Another Investor Talks About Shorting “Cult” Stock Tesla (TSLA), Plus Talks Longs and Shorts in Dell, Gaia, and Land’s End

Greenhaven’s Hidden Gem: Gaia

Greenhaven Road Capital invested in Gaia Inc (NASDAQ:GAIA) in the third quarter, a company which Miller admits is ‘invisible’ due to its tiny market capitalization. But 75% of Gaia’s market cap consists of cash and real estate and it is gaining customers in a large and growing market. Gaia’s CEO, Jirka Rysavy, who also founded Fortune 500 company, Corporate Express, owns 38% of the company. Rysavy has an impeccable track record of sound execution in various sectors. In the second quarter, Gaia sold its big branded business for $167 million and its travel business for $12 million. The company is now left with a video streaming business which Miller thinks has an edge due to its niche-focused approach. Gaia streams content related to Yoga, nutrition, parenting, and related topics. The fund’s investor letter said that Gaia has a fully funded business model, and that the company can grow by as much as 50% per year. It generates greater than 80% gross margins. Although the investment has not been profitable yet, Miller thinks future growth prospects and downside protection make Gaia a good stock to own. John W. Rogers’ Ariel Investments owns 1.52 million shares of Gaia Inc (NASDAQ:GAIA) as of the end of the second quarter.

Lands’ End Will Continue to Fall

Greenhaven Road Capital is also short Lands’ End, Inc. (NASDAQ:LE), a company which Miller thinks has leadership problems. The letter said the company’s EBITDA was less than $10 million in the first-half of 2016, while its net debt is a whopping $280 million. Land’s End’s ex-CEO, Federica Marchionni, who used to spend little time in the company’s headquarters in Wisconsin, tried to radically shift Lands’ End’s brand towards high-end fashion, from what Miller calls “dowdy”-themed clothing. That strategy failed. The company is now being run by an interim CEO, an approach Miller thinks does not often work. Chuck Royce’s Royce & Associates is one of ten hedge funds tracked by Insider Monkey which owned shares of Lands’ End, Inc. (NASDAQ:LE) at the end of the second quarter.

Disclosure: None