Jun. 25 at 4:42 PM
6 months ago we initiated our long position in
$LTH, while also including an optional pair trade of long
$LTH/short
$PLNT
Today that pair trade crossed +100%.
One of the most asymmetric trades of our history, and one that has been fairly directional throughout.
“When compared to Planet Fitness (PLNT), we see a sharp discount, despite both topline and profitability metrics being in favor of LTH. We can attribute this to LTH’s slightly higher indebtedness, however, with a favorable interest rate regime and excellent operating leverage taking shape, we expect this gap in valuations to close relatively soon, especially given the trends we noted under the K-Shaped economy.
The near 40% discount on LTH compared to PLNT is unjustified and gives us the first reference point in going about valuation. (For our HF clients, a pair trade short PLNT/long LTH is likely alpha positive over the next twelve months and one we would advise).”
