you know? So, like that's why I again that's just my own personal anecdote, but like >> again I I think it might be kind of a >> might have locked out in some respects, bro. Like [laughter] you don't have to waste any more time thinking about like the like the the market dynamics of how this is being marketed. It's like all right valuation side of things. Totally get that. But if the thesis is also this like marketing to to women type stuff, hey, good luck, you know, have fun with that. Well, I mean, if thinking that way, um, it's then, you know, almost impossible to imagine why people will won't buy knockoff brands of Coca-Cola or, you know, Fred Lace. How come, you know, the brand has that much power that people are willing to pay for a product that tastes exactly the same, right? And I think that's the uniqueness of branding that uh you know Buffett uh you know with Seas Candy and with Coca-Cola his understanding of that is uh is sort of predicting the future financial results. >> Oh no I sorry I don't mean to cut you I'll actually agree. I think like the brand itself you know the like the name like that's a I think it's a legit good name for for for protein bar. Um, I guess it's more the marketing um, plan, right? I guess that's really where my where my critique is is more on like how how it's being marketed versus the actual branding itself. Because that's really the big difference when you think about it with like Coca-Cola and Pepsi is like how was Coca-Cola marketed versus like the brand like everybody would agree like oh Coca-Cola Pepsi like that's pretty cool looking branding you know I guess you know has the story but like when it when you think about how it was marketed ver versus its competitors and why it won versus like that's a marketing critique versus you know the branding itself. That's interest I'm I'm I'm not exactly sure um uh what you mean there, but I I would say that's um you know I mentioned you know Warren Buffett says brand is really a promise. Um and you know well how the way you convey that promise you know is through your advertisements is through how what the packaging looks like and also at the core product uh at the core at its core shoe bar is like a meat low kind of protein bar protein content >> uh bar you know that your mom's you know would like a lot more than something like say a David bar that you know That's 25 grams >> for sure. And look, I I just find this I just find it a fascinating case study. You know, it's just this is one that's been, you know, I know a lot of investors, we talked about with quite a few folks, you know, in the last six months. Um, so, and again, I don't I'm not a shareholder. I have no dog in this fight, but I I you know, I find it I find it pretty What would you say been the biggest lesson? I mean, I'm sure you're still kind of taking it all in. like this all was just announced today and it's not it's not like it's officially closed or anything but I mean what have been some early lessons or early reflections after this happened um that maybe you might take into when you look at the next CPG name or some other potential potential investment. >> Yeah. Um it's you know you're right it is early in the process so who knows what'll happen. Um I'd say you know understanding the incentives of management is is a big take away from from this you know the situation Kingsley Ward uh family office uh big incentive for for firm gains as as any invest investor is in in the professional world um which you know given what I believe um it's it's my takeaway that that's a big reason propelling this deal. Um, and yeah, I mean from this particular deal, I'd say that's the lesson. And I I'd say, you know, there's there's a theme among value investors. I'd say that [laughter] that also has a, you know, they share this unpopular opinion about takeover bids. And you have uh the one I was, you know, writing about this morning was Norbert Louu uh who wrote MVR in in uh Joe Greenblat's uh value investor club. He had a position in Quinca, which was a Latin American beer brand that had uh untapped pressing power and for for many years increased prices. He had the same kind of mindset where when Ambev came to take it over uh and at a good price, he thought, you know, the real winner in this deal is Ambe, not me. And you know, as an as an investor selling that position now, you have to think where do you put the rest of your money or where do you put your money now? Uh and and the kind of opportunity cost that's lost is is huge. You know, uh you can think of the the person who sold Seas Candy to Buffett after, you know, he generated 1.3 billion out of the company uh from a $25 million investment. At the time, I'm sure he was very proud of his sale to Buffett, but you know, after that that thesis executes, uh I'm sure he realized that that's a big blunder, right? I mean, but at the same time, like would we could go back and forth on that on on on all of these, right? where it's like would would the company have continued to grow at that increased uh pace if you know Buffett weren't involved or you know or if Ambe didn't buy it you know just >> personal opinion especially just to maybe wrap on like dude >> at a nice premium on a single product protein bar company like >> 200 million like come on man like that's all all things aside all valuation aside like objectively single product protein bar company for 200 million. Like that's not bad. >> Yeah. I mean, that's that's >> Come on, man. [laughter] >> If we're if we're just, you know, like but I but dude, I get it. I get it from your end. you know, look if your if your valuation has shown that it could have been worth more, you know, hey, >> but anyways, I mean, >> what would you say also has, you know, been, you know, just kind of reflecting more on it like an investing experience that really helped shape your career already so far? You know, I mean, you you published, you shared with me a couple letters. I mean what has there been any other other experiences that you've been like oh that was I'm really whether I made money or not on this idea like this actually was very formative for me to like now think more like with Trouar for instance now you're looking at management incentives probably a little bit more closely than you probably previously did you know like have there have been any other experiences like that >> interesting um I think uh well generally when I look at these he's uh you know what I take away from the insights of the investors before me. Um I I you know Leelu has this thing where he he says everything to the extreme but he says you know people who use these insights need a different part of the DNA. Um and I see you know sometimes I I look at you know a company like wise where I can clearly see they're they're that they're using the Costco model the geo model but the stock price still still falls. Um so uh you know in terms of using the insights of of the investors before me I think you know everything they've said still holds true. um in in terms of you know personal investments that uh that kind of shaped me um I'd say you know with uh as a young investor you know before I got internships and and started working professionally I'd say you know just realizing the the kind of companies that are out there with such huge price dislocations uh and mismatches with their their intrinsic value and uh being able to profit off them has has given me the confidence that yes uh you know although modern portfolio theory says you know that there there is there's an efficient market or somewhat efficient market you know there there is real opportunity for investors to to make uh make make higher the market returns. >> Very cool. All right. Well, dude, you've we've covered a lot here today. You know, this has been a fun reflection on you know, listen, you're you're just getting your start, man. like you're you've already you've already picked a winner, right? You know, for whatever it's worth. Um, and that's you know what's cool that I'm I'm really getting the feel from you on this is that like you know you're as you're one obviously obviously you're very passionate for it but like it's pissing you off that it couldn't didn't make more you know which shows that you're like let me find the next one could actually you know even crush it even higher. So like I I It's pretty It's pretty cool to see, man. I must say, you know, like you're 23 just getting after it. Like, hey, you already made a you already made made some couple bucks on this one. Like, now it's just time to find the next one and or, you know, continue to to do the due diligence on some more core holdings or reallocate to some other core holdings, right? So, I mean, for those that are listening in that, you know, might be in a similar situation or are, you know, maybe have been dancing with maybe starting their own fund, but hadn't haven't done it yet, like what advice do you have to them, you know, beyond the like just do it? Like what what other advice do you have? >> Yeah, I'd say, you know, the advice I'd give people is to start writing your investment thesis and putting them online. And you know uh really my first investment thesis I put out um I was very fortunate to to meet fund managers with decades of experience and um you know talk invited to a conference and you know putting your ideas out there testing them against other people um seeing what they comment. It's it's a great way to to test your own skills and to meet new people. Uh and and you know, occasionally you get the winners. Uh like for me, it was advanced auto parts during uh you know, April of this year the rebound after that uh helps you know give you some credibility and helps connect you with with uh funers as well. >> Very cool. Well, Kenny, with that, where can our audience go and find more information to follow you as well as Coral Capital? Yeah, of course. You can find more information on my website, Corval Capital, and I also write on Substack as fundamental. >> Very cool. Kenny, thank you for joining me today. Really do appreciate it. Good luck. Stay safe and I look forward to our next update. >> Yeah, of course. >> Thank you. [music] >> [music]
Capital Cycles, Moats, Margin of Safety + Thoughts on $AAP $TRBR.V with Kenny Chan, Korwell Capital
Summary
Transcript
This podcast is forformational purposes only and is not an offer or solicitation of an offer to buy or sell securities. SNN network Network, SNN Inc. and the Plano Microcap podcast and the representatives are not licensed brokers, broker dealers, market makers, investment bankers, investment adviserss, analysts, or underwriters. We do not recommend any companies [music] discussed. We may buy and sell securities in any company mentioned and make profit in the event those securities rise in value. We recommend you consult with a professional investment advisor, broker, or legal counsel before purchasing or selling any securities referenced in this podcast. Welcome to the Planet Microap podcast. I'm your host, Robert Craft. Thanks so much for the continued support and for tuning in. If you enjoy the show, please take a moment to rate us five stars on Spotify or Apple Podcast. [music] It really helps more folks discover the Micro Cap community. By the way, I'm recording uh this little intro here on uh Wednesday, November 26, 2025. So listen, just wanted to give a quick thanks to everybody that has ever listened, downloaded, just spent time on listening to Planet Microcap podcast and hearing our guests and and learning more about what's going on. I mean, it's you that really makes this community. So, just wanted to give a quick thank you. Wishing everybody a happy Thanksgiving for those that are celebrating and uh yeah, just truly thank you. Uh, you know, a little quick uh uh uh uh just getting some stuff uh out there as well. You know, registration is now open for the Planet Micro Cap Las Vegas 2026 in partnership with Micro Cap Club. It is taking place June 16th through 18, 2026 at the Bellagio in Las Vegas. It's the premier gathering for MicroAP investors, companies, and allocators. Visit planet microcapshow showcase.com to register, and I'll see you all in Vegas. Now, my guest on the show today is Kenny Chan, founder and portfolio manager of Corwell Capital. Kenny is only 23, but he's built an investing philosophy rooted in the classics, Peter Lynch, Joel Greenblat, Warren Buffett, and adapted with a modern high conviction approach. His north star, and I quote here, by Phil Fischer like businesses at Graham-like prices end quote. Kenny walks us through the four categories that define his framework, misunderstood Buffett like compounders, deep Graham style value plays, capital cycle opportunities and turnarounds. We discuss how he launched Corwell Capital straight out of college and how investing his in his own convictions, not academic theory, drives his process. We dig into two examples that bring this to life. first advanced auto parts where Kenny saw a rare combination of capital cycle tailwinds, industry consolidation and a fixable integration problem creating a classic turnaround at a very cheap price. Uh second uh True Bar which uh we actually recorded this on Monday uh November 24th. So we it actually received the takeover bid uh on the day of the interview. So, Kenny breaks down why he viewed the company as a niche brand uh with the durable moat, why the sale undervalues its long-term potential, and the critical lesson he's taking away. Understand management incentives before you invest. We wrap with Kenny's advice for aspiring managers, especially the importance of writing publicly, testing your thesis, and building a network through the quality of your ideas. We talked about a number of companies in today's episode. Kenny is a shareholder of Advanced Auto Parts and Troubar, and I am not a shareholder in any of the names mentioned. Thank you again for tuning in to the Planet Microcap podcast and please enjoy my conversation with Kenny Chan of Corwell Capital. Kenny, thank you for joining me today. How you doing, man? >> Thank you for having me. >> Absolutely. It's great to have you, man. Well, look, we met for the first time um at recently at our Toronto event. So, firstly, thank you for for coming. That was a lot of fun uh uh to hang with you and uh you know, get to know you a little bit more. I wanted to invite you on because one, you know, you just launched your fund very recently. you know, your young buck getting after it with the with the new fund and everything like that, you know, putting out invest letters, all this stuff. And so, just really wanted to have an opportunity to learn more about, you know, your approach to investing, your philosophy, and um, you know, kind of go through maybe a couple ideas, stuff like I mean, we're recording this on Monday, November 24, 2025. So, I know one of your core holdings probably definitely get into a little bit today. So, [laughter] um, you know, with that, you know, Kenny, for those that, you know, haven't met you before or know your background, you know, where did your passion for investing begin and how did that then lead to, uh, launching and founding, uh, your own fund at Coral Capital? >> Yeah, of course. And Bobby, it was great meeting in Toronto. The event was amazing. Um but uh on me um yeah I I you know I I grew up uh watching my dad open a comic book store. So I think naturally I was always interested in business and you know as I grew up I started reading more business news and eventually caught on to some investing books and so my first investing book was uh Peter Lynch one open Wall Street and it absolutely blew my mind and that led me to start reading other books Joe Greenlats and Seph Clarman's and I had these hourlong train rides and every day from and to school I I I'd spend it reading uh on on investing Eventually uh even even before applying to to college, I knew that I really wanted to work in value investing. And so I eventually got admitted to NYU Stern. And it was a great opportunity there to test my ideas against um classes and in uh in different internship experiences and private equity in the hedge fund space. Um, and I graduated with uh a return offer to private equity, but our fund uh ended up closing before I could uh start. And so I ended up in a small public equity shop and um you know, a couple months into it uh I'd gotten to know my boss very well and um I took the chance to ask him, hey, would you help back me if I started my own fund? And he said yes. >> Thank you. So I mean what you know I mean you know I know you're 23 right when I say young but I'm like this dude man I feel quite old you know already but I mean what what would you say gave you that confidence? I mean, again, you just came out of university. You were at the, you know, public e public small small cap equity shop for four what, three, four months, something like that. And you're just like, you know what? I'm ready to I'm ready to already kind of go out on my own and and get after it, you know? What gave you that confidence to do that? Yeah, I think you know first um I just had the opportunity to do so. My my former boss who I'm great friends with is great person and and he had belief in me. So you know part of it is just it was just opportunity. Um and another part is I think you know going through education on modern portfolio theory and working in private equity you realize that there's most of the industry has a different view of investing than what uh what was taught to me through a lot of these value investors books. And to me, the most important thing um out of my career is is to be able to research stocks in in the way that I believe and ultimately to invest in my own convictions. So it it wasn't uh more so confidence as as though you know. >> Well, do do you think there might be something to that delta? I mean, you know, you talk with investors all the time. They've been doing it a long time. like, "Hey man, there's of course you want to read the books to get the fundamentals, but then once you're once you're now out there, you know, it's different, you know?" So, I mean, is is it a do you feel do you feel that a little bit of like, you know, you kind of you understand what they're saying, but you still are like, "Well, I I get that, but I still have my convictions on how I want to go about doing this." >> You know what I'm trying to say? Um, I would say really everything I'm doing isn't new. I I'm I'm really just copying the insights from from value investors performing, but the difference is that I I I believe I have a different perspective of their insights than than most investors. And so you have your your book like What Up Wall Street and many investors have spawned from that book, but very few invest like Peter Lynch with 3,000 stocks in the portfolio and and um you know and looking at cyclicals the way he does, looking at industry data the way he does. So, you know, even though there's a common theme of uh of education in these books, um it there there aren't many that I'd say invest the way that these investors ultimately did. >> Absolutely. Well, that that's a perfect segue to dig in a little bit further on, you know, your your fund strategy, your philosophy. So, give us the full the full pitch. You know, what is the fund philosophy and then what's the strategy that you are looking to basically enact that? Yeah, I'd say in [clears throat] in a in a high level, the way I invest is using a first principles understanding of business to understand a business beyond just its financial statements. And a lot of this is using what Leelu calls insights, which he says there are maybe 10 or so insights that are why Buffett has outperformed value investors before him like Benjamin Graham. And luckily for for investors a lot of these insights are public and you can learn though. Um and so I I my core thesis is you know buying Phil Fisher like companies at a graml like price. This is something that that uh Warren Buffett said before or you know or buying Graham like companies at at a very very cheap price. And so to be able to do that it's it requires a deep understanding of business to understand beyond the the financial statements to understand uh situations where a company stock price is temporarily depressed although the business model is still very great. And so I I'd have uh I'd say I have four categories if I had to categorize them four categories of investments. I have my misunderstood Buffett like companies, high return on capital and reinvestment opportunity which are very rare um at a cheap price. And then you have your Grahamlike companies that are trading at a huge discount, tangible book value with management that's willing to unlock it. And you also have your what I call capital cycle opportunities uh which which is a methodology of like understanding the cyclicality of industries. And so from these industry dynamics, you can have a company become a Buffetike company or you can have you know your cyclical companies that are trading at gramlike prices and and lastly you know you have your turnarounds that are these buffaloike companies that have a temporary situation that's depressed their stock price. >> Very good. So, I mean, in before we get to some of, you know, because one of the things I wanted to talk to you about today that that you also hit me up on was, you know, how Buffett really inspired you. I mean, and I inspires a lot of, you know, a lot of people who listen in or have been on the pod before, but, you know, there's there's a bit of more even more sentimentality about that, I'd say. you know, where we currently sit today being that he already put out his last letter and kind of going quiet a little bit, but you know, can you give us before we get in into that part of this and maybe it'll dubtail what what would you say is, you know, you don't have to name your best pick or anything like that, but like what is that ideal setup for you amongst maybe amongst all four of those buckets? Yeah, I I you know um really the the best investment opportunity if I could hand create one is really one of these businesses that can not only uh not only has a high return on on capital but can continue to grow its return on capital. And the way that can be done is through pricing power or or structural changes in the industry. And you know an example I can give um is during uh my fund launch I invested and I still own a position at Advanced Auto Parts and the aftermarket auto parts industry is is one that's very interesting. you know, you have uh when you hear cars, you or businesses that know sell car components, you naturally think that it's very cyclical, but there's an insight from, you know, Peter Lynch that kind of explains that the cyclicality is is more so people deferring uh their their new car purchases. And when they defer their new car purchases, what do they end up doing? They they end up, you know, fixing up their old car. And so when when you look at the the businesses um in in the aftermarket auto parts industry, you have your Autozone uh O'Reilly Advanced Auto Parts. These kind of businesses were able to maintain their margins through recessions, through tariffs. And so, you know, I came in during uh liberation day tariffs and uh I saw that auto advanced auto parts was at extremely depressed price and it was a good pickup. But another thing with that industry is that the industry has rapidly consolidated in the last two decades. And if you look at historically, you know, in the 2000s, there were thousands of mom and pop uh aftermarkets, auto parts stores, and all of those got consolidated into these four players today. And what that resulted in is you have your AutoZone and your O'Reilly doubling their operating margins from the 2000s to today. And you know, their stock prices since IPO have compounded at around 25%. Advanced Auto Parts used to be the biggest player, but they had a had a few hiccups really because they failed to integrate their acquisitions. And now there's a manager who's who understands that and is willing to fix those issues. So you have an opportunity to buy a very good great great business, high return on capital potentially at a very cheap price. Very good. So I you know one thing that you know I I guess as we pay homage a little bit to to to uh to Buffett and B some of Bergkshire's best investments were you know him looking at and finding some of these misunderstood micro caps. How are you do you apply that that that I guess you say that strategy that essence you know how do you apply your way to find what you know were those misunderstood micro caps for Berkshire and then say all right these are now my corwell capital you know core ideas. Yeah, I I I think I could break it down um through two insights that uh Buffett had that I think uh is is core to to almost all of his investments. You know, the first being let's talk about Geico and the the insight that I'd call this is uh what Nick Sleep eventually calls shared economy scales. So where a business foregoes um you know quoting the highest price for their product and instead depends on volume to match that uh that decrease in price and these are lowcost operators like Geico itself and you know I we look at Bergkshire's history Geico might be the most important investment uh Buffett's ever made. He bought this initially for Berkshire in 1976. Um, and it's it was going through a terrible time. Uh, almost going into bankruptcy. And at the time the market cap was maybe 100 or 200 million, a clear micro cap. But you know, Buffett understood the reason why uh it got to that point um was that its its managers took on terrible risks that they weren't familiar with. The traditional business model of GEICO was to underlay auto insurance for government employees who were safer drivers, who had higher renewal rates, and they use a direct mailing uh method of distribution. So, their costs were the lowest in the industry. And what they've done is they' expanded to non-government workers and other lines of insurance. Um, and if you look at the financials of Geico, the one year in 1975, uh, wiped out, I believe around 70% of its equity value. So it was such a terrible business that if it had gone, you know, lost, uh, it continued to lose as much for a few more quarters, it would have been out of business. And despite this uh you know Buffett put in at least 25% of Berkshire's equity portfolio into the company in in in the form of a preferred share and common shares. But nonetheless if the company continued to lose you know at this pace his entire position would be wiped. And and so at first glance you you you look at a company like this and you think this is an awful situation. you know, any modern any portfolio manager today that invests like that would probably be fired. Um, but he understood, you know, he he had a good relationship with past managers like Gecko. He understood the core business selling to government employees at the lowest price still was there, still present. And um you know that's you know when when I think about investing um today there there are tons of situations like this where you have a great business model hidden underneath you know a couple years of mismanagement and a new manager that uh is is is understanding of the industry dynamics and can can reverse a lot of the damage that a previous management has done. Absolutely. No, that's I very much appreciate all that. So, that's really cool to hear. Yeah. Hey, listen man, even on the Young Bucks, man, it's that lessons learned from the 50s and 60s are, you know, taking effect and being put into practice. So I mean at do you have any do you have any examples you know let's say other than advanced auto parts where you took those insights and were like all right I see a lot of these similarities and you know in this idea you know again you can say the name of the company if you want to or not it's up to you. Yeah, I'd say, you know, in today's market, today's market, it's hard because a lot of the bigger companies are already priced, you know, Costco's at 50 times. Um, you know, Costco is a very similar model, uh, that Nick Luke found. Um, I'd say today, I I don't own this, but Wise, uh, this the payment company in the UK is a very similar model. uh its price got uh got cut a little bit because they they intentionally decided to lower their margins to better um to to provide a better product for consumers. And that's a textbook example of the share economy scaled, you know, having the lowest cost product out there and allowing volume to overtake the the difference in price. Um and and you know in in micro caps there are a lot of companies that are trying to copy the Costco model, the GEICO model at at a smaller scale. And if you can understand their businesses uh and understand the management team and how they think, you can get these businesses that will will uh develop into you know something like a Geico or Costco at you know hopefully a Graham like price. >> Absolutely. All right. So I have to ask like the today again we're recording this Monday. November 24th, um, one of your core companies, uh, Troubar, uh, uh, announced a bit to be acquired, um, this morning. You know, I'd love to hear what are some of the lessons learned or some of your insights from from that experience because Troubar has has had an is an interesting case study, I feel, in, you know, kind of the micro cap, you know, consumer brand, you know, and it's, you know, attract what what attracts investors to it, you know, the risks that are involved. So, I'd love to hear from your perspective what that experience was like, how you found it, you know, why you had the conviction, and then maybe even some commentary on what, you know, some of the news today. >> Yeah, of course. Um, you know, I I I always like to to read investment reports online and look at insider trading. Um, so true popped up a couple times throughout reading and and screening for insider buying. Uh initially it it looked like a like a special situation out of Joel Greenblat's book. You know this there's this terrible business uh that primarily did cannabis that you know uh got rid of its terrible cannabis business, it's terrible skincare business and is revealing this very promising protein bar business. And you know naturally for these kind of restructuring situations, people are turned away. the old financials don't reflect the the the financials uh of the standalone company. So I took a look I I noticed the high insider ownership. I noticed the incredible growth in this company. If you take the standalone uh revenue by itself, they've been doubling revenues uh for a couple years with no marketing uh very little trade spend. And so when I looked into this company, I I I noticed, you know, protein bars are very competitive uh industry. So how come they've been able to succeed so handedly? You I looked at the history and I realized this protein bar was created specifically for women. You look at the protein bar market today and the the ethos is protein maximization. So you have recently David Bar came out that tried to jam as much protein bar as as they could in food bar. But when you talk to women you realize that they don't want at you know 25 30 grams of protein in their protein bar. They want a good amount maybe you know 16 12 to 16 and then fiber and these other kind of macronutrients. So looking at the market positioning there's very few protein bars. Uh I I believe when I spent time looking uh Troubar was at one of the largest already that was clearly targeting women and so you know they have this great the third party distribution model. um they've already started creating this very promising brand and you know at its price it was it was pricing it as a very speculative uh investment maybe because of the cannabis pass and uh so I I I made that uh position for the fund earlier this year. Um today came out with a takeover offer. Um nothing of the sort has has been mentioned during earnings calls. Uh and it looks like they're trying to push this through very quickly and the price given you know around 2.2 times last four quarter sales is is very disappointing in in my opinion. I I think when you buy a brand like this, the the certainty of the brand succeeding is is due to its market position and what what the promise is to to consumers. So, you know, Warren Buffett always says a brand is a promise. And when you look at, you know, there there's certain anomalies in the branding world. Why did why do people buy Coca-Cola over Pepsi when they essentially taste the same? And in the past, Pepsi was actually uh only in operations because they sold at a lower price. It's because of the marketing and the brand building they've done throughout decades to have this emotion evoked out of you when you buy a can of Coca-Cola. You get this sense of nostalgia. You get a sense of happiness. That kind of branding is a moat. It's not something you can see in a financial statement, but it's an incredible barrier to entry. And when you have a a brand like Troubar where this is a kind of like capital cycle opportunity, all the money is flowing into the protein dense bars. Not much is going into this woman focused niche and they're starting to build this brand that's, you know, clearly the sales are showing that that it's it's resonating with with its pen consumers. And so you you have that margin of safety from the brand positioning, not necessarily from the assets on its balance sheet or the the the the earnings that that it's it's generating right now. And to to kind of cut that story off at, you know, 60 70 million uh in in sales is very disappointing because, you know, this it's my belief that this Troubar will be able to continue to grow and uh by by selling it off so early, you're you're losing a lot of value that could be generated. >> And listen, I I I I respect that, you know, um listen, you you put together a big thesis, right? You you made it a core position. You know, you you thought that there was clearly some more runway there to be to be unlocked, you know, but may I push back? >> Yeah, of course. >> Respectfully. Um, >> no, but I mean, look, I have no dog at this. I'm not a shareholder or any of this stuff. Uh but but it it it's it's interesting and you know having spoken with a number of CPG companies in micro cap over the years and you know look it to push back like for instance on your your Pepsi Cola example with with uh with that like brand's been around since 2019. you know, it's not like this has been around for, you know, for that long. And with >> how quickly and how many, you know, the just how how uh what's what competitive this space is, >> you know, >> it's nice that you kind of carved out this, you know, marketing niche like this is for for but like that can be fleeting as well too, right? Like we've seen many amazing marketing strategies that we thought were brilliant at the time probably generate a lot of revenue but then you know over you know over time and in this day and age it's usually much faster than it was previously you know >> that now thesis or that market just doesn't work anymore you know >> so I'd be curious your thoughts on that front >> yeah absolutely you know when you look at protein bars in aggregate it is very competitive but in this specific niche and This has you know been reciprocated by industry reports like Mintel. There are very few protein bars you know for whatever reason that are focusing on the characteristics that that target women you know taste this lower protein count fiber and it's it's it's really part of the cap capital cycle framework. um you know so the idea that the trendy things that where where capital is being shoved into will will be more competitive and returns will go down you know like looking looking at brands you know despite the the success of Troubar uh past couple years uh it's had a small scale so maybe hasn't caught on uh the attention of the larger players but I I I'm I'm shocked to see that no one else is trying to enter this this you know, protein bars for one niche. And as as they delay that investment into this protein bar uh niche, True Bar is continuing to build a brand, it's continuing to invest in marketing and brand awareness and capturing what Buffett calls share of mind. So, you know, if tomorrow um a huge player came out and said, "Oh, we want to invest into women's protein bar." That that would be a considerable uh danger. But it, you know, but it it it it's not um it for some reason companies just don't focus on on these kind of uh untapped or maybe newer markets and it's it's hard to imagine them >> newer markets. Women have been eating protein bars for years. What do you mean new markets? Come on. >> Yeah. But uh you know the industry reports um talk about all >> people have been eating protein bars for years. Sorry, I don't mean >> Yeah, of course. Of course. Of course. Um and I think that's the the big misconception because when I talk to people um predominantly men who who are investors in uh in they don't understand the differences that appeal to women and I think a lot of companies in general don't understand that. And so that's that's why you know they have this little niche that's been working so success success successfully and um it kind of explains this uh capital cycle miss missed opportunity from the larger players. >> I mean again not and playing devil's advocate too. I mean, but if we're using if it's part of kind of that falls in that bucket of the capital cycle thesis, you know, isn't this then kind of a win? You know, you're kind of you're selling out before the bottom falls out in this trend of, you know, investing in protein bar. They're one product company, you know, they're Yeah. Yeah, I mean look, if you invested in it, you know, when it was pe when it was 52 week highs, like, yeah, that, you know, this sucks. But like, you know, for those that kind of bottom bottom ticked it, you know, this is kind of like a nice win on the on the on the cap on if if that's going to be your thesis, you know, like, yeah, you you're like, all right, the the trend is still very much your friend in this case, but like I mean, really, for how much longer? Yeah, that's a good point. Um, but you know, when I think about the end consumer, you know, women, I think their target audience is really moms. You know, the the the trend of eating protein in aggregate has been very very strong. It's hard to believe that, you know, these women will stop eating protein bars. And another like point point of consideration is the valuation that you're getting this company at. you know when when you look at big investments in the past there are um so I I believe Nick Sleep uh had a big position in Amazon and at the time investors were kind of worried that you know margins are are volatile uh and and that that's being reflected here with with the trade spend and marketing spend so the valuation you're getting um if you consider you know 7 to 8% net margins or operating margins as as a long-term achievable goal. The the the valuation you're getting is very cheap. So you have this huge marginal safety and you know if if you think about the capital cycle and and you're may be putting into consideration that uh this trend will die out which I I don't believe um with women and bars but what if another company comes out for brand right the you know if if you look at the company and its growth was cut in half it's still cheap it's just that margin of safety gives you that uh that that safety that that certainty that you need. >> Listen, I I I'm not even going to try and push back on the because you've done much more work than me on the valuation fundamental side of the business. So like I'm not even going to try and like I'll I'll take you at your word. So you know pro you you know that bring up a point there. I'm just more saying on, you know, I still think this is, you know, probably the best possible outcome in some respects because, >> you know, I don't know. Look, like I just I'm just I'm I'm also just not I I think I think for me, this is my own personal opinion. I just don't I'm I'm not a big believer in like you're just marketing protein bars for for like I think women are are they'll sniff that out a mile away of just like a marketing ploy versus like if this other bar looks healthier for me than this one. I don't care if this is for women, you know, like I'll eat that other bar because it's better for me or tastier or whatever. You know what I mean? Like that's that's really the risk you're running into when you're just you're locking yourself in of like this is a protein bar for women, you know? Like listen, I was in Costco the other day cuz I actually hadn't seen one before. And I finally looked at it and like I had no idea that it was marketed for women or whatever. I was just looking at the the the the ingredients and everything and I was like, "Huh, this doesn't seem like something I would probably" And I showed it to my wife and she said the same thing, you know? So, like that's why I again that's just my own personal anecdote, but like >> again I I think it might be kind of a >> might have locked out in some respects, bro. Like [laughter] you don't have to waste any more time thinking about like the like the the market dynamics of how this is being marketed. It's like all right valuation side of things. Totally get that. But if the thesis is also this like marketing to to women type stuff, hey, good luck, you know, have fun with that. Well, I mean, if thinking that way, um, it's then, you know, almost impossible to imagine why people will won't buy knockoff brands of Coca-Cola or, you know, Fred Lace. How come, you know, the brand has that much power that people are willing to pay for a product that tastes exactly the same, right? And I think that's the uniqueness of branding that uh you know Buffett uh you know with Seas Candy and with Coca-Cola his understanding of that is uh is sort of predicting the future financial results. >> Oh no I sorry I don't mean to cut you I'll actually agree. I think like the brand itself you know the like the name like that's a I think it's a legit good name for for for protein bar. Um, I guess it's more the marketing um, plan, right? I guess that's really where my where my critique is is more on like how how it's being marketed versus the actual branding itself. Because that's really the big difference when you think about it with like Coca-Cola and Pepsi is like how was Coca-Cola marketed versus like the brand like everybody would agree like oh Coca-Cola Pepsi like that's pretty cool looking branding you know I guess you know has the story but like when it when you think about how it was marketed ver versus its competitors and why it won versus like that's a marketing critique versus you know the branding itself. That's interest I'm I'm I'm not exactly sure um uh what you mean there, but I I would say that's um you know I mentioned you know Warren Buffett says brand is really a promise. Um and you know well how the way you convey that promise you know is through your advertisements is through how what the packaging looks like and also at the core product uh at the core at its core shoe bar is like a meat low kind of protein bar protein content >> uh bar you know that your mom's you know would like a lot more than something like say a David bar that you know That's 25 grams >> for sure. And look, I I just find this I just find it a fascinating case study. You know, it's just this is one that's been, you know, I know a lot of investors, we talked about with quite a few folks, you know, in the last six months. Um, so, and again, I don't I'm not a shareholder. I have no dog in this fight, but I I you know, I find it I find it pretty What would you say been the biggest lesson? I mean, I'm sure you're still kind of taking it all in. like this all was just announced today and it's not it's not like it's officially closed or anything but I mean what have been some early lessons or early reflections after this happened um that maybe you might take into when you look at the next CPG name or some other potential potential investment. >> Yeah. Um it's you know you're right it is early in the process so who knows what'll happen. Um I'd say you know understanding the incentives of management is is a big take away from from this you know the situation Kingsley Ward uh family office uh big incentive for for firm gains as as any invest investor is in in the professional world um which you know given what I believe um it's it's my takeaway that that's a big reason propelling this deal. Um, and yeah, I mean from this particular deal, I'd say that's the lesson. And I I'd say, you know, there's there's a theme among value investors. I'd say that [laughter] that also has a, you know, they share this unpopular opinion about takeover bids. And you have uh the one I was, you know, writing about this morning was Norbert Louu uh who wrote MVR in in uh Joe Greenblat's uh value investor club. He had a position in Quinca, which was a Latin American beer brand that had uh untapped pressing power and for for many years increased prices. He had the same kind of mindset where when Ambev came to take it over uh and at a good price, he thought, you know, the real winner in this deal is Ambe, not me. And you know, as an as an investor selling that position now, you have to think where do you put the rest of your money or where do you put your money now? Uh and and the kind of opportunity cost that's lost is is huge. You know, uh you can think of the the person who sold Seas Candy to Buffett after, you know, he generated 1.3 billion out of the company uh from a $25 million investment. At the time, I'm sure he was very proud of his sale to Buffett, but you know, after that that thesis executes, uh I'm sure he realized that that's a big blunder, right? I mean, but at the same time, like would we could go back and forth on that on on on all of these, right? where it's like would would the company have continued to grow at that increased uh pace if you know Buffett weren't involved or you know or if Ambe didn't buy it you know just >> personal opinion especially just to maybe wrap on like dude >> at a nice premium on a single product protein bar company like >> 200 million like come on man like that's all all things aside all valuation aside like objectively single product protein bar company for 200 million. Like that's not bad. >> Yeah. I mean, that's that's >> Come on, man. [laughter] >> If we're if we're just, you know, like but I but dude, I get it. I get it from your end. you know, look if your if your valuation has shown that it could have been worth more, you know, hey, >> but anyways, I mean, >> what would you say also has, you know, been, you know, just kind of reflecting more on it like an investing experience that really helped shape your career already so far? You know, I mean, you you published, you shared with me a couple letters. I mean what has there been any other other experiences that you've been like oh that was I'm really whether I made money or not on this idea like this actually was very formative for me to like now think more like with Trouar for instance now you're looking at management incentives probably a little bit more closely than you probably previously did you know like have there have been any other experiences like that >> interesting um I think uh well generally when I look at these he's uh you know what I take away from the insights of the investors before me. Um I I you know Leelu has this thing where he he says everything to the extreme but he says you know people who use these insights need a different part of the DNA. Um and I see you know sometimes I I look at you know a company like wise where I can clearly see they're they're that they're using the Costco model the geo model but the stock price still still falls. Um so uh you know in terms of using the insights of of the investors before me I think you know everything they've said still holds true. um in in terms of you know personal investments that uh that kind of shaped me um I'd say you know with uh as a young investor you know before I got internships and and started working professionally I'd say you know just realizing the the kind of companies that are out there with such huge price dislocations uh and mismatches with their their intrinsic value and uh being able to profit off them has has given me the confidence that yes uh you know although modern portfolio theory says you know that there there is there's an efficient market or somewhat efficient market you know there there is real opportunity for investors to to make uh make make higher the market returns. >> Very cool. All right. Well, dude, you've we've covered a lot here today. You know, this has been a fun reflection on you know, listen, you're you're just getting your start, man. like you're you've already you've already picked a winner, right? You know, for whatever it's worth. Um, and that's you know what's cool that I'm I'm really getting the feel from you on this is that like you know you're as you're one obviously obviously you're very passionate for it but like it's pissing you off that it couldn't didn't make more you know which shows that you're like let me find the next one could actually you know even crush it even higher. So like I I It's pretty It's pretty cool to see, man. I must say, you know, like you're 23 just getting after it. Like, hey, you already made a you already made made some couple bucks on this one. Like, now it's just time to find the next one and or, you know, continue to to do the due diligence on some more core holdings or reallocate to some other core holdings, right? So, I mean, for those that are listening in that, you know, might be in a similar situation or are, you know, maybe have been dancing with maybe starting their own fund, but hadn't haven't done it yet, like what advice do you have to them, you know, beyond the like just do it? Like what what other advice do you have? >> Yeah, I'd say, you know, the advice I'd give people is to start writing your investment thesis and putting them online. And you know uh really my first investment thesis I put out um I was very fortunate to to meet fund managers with decades of experience and um you know talk invited to a conference and you know putting your ideas out there testing them against other people um seeing what they comment. It's it's a great way to to test your own skills and to meet new people. Uh and and you know, occasionally you get the winners. Uh like for me, it was advanced auto parts during uh you know, April of this year the rebound after that uh helps you know give you some credibility and helps connect you with with uh funers as well. >> Very cool. Well, Kenny, with that, where can our audience go and find more information to follow you as well as Coral Capital? Yeah, of course. You can find more information on my website, Corval Capital, and I also write on Substack as fundamental. >> Very cool. Kenny, thank you for joining me today. Really do appreciate it. Good luck. Stay safe and I look forward to our next update. >> Yeah, of course. >> Thank you. [music] >> [music]