Resolute Holdings Management, Inc. (RHLD): A Bear Case Theory

We came across a bearish thesis on Resolute Holdings Management, Inc. on Value Investors Club by cubbie. In this article, we will summarize the bears’ thesis on RHLD. Resolute Holdings Management, Inc.’s share was trading at $222.08 as of January 14th.

Resolute Holdings Management, Inc. operates as an alternative asset management platform. Resolute presents a compelling short opportunity stemming from the structure and incentives created by Resolute Holdings I LP’s 2024 investment in CompoSecure and the subsequent taxable spin-off of Resolute Holdings as a standalone management company. Following a $372 million investment that granted Resolute Holdings I LP a controlling stake in CompoSecure, a newly reconstituted board dominated by long-time associates of David Cote approved a sweeping management agreement that grants Resolute Holdings effective operational and strategic control of CompoSecure for at least ten years.

Under this agreement, Resolute receives a quarterly cash fee equal to 2.5 percent of CompoSecure EBITDA, full reimbursement of non-personnel expenses, and near permanent renewal rights absent felony or fraud, with no performance-based hurdles. This structure materially alters the alignment between Resolute Holdings I LP and CompoSecure minority shareholders, as control is preserved regardless of dilution, while the fee stream grows with any acquisition activity. These incentives may encourage aggressive and dilutive M&A, as Resolute benefits from fee expansion even if acquisitions underperform.

The recent agreement to acquire Husky at an estimated 11.2x EBITDA illustrates this risk, as the purchase appears expensive for a cyclical industrial asset and meaningfully increases Resolute’s fee base while reducing its ownership stake in CompoSecure.

At current valuation levels, Resolute’s equity implies an aggressive and sustained pace of successful capital deployment far beyond what appears realistic, requiring tens of billions in acquisitions to justify its multiple. As the market reassesses the durability and quality of the fee stream relative to execution risk, the stock appears positioned to re-rate lower toward a more reasonable valuation, supporting a price target of $26.

Previously, we covered a bullish thesis on BlackRock, Inc. (BLK) by Kroker Equity Research in February 2025, which highlighted its diversified asset management, record inflows, and Aladdin® platform driving strong revenue growth. BLK has appreciated approximately 9.82% since coverage. Cubbie Shares a contrarian view on RHLD, emphasizing expensive acquisitions and aggressive current valuations.

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Disclosure: None.