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Matthew_Warder

Matt Warder

Chief Analyst of Cabot Turnaround Letter

Matt Warder is an energy, metals, and mining analyst with nearly two decades of experience covering the natural resource and industrial sectors. As founder and CEO of management consultancy and financial analytics firm Seawolf Research, he provides investment and consulting services to clients across multiple sectors with a pronounced focus on energy, metals, mining, and industrial supply chains.

Prior to forming Seawolf, Matt co-founded and served as Director of Energy Capital Research Group (ECRG), where he managed an 8-person team dedicated to cross-sector equity research, due diligence, financial modeling, and commodity supply/demand/price forecasting for a major financial publisher. In that remit, he designed and directed development of a Python-driven, customizable financial data platform for his team’s proprietary securities analysis, and authored a weekly natural resources-focused newsletter alongside legendary mining investor Rick Rule.

Matt’s tenure at ECRG followed nearly a decade at global energy/metals/mining research consultancy Wood Mackenzie. At WoodMac, Matt served as Principal Analyst for Coal, Iron Ore, and Steel Costs, leading several supply side analysis teams across the North and South American industries, and helping to develop the company’s asset-by-asset cost research from the ground up. While in those positions, he authored over 150 reports annually covering individual assets, regional supply studies, and emerging trends in the steel raw materials markets – in addition to providing bespoke research and consulting services for industry clients and institutional investors.

Matt frequently presents at natural resources conferences around the world and holds a Bachelor of Science in Chemistry from the College of William & Mary.

From this author
As I mentioned in my first installment of the Cabot Turnaround Letter, the most valuable lesson I have learned in my professional career as a price forecaster is that the rate of change – of just about any metric – tells us everything we need to know about the immediate future. When the rate of change accelerates, it tends to continue accelerating. When it decelerates, it tends to continue decelerating. And the resulting push and pull is a large part of what comprises the business cycle.
Mattel (MAT) reported revenue of $1.08 billion, down 0.7% from last year, and missing the consensus estimate of $1.09 billion by 1%. Earnings per share, however, exceeded the consensus estimate of $0.16 by 18.75%, coming in at $0.19. Key metrics showed mixed performance: Barbie sales fell 5.9% to $266.10 million, Fisher-Price dropped 17.5% to $135.90 million, while Hot Wheels rose 3.9% to $327.40 million, and other brands reached $471.90 million, beating estimates.
There are any number of catalysts that can change the fortunes of a turnaround stock, but the easiest opportunity is simply leveraging the business cycle.
V.F. Corporation (VFC) announced the sale of Supreme, the famed streetwear brand, to EssilorLuxottica, the owner of Ray-Ban, for $1.5 billion, leading to a 13.6% surge in VFC’s shares on Wednesday. Supreme, a New York City skate shop turned global fashion icon since 1994, became renowned for its exclusive collaborations with luxury brands like Louis Vuitton and Nike. VFC acquired Supreme in 2020 for $2.1B, hoping to leverage its trendy image to boost its portfolio. However, the huge debt load and miserable margins took their toll, and by last year the company had written down two-thirds of Supreme’s value.
With inflation numbers finally softening and Federal Reserve Chairman Powell telegraphing rate cuts in September (or sooner), the biggest turnaround catalyst of 2024 may finally be here.
Wells Fargo (WFC) kicked off the Cabot Turnaround Letter earnings season today, showing solid EPS of $1.33/share, which exceeded estimates by 4 cents. WFC also beat revenue estimates by $410M, coming in at $20.69B, but the stock is trading lower this morning as the company posted a 9% YoY decline in net interest. We moved this one to HOLD back in the May 27 issue at 60, and it just hasn’t quite been able to clear that prior high. Given that we have a 119% overall gain on this stock in the rear-view mirror, and that interest rates – and therefore WFC earnings – are only likely to go lower from here, we’re moving this one to SELL.
Earnings season is over, so there were no companies that reported earnings this past week. However, the next earnings season is just around the corner, starting with Mattel (MAT) on July 23rd.
Walgreens Boots Alliance (WBA) acknowledged disappointing quarterly results on Thursday, cutting its full-year financial guidance to a range of $2.80 a share to $2.95 a share, down from previous expectations of $3.20 a share to $3.35, and well off analyst estimates of $3.21. CEO Tim Wentworth discussed plans that could lead to the closure of thousands of its U.S. pharmacies as the company’s retail business continues to struggle. “We are at a point where the current pharmacy model is not sustainable, and the challenges in our operating environment require we approach the market differently,” Wentworth said, also noting that a quarter of the stores are not contributing to operating income. While there were positives – a well-performing international business and a growing U.S. healthcare segment for instance – future performance will heavily rely on the company’s shift toward greater efficiency.
In this month’s issue of Cabot Turnaround Letter, I recommend a company I’ve been fond of all the way back to 7th grade. It’s a household name, but one that’s perhaps been forgotten on Wall Street in recent years. But now, it looks primed for a turnaround.

Details inside.
Earnings season is over, so there were no companies that reported earnings this past week. However, we do have at one last company on a slightly different fiscal schedule reporting next week – Walgreens Boots Alliance (WBA), who will announce results on the 27th.
Turnaround stocks can benefit from new executive leadership, activist campaigns, bankruptcies, spinoffs and more, but the easiest turnaround opportunities come from simply tracking the business cycle.
Ammo Inc (POWW) beat on revenue of $40.42M but its EPS of $0.01 per share missed expectations by $0.03. The company experienced sequential revenue growth in the ammunition segment and maintained robust margins in the GunBroker marketplace, but total revenues and gross profit margin were both down year-on-year, influenced by a shift in sales mix and macroeconomic pressures. The year ended with substantial operational cash flow and an improved net working capital position including $55.6M in cash, positioning the company for future growth.
Earnings season is largely over, so there were no companies that reported earnings this past week. However, we do have at least one company reporting next week – Ammo, Inc. (POWW). And the next earnings season is frankly just around the corner, with Walgreens Boots Alliance (WBA) announcing they’ll release their next round of results the last week of the month.
Duluth Holdings Inc. (DLTH) reported its fiscal first-quarter 2024 results, with revenues of $116.68 million, missing estimates by 2.52% and down from $123.76 million a year ago. The company posted a net loss of $7.9 million and Adjusted EBITDA of $1.8 million. Despite sales challenges, CEO Sam Sato highlighted improved inventory management and successful customer engagement campaigns. The company ended the quarter with $6.8 million in cash and updated its fiscal 2024 outlook to net sales of $640 million and Adjusted EBITDA of $39 million.
Sizing up a merger arb opportunity requires more than just garden variety equity analysis. In his famous letter to Berkshire Hathaway shareholders in 1988, Warren Buffett laid out four questions to answer regarding arbitrage situations:
  1. How likely is it that the promised event will indeed occur?
  2. How long will your money be tied up?
  3. What chance is there that something still better will transpire – a competing takeover bid, for example?
  4. What will happen if the event does not take place because of anti-trust action, financing glitches, etc.?
Today, we add a new Cabot Turnaround Letter recommendation that we think comes close to answering all four.
V.F. Corporation (VFC) reported a 13% revenue decline to $2.4 billion, missing expectations. Sales were down across the company’s brands, with North Face sales down 5%, Vans 26%, Timberland 14%, and Dickies 15%, with all regions seeing declines, led by a 22% drop in the Americas. Adjusted operating margin fell to -2.1%, with EPS at -$0.32 vs. $0.17 a year ago. On a slightly better note, inventory fell $382 million from Q4, and net debt is down to $5.3 billion. While CEO Bracken Darrell emphasized ongoing turnaround plans and leadership rebuilding, analysts downgraded the stock as the company’s $1.7B in debt maturities could lead to potential asset sales and dividend cuts.
In today’s note, we discuss the recent earnings reports from Kopin Corporation (KOPN), Adient (ADNT), and Bayer (BAYRY).


Our note also includes the monthly Catalyst Report, which we encourage you to look through. This report is a listing of a few companies that have reported a catalyst in the past month. These catalysts include new CEOs, activist activity, spin-offs, cyclical turnarounds and other possible game-changers. We source many of our feature recommendations from this list. You will find it nowhere else on Wall Street.
Viatris (VTRS) reported 1Q 2024 results yesterday, narrowly missing on revenue but coming in line with earnings expectations at 67 cents per share. Sales of older drugs Lipitor and Norvasc declined, with the branded drugs unit’s revenue dropping 4.5% to $2.31 billion. The company has completed its women’s healthcare business divestiture and expects its API unit sale to close soon. Despite the challenges, Viatris reaffirmed its financial guidance for the year, projecting total revenue between $15.5 billion and $16.0 billion, with adjusted EBITDA estimated at $5.0 billion to $5.4 billion. The company remains focused on debt reduction, having paid down $546 million during the quarter.
Gannett (GCI) reported after the bell yesterday, beating on revenue but missing earnings expectations by 21%. The company posted an $84M loss on $635M in income but reiterated guidance to 10% growth in its digital division, keeping overall revenue declines to the low to mid-single digits. CEO Michael Reed reiterated the focus on digital transformation, with revenues from that side of the business likely to comprise 50% of Gannett’s income by 2025.
Xerox (XRX) reported significant year-on-year decreases in both revenue and earnings on Tuesday, showing a net loss of -$113M (versus estimates of +$49.5M) on revenue of $1.5B, down 12.4% from last year’s 1Q. Despite the disappointing results, CEO Steve Bandrowczak remains optimistic about the company’s restructuring strategy, which aims to align Xerox more closely with market demands and improve operational efficiency.
In twenty years of price forecasting, the most valuable lesson I have learned is that the rate of change tells us everything we need to know about the immediate future. When it accelerates, it tends to continue accelerating. When it decelerates, it tends to continue decelerating. And surprisingly, this tends to be the case no matter what metric we choose to examine.
Nokia (NOK) missed on revenue but beat on earnings yesterday, reporting EPS of $0.10/share, which exceeded estimates by over 50%. CEO Pekka Lundmark noted that 2024 will probably remain a weak year for the mobile RAN (radio access network) market, but reiterated expectations that it will likely pick up over the final two quarters. Declining demand for 5G equipment in the U.S./Canada, and a significant slowdown in China (also notably affecting AAPL) are the root cause, but economic data has only recently started to inflect.
Wells Fargo (WFC) kicked off the Cabot Turnaround Letter earnings season today, showing EPS of $1.26/share, which exceeded estimates by 17 cents. WFC also beat top-line revenue estimates by $710M, coming in at $20.86B. Despite the comfortable beats, WFC shares are essentially flat for the day.
The next earnings season starts very soon, with Mattel (MAT) set to report on Tuesday, April 23.