Going Private. Funding Secured.
Our first private deal and an exciting announcement
This year has been incredibly difficult for investing money especially since two of the worst sectors this year are the ones I invest in; Consumer Discretionary and Cannabis.
With that said, I’ve learned a lot about myself and my style of investing. This has led me to appreciate cash flow way more than I have over the last couple of years.
This is inherently different than focusing on earnings, topline, proprietary IP, TAM assumptions, or what have you.
The focus on how much “cash” the company generates is what started to peep my interest in a new way. Queue Shark Tanks Kevin O’Leary.
This led me to take a look at private businesses that generate tons of it. They don’t need to have stellar growth, but consistent cash flow that is easy(ish) to operate/run and are in an industry that is recession resistant (not proof) and in-demand.
Bingo bongo, a few ideas came across my mind that eventually led me to an area I’m pretty knowledgeable. Pet services.
It’s something I could personally relate to (I own a dog), have done plenty of research on (Petco/Chewy/Bark), and doesn’t take a rocket scientist to understand the underlying trends.
After countless opportunities that I looked into, I’m excited to announce that we’ve made our first small business acquisition in the pet space.
While I’ve decided to not share the public details of the business transaction, you can see the high-level takeaways below.
You’re reading the above right. It’s not a fluke or some type of fire sale bid. I found an incredible deal, paid well below precedent comps, and it generates incredibly healthy cash flow. #excited.
When I started Cedar Grove Capital, I had envisioned it solely as a L/S fund but as many people know, things change. The above private deal is kicking on the new and improved vision I have for Cedar Grove Capital (“CGC”), which brings me to my next exciting announcement.
I want to start said special announcement with a quick background about myself. What many of you don’t know, unless you personally know me, but I’m really no different than the average person who’s reading this. Investing has always been a passion of mine and I started the fund to eventually build it up like so many other current and former portfolio managers.
While the money I manage is from friends and family, the AUM has not allowed me to make it a full-time opportunity (fun fact, you need tens of millions unless you’re living with your parents and eating rice and beans to make it worth it). This is why I’ve also kept a full-time job to support myself financially as I got Cedar Grove Capital going.
While I started out my career in investment banking, over the last 3 years I’ve worked at various tech startups. My roles have me working directly with founders, CEOs, C-suite level management, and more.
In these roles, I’m responsible for growing and improving various business lines and the broader company itself. This, I believe, has given me an edge in investing given I understand businesses at a much more granular level than many retail investors. Especially consumer and retail ones. If you’re interested in creeping my CV some more, you can take a look at my LinkedIn.
The reason I tell you all this is because I’m sure many of you out there have always thought about starting something for yourself but haven’t pulled the trigger. Now that you know where I’m coming from, perhaps you can relate more to what I’m trying to accomplish for myself and be able to follow along more closely as I progress in this endeavor.
Now, with that said, Cedar Grove Capital Management has published research on investment ideas — both long and short — as well as trades, industry trends, and numerous charts. While I’m terrible at writing, I’ve been getting better over the last year and appreciate all of you that have followed along so far.
With the introduction of private investments, we’re going through a bit of a restructuring. The broader CGC brand is now three parts instead of one.
As part of the restructuring, we’re making one change and one addition. While I chose not to publicly publish our first private deal as a case study (there’s a reason why), and consequently all the future ones, I am offering consulting services through Cedar Grove Consulting.
This business solely exists to provide helpful guidance and expertise to everyday people who too want to purchase their first SMB or perhaps improve the operations of an existing one.
To learn more about this service offering, click on the button below.
In regards to Cedar Grove Capital Management, I’ve transitioned it into a multi-strategy fund. This means that more research and ideas will come from new and exciting areas of the market other than L/S equities.
But, with so much happening, I do feel like my content is worth more than the “free” option that I’ve currently been doing. Because of this, CGC Management will be going paid, but don’t freak out! It’s not exactly what you think.
I still believe that everyday people should still have access to content, but perhaps have the modeling/quantitative aspects behind the paywall. I spend so much time publishing what is essentially my investment notebook to share with you all that there has to be value there if I’ve grown subscribers over 4.9x YTD.
I’ve priced the newsletter competitively against other newsletters that I believe only provide generic research and rudimentary deep dives. This pricing incentivizes more toward a discounted annual plan rather than a month to month.
I’ve outlined below exactly what each subscription will get you based on what tier.
The reason I’ve included a “Founding Team Member” option is that if there’s anyone out there that has enjoyed my content and has the means to support my endeavor more than the regular paid subscription, I at least wanted to give you an extra perk. Additionally, this might translate to more perks as I tinker with the offerings.
Also, if you’re reading this, that means you also get to take part in my launch promotion. Until December 31st, 2022, you can get 30% off a year-long subscription.
If you’re a student, please use the link below for your discount offer. Reminder, this is only valid for emails ending in .edu.
Lastly, group subscriptions will get 30% off (groups of 4 or more).
This last year of writing has been a whirlwind and I’m so thankful that over >880 of you have found my research to be valuable. I’ve met so many incredible people once I decided to get on Twitter and I appreciate every one of you that has subscribed, shared, liked, and commented on my posts.
As a token of my appreciation, I also wanted to gift 5, year-long subscriptions, free of charge via a referral system. Have your friend use this form link to let me know who referred them to the Substack. Each successful signup with the above form will count towards you getting a year-long subscription (valued at $120). Winners will be announced on December 1 so make sure to get your friends to fill out the link for a chance to win.
I’m excited about this next step in my personal and professional life and I hope you are too. If you’re reading this for the first time, I hope you decide to follow along my journey by subscribing below and taking something to use for your own personal advancement.
Until next time,
Paul Cerro | Cedar Grove Capital
Personal Twitter: @paulcerro
Fund Twitter: @cedargrovecm
Company Twitter: @cedargrovech
Congrats and wishing you lots of success!