**Sorry, we have to send this in two parts because we ran out of space. Part II will be on SNWV, KITS, REAL, and LNSR.

If you’re like us, you’ve most likely endured the biggest part of Q3 earnings season while also trying to hold your portfolio together in what seems like a harsh drawdown in most names broadly.

Below, we’re sharing our notes on names that we hold and cover to provide an update on how we’ve interpreted recent earnings releases. Looking at the below, we’ll talk about these names in that order, should you want to jump around and only focus on certain stocks.

With that, let’s begin.

Experiencing drawdowns is tough, and to be able to stomach those drawdowns and not second-guess yourself is even harder. That’s why when we first came across OSW, we were surprised by how simple the business model and how asset-light the company was, is.

For quick reference, OSW is a spa and wellness center that mainly operates on cruise ships. This attachment and perceived correlation with cruise lines sent the stock into free fall on liberation day. We outlined exactly why that was wrong and why we invested in the name here (free to read).

The reason we are bringing this back up is because with so much froth in the market and names getting hit left and right, we believe that OSW is a prime candidate for any manager/investor who is looking for a new idea that continues to get looped into the broader cruise line ship trade.

Take the following, for example. The biggest cruise lines (RCL, CCL, and NCLH) have seen quite the drawdown since the start of the quarter, exacerbated by reporting positive quarterly revenue growth but below Wall Street expectations.

This was on the back of OSW posting market-beating results.

These recent results sent the stock up >10% since announcing earnings, but then, as you see, it has dripped lower during the recent market turmoil. This is truly an interesting company in the small/mid-cap space for anyone who needs another idea.

Is it as sexy as AI or quantum? Absolutely not, but at 17.0x NTM EBITDA and projected to grow EBITDA double digits for the next few years via an asset-light model, the risk-reward profile here for a true compounder, in our opinion, was and continues to be high.

We no longer hold a position in this name strictly because we had other higher conviction names with a higher IRR, not because we don’t like the company. Just something to put on your radar one last time, if it gets “cheaper” on the back of strong fundamentals, should the market sell off.

Capri is a name that we’ve been tracking for most of this year, mainly from the perspective of their divestment of Versace as a special situation trade. We’ve outlined plenty of work on the math (recent here), but of course, with liberation day tariffs, anything consumer or retail related that has exposure to Asian manufacturing has been hurt and slow to recover.

Despite the sale of Versace ($1.375 billion) scheduled to be completed later this year, and our opinion that the bottom was still in, there’s a lot of work that still needs to be done before CPRI can get its legs again.

Based on last quarter’s earnings, management hinted that they were seeing some positive trends with their new push in brand storytelling and product initiatives; however, both Kors and Jimmy Choo continue to see declines in their financials.

As we see it, there could be potential for CPRI investors to make a decent return on their money at some point in the future, but it’s tough to see when that could be, if at all.

We’ve said in the past, the company has had an identity problem ever since it tried to become a “luxury fashion house” by acquiring Jimmy Choo and Versace. Clearly, that hasn’t worked out that well, but that’s not stopping management from understanding that things need to be done.

These initiatives by management are what will put in motion the turnaround that could reward investors, but it won’t be easy or quick. Big picture, they need to change the perception of the brand and rely less on promotions so they don’t appear “cheap” in customers’ eyes. This is not something that happens overnight.

In the recent quarter, management highlighted that channel comps turned positive and their outlet sales saw reduced promotions in an effort to course correct their pricing strategy, which could lead to sales declines in the near future.

Management did, however, believe that revenue and earnings growth would return in FY’2027 and that tariffs would be mitigated → something that took a toll on gross margins in the quarter.

If any investors are still interested in holding this name, there are a few positives and catalysts in store for those willing to wait.

The problem here is that it’s just tough to see how much the market will reward the company if they are able to get things on track. Even if we keep CPRI’s LT guidance intact and apply a conservative multiple, the return isn’t the most attractive.

The multiple is largely what will drive future returns until the company can get back to growth. In our opinion, banking on a multiple re-rating is a terrible way of doing things, which is why we always tend to stay conservative in that nature from a thesis point of view.

We can’t foresee when CPRI will turn the corner, but we do think that post the rally that it's had off the lows earlier this year from the divestment, there are better opportunities out there in the turnaround space. Such as the one below that we’ve been very bullish and public on for a few months now.

WW is another name that, in our opinion, had an unwarranted drawdown that we had to deal with. After posting Q2 earnings, the stock sold off aggressively after its pop above $45/share in August.

However, in our original thesis (here), we highlighted why a slimmed-down WW was better positioned to make a turnaround now vs when they first started selling medication in 2023. This is coming from someone who shorted the company back then for the complete opposite reasons of why we’re long today.

We believe that WW’s evidence-based care model is best positioned to work, and partner with modern insurance companies who are utilizing a value-based care approach.

As the stock began to dip below $30/share and, eventually, under $26/share, we sent you all our note on the credit agreement and why that alone could yield a 2x on the stock.

Given the most recent earnings last week (popped >15%), we’re bullish than ever and think we’re truly in the early innings of a multi-year turnaround story, and a looming catalyst that we think investors aren’t appropriately underwriting, if at all.

If you’d like to see our previous work before diving further, just click here.