Today’s report is going to cover quick updates on a lot of companies in one report because we hate getting spammed with emails and wouldn’t do that to you. If you have an interest in only some of these companies, they’ll be in the order that you see below, so you can jump around if needed.

Earlier in January, we sent a follow-up to our M&A arb trade of calling BS on the Soho House (SHCO) take private offer. There were plenty of reasons why we thought the offer was complete crap it looks like we were right.

As a reminder, the “offer” was announced ~1 week before Christmas last year and typically, it would only take a few months for that offer to be accepted or denied. Fast forward to SHCO’s Q1 earnings release on May 9th, the company updated shareholders on the transaction.

This, ~6 months later, reaffirms our original concerns around the legitimacy of the deal not being “real.” Stock is down ~15% since the time we published our trade idea, though we remind you that it was down 34% at its trough post-liberation day.

We don’t foresee any further materialization regarding this deal or the prospects of SHCO turning around in the near term.

For those of you who read our initial report on LNSR, you most likely did well if you decided to buy. Through market close yesterday, the stock is up 45.7% (since Feb). If you were to factor in the takeout price by Alcon (ALC) for the $14/share + the $2.75 CVR, the potential return could be upwards of 80% since we published.

However, there’s some red lining here. When the announcement came out that they were being sold for $14/share, we quickly put out an open letter for shareholders to reject this offer because we thought the company was worth closer to $20/share, if not more.

In our Q1 letter, we highlighted that between ALC and JNJ, they own about 50% of the global market for cataract surgery devices, which isn’t an insignificant number. Because of this, the FTC has now made a Second Request on the deal. It doesn’t necessarily mean that the FTC might block, but it’s something to keep an eye on since the stock is now trading under the takeout price (currently $13.51).

Honestly? We’d rather the deal not happen and size up our position post-deal-break since we’re confident LNSR is worth much, much more. However, if the deal does go through, there’s obviously a bit of juice left in the spread that could be worth it for someone looking for an arb trade.

**Reminder, the special meeting for this deal is on July 1st, and if you’re a current shareholder, you should have received the Yes/No vote the other day electronically.

Battles hard fought and won. If you read our research on Liquidia (LQDA) back on January 7th and decided to act, congrats! The stock is up ~42% since then. It has been a long and bumpy road for those who got into it this year and for others who have been holding on for much longer than that.

Thankfully, United Therapeutics (UTHR) most recent hail mary to stop Yutrepia from coming to market through a temporary restraining order (TRO) was shot down by a judge last week. Court doc here.

With the approval of the FDA on the 22nd, LQDA has already begun its first commercial shipment of Yutrepia, which is what we’ve all been waiting for. With the TRO out, we’re still not quite out of the woods yet, but the upside for LQDA is looking brighter.

In our original note, we outlined the math on what we think LQDA could do with Yutrepia and the conservative price that could reward shareholders. Emphasis on conservative, which would still signal a multiple of where it’s at today.

We are very optimistic about the future of this company and our current position.

As a reminder, LQDA presented at Jefferies yesterday with some very positive commentary - hence the >6% move in the stock.

Capri has been a love-hate relationship for us. We were long the original arb trade with Tapestry (TPR) in 2024, which didn’t end up well for a lot of people. We then shared the trade idea for CPRI divesting Versace before Liberation Day. Needless to say, we got rugged on price but ended up being right on the outcome of the divestment (1:1?)

Anyways, since our post-sale update on April 13th, the stock is up 23% when we reiterated that the financials still showed a healthier company could come out of this rut with value-accretive options for shareholders.

This was further reinforced when the company announced its Q4’25 earnings, which signaled to us that the bottom was most likely in. A few things stood out to us that build on our conviction that a turnaround for CPRI (MK + Choo) seems likely.

So there’s been good things going on, and management highlights the positive trends it’s seeing at MK with their new brand storytelling and product initiatives. It makes us believe that the bottom of the Liberation Day tariffs is in, though the unfortunate part is that CPRI was not one to rebound quickly despite the reciprocal tariffs being paused → most of MK sourcing comes from Vietnam, Cambodia, and Indonesia.

But here’s how we’re still looking at the valuation going forward, and caveat that it will take time to get there if the tariff pause and sale are any indicators of investor sentiment for the future.

We can play with all the math we want, but at the end of the day, we think if tariffs do become illegal and hold, then a re-rating is warranted, considering the company received one on the way down.

Based on those assumptions, we still see upside in the stock should the positive Q1 trends hold and financials don’t deteriorate beyond management guidance.

Even factoring in various assumptions, the trade looks asymmetric from here as long as Trump doesn’t go crazy again with tariffs or anything else that would throw the macro off balance again.

While not a large position by any means, we’re looking to see this one through and reap the fruits of our labor (analysis).

GEN Restaurant (GENK) has been a love-hate relationship for us. It’s one of those names that showed a lot of positives for how big the KBBQ concept could really be.

However, on February 7th, we were notified by another investor of some perhaps not-so-truthful information that led us to close the position → this was shared with you all on the same day. We also spoke to them at the Microcap conference in April and shared with you that we decided to pass once again. Since the initial red flag post, the stock has dropped from ~$6/share to ~$3.20/share earlier this week before rising to north of $4/share.

We think there have been some positive changes that could entice us to hop back in at these levels for a speculative trade.

Granted, none of this is based on changes to the underlying business. It’s just additional factors that are arguably positives that you’d like to see in a company that might be reflecting. Something worth noting if you’re looking to potentially get back into this name.

If you haven’t already, you can read our recent arb trade idea with DICK’S Sporting Goods (DKS) acquiring Foot Locker (FL). In that report, we highlighted that the deal could face FTC scrutiny because of the leverage that the combined company would have against Nike (NKE), the largest athletic footwear retailer in the country.

What’s interesting is that recently, FT reported that NKE was actually in favor of the deal happening.

This is a surprising take for us, as we would have thought that NKE would not want the deal to happen. What’s interesting is that in the same article, a comment was made that in the grand scheme of wholesale athletic footwear dominance, NKE can’t continue to lose out, which is why they’re coming back to wholesale and relaunching on Amazon.

So we think that this new information shared would lean more towards the acquisition being completed without FTC contesting it, so potential ROI of the deal leans more towards the higher single digits, contingent on where you think DKS eventually trades, rather than the outsized >30% return from a deal break.

Something to note if you’re in it or contemplating being in it.

The other day, HIMS announced that it was going to acquire ZAVA, another telehealth company that operates in four countries (UK, Germany, France, and Ireland) and has $1.3 million subscribers.

There are two main things that we wanted to address in relation to this announcement.

We’ve never understood why HIMS would want to move abroad, given their cash pay business model not meaning much when you’re trying to penetrate countries largely built on socialized healthcare. They made their UK acquisition in 2019, and we’ve rarely heard anything out of that endeavor since, hinting that it was very immaterial to growth.

The premise of this opinion is based on the fact that here in the U.S., the healthcare system is riddled with problems that a cash pay model works very well by disrupting it. That’s why, after 8 years, HIMS has grown from $0 to $1.45 billion, treating various conditions in the process.

ZAVA? Been around since 2011, and after 14 years, has only been able to generate ~$35 million in sales.

Pretty pathetic, which one could argue that a cash pay model in a heavily insurance-based continent doesn’t work very well. So there are a few points that we can infer from this acquisition, as well as an out-of-the-box take.

Either way, this deal seems very much like a nothingburger, and the market reaction said more than people realize.

Given that this isn’t the first time Andrew has announced a deal, we were quick to call it out. Do you remember the Trybe acquisition from back in February, 2 days before the shortage ended? Yeah, that day the stock rallied 25% at the peak from buying a company with just a dozen employees. That’s how stupid it was, and that’s what we linked it to immediately.

Many assumed, like last time, that the short interest would help fuel another short squeeze and maintain it. The issue with that is that SI has been going down since the 15th of May, which we tweeted about last week. This already wasn’t in bulls favor.

At the market open, the stock rallied ~18% as many retail investors were once again banking on another short squeeze. However, within just 30 minutes, the price went from +18 points to just +3. In 1 hour and 15 minutes, it went negative.

It’s telling when you think about how volatile this stock is and the market pukes to a >20 point reversal in less than 1.5 hours. To add insult to injury, the stock traded ~115 million shares, the second highest on record, and the stock still couldn’t end up in the green. Market effectively puked it.

We think this is for a few reasons.

We think that the stock, post the Q1’25 squeeze, is finally running out of juice, and the slow grind lower could be in the cards until CC data suggests a strong beat to Q2 guide.

It will be interesting to see how this plays out, but make no mistake, the traditional PR pump plan that Andrew lives off of didn’t work this time. This was another minuscule deal with barely any revenue or growth that the market shrugged off almost immediately.

We’re here for the ride.

As always, we appreciate your support of our work. If you have any questions, please make sure to message or comment below. If you think others would benefit from the research/commentary we release, we would greatly appreciate your sharing.

Until next time,

Paul Cerro | Cedar Grove Capital

Personal Twitter: @paulcerro

Fund Twitter: @cedargrovecm