After Two AI Picks Hit +1,000%, Here's Where I'm Recycling The Capital
A regulatory regime change, a pending European JV, +65% upside against a risk-reward 1 to 2.9. Buy.
Note:
Since my trade alert on Monday, the shares are down to $59, so the upside is now 74% with a risk-reward of 1 to 3.2. Even better!
My top three positions that have 5x to 8x1 are AI-related holdings, POWL and STRL, crossed +1,000% last week.
That kind of move is the privilege of buying right and sitting still, but it also concentrates the portfolio in one theme. Almost a fifth of the portfolio (6 companies out of a total of 31) are related to the AI-theme. All those positions have appreciated considerably. The one with the smallest gain is MU, which has gained 106% from the cost basis…
… or 136% since I recommended it the first time.
So while 19% of the positions are in the AI-theme on a count basis, 38.3% of the market value of the portfolio is in the theme.
So I’ve been hunting in sectors I actually understand, away from the AI complex. Energy first. In November, I flagged in the Weekly 58 that energy was the sector to watch on a 12-month view.
In December, I followed with my first energy pick…
… and in March, I added a second energy name in MENA oilfield services.
Utilities second. In February I picked up a utility name that slipped through my fingers in 2024 when valuation finally became sensible.
Defence third. My April defence pick sits on the +13.4% FY2026 budget signal and a multi-year spend cycle.
So far, 3 out of my 4 picks show a positive return. Defence shows a loss, but it hasn’t been more than a month yet.
So which space will be the fourth???
Food is the fourth, and the logic looks like defence: regulatory tailwinds doing the work, multiples compressed, and the operating story turning before the multiple does. Of every food name I’ve looked at over the past month, this one is the one I keep coming back to.
Why Food, Why Now
I’ve spent the past quarter looking at every credible food name with a circular-economy or biofuel angle. Adecoagro. Bunge. ADM. Bachoco. Pilgrim’s Pride (which I just exited).
Of all of them, this one has the most asymmetric setup right now because three things are converging at the same time.
A federal regulator finalized the largest renewable fuel mandate in the program’s history.
A pending European joint venture gives the high-margin specialty arm a 12-16x EBITDA re-rating catalyst inside the next 12 months.
And the operations team has spent two years cleaning up two big acquisitions, with the result showing up cleanly in Q1 2026’s gross margin print.
Each of those would be useful on its own. Together, they’re a regime change.
The market hasn’t repriced for this. The stock trades at 14.5x EV/EBITDA versus a 5-year average of 13.5x, slightly above on the surface, but the trough year compresses EBITDA artificially.
On the DCF-implied EV/EBITDA of 20.6x, the entry today is 40% below fair value. P/B at 2.2x versus the 5-year average of 2.1x looks slightly expensive only because book value is depressed.
This company is the unglamorous opposite of an AI compute story. The company picks up dead animals, used fryer oil, and slaughterhouse byproducts from hundreds of thousands of collection points and turns them into proteins, fats, collagen, gelatin, and renewable diesel feedstock. Every part of the supply chain is regulated. Every cent of the margin depends on commodity pricing. The stock has been cut in half from its 2022 highs and is one of the most hated names in consumer staples. It’s exactly the kind of business I want to own when the AI frenzy needs a counterweight.