Closing MFRM for now

Over the past week I’ve closed out my MFRM short position, as the share price has come more in line with the following company-specific and broader market realities:

• MFRM is a rollup acquisition model with exploding debt
• From a profitability standpoint, the company has yet to prove that this model has economies of scale
• Q1 earnings reports have been horrible for retailers

Finally, I’ve seen various short cases for MFRM put forward from others. While I am by no means turning bullish on MFRM, I do think that shares have started to price in much of the (still valid) risks to the story.


Here is a valuation table with updated figures based on MFRM’s 2016 guidance put forth in the Q4 earnings release.

With EV per store having fallen well below historical levels given the current stock price, the valuation here in the low $30’s has provided a nice return from the mid-$40’s where the short recommendation was initiated. While I do think it could easily go lower, the risk-reward has become more symmetric.