Investment Review №328. Waiting for change

Heritage Global Inc. (HGBL) operates as a diversified asset monetization platform. In its Industrial Assets segment, the company auctions and sells equipment and businesses. In the Financial Assets division, it stands as the largest broker of consumer charged-off debt in North America and finances the buyers of that debt. This model reduces the company’s dependence on the cycles of any single line of business and allows it to capitalize on both the growth in bankruptcies and business closures, as well as the rise in consumer lending with high charge-off levels. Furthermore, the company pursues an active M&A strategy, with management anticipating the completion of at least one deal by the year’s end. However, investors should consider the inherent volatility of the business, the concentration of risk in the lending segment, and the low liquidity of the stock. Despite these constraints, we believe that the current market valuation fails to capture the company’s potential, presenting an attractive risk/reward ratio. Analysts at Freedom Broker have determined a fair price for the stock at $3.1 over a one-year horizon.

Orla Mining (ORLA) is a distinguished gold mining company operating in both North and Latin America, with three primary growth drivers: 1) the Musselwhite underground mine in Ontario, acquired from Newmont in February 2025, which will allow the company to more than double its production capacity; 2) the low-cost Camino Rojo Oxide project in Mexico, renowned for its significant underground /sulfide expansion potential; and 3) the South Railroad heap leach project in Nevada. These catalysts form sustainable multi-year growth potential. In addition, ORLA remains one of the most cost-effective producers, which increases its appeal. The Camino Rojo project, in particular, boasts impressive cost efficiency, with the company reporting cash costs of $597 per ounce and a total AISC of $845 per ounce in the first quarter of 2025, prior to the geotechnical incident in July 2025. Even after accounting for remediation costs, the Camino Rojo AISC forecast for 2025 ($875-975 per ounce) is still better than that of most peers. According to FactSet’s consensus, the target stock price stands at $13.30 on a one-year horizon.

M-tron Industries, Inc. (MPTI) designs and manufactures highly reliable radio electronic devices for frequency and spectrum management. The company is strategically positioned in key product segments due to its strong relationships with leading defense prime contractors and the increasing demand for commercial avionics. MPTI’s components are used in systems on most Boeing and Airbus aircraft, and its other clients include industry giants like Lockheed Martin, Northrop Grumman, Raytheon Technologies, and BAE Systems, reflecting the high demand for the company’s products within the industry. MPTI’s growth is also driven by its significant investments in R&D and capital expenditure, which helps expand and maintain the relevance of its product line. Around 30% of the FY 2024 revenue was generated by products launched since 2020, highlighting the crucial role of innovation in fueling future growth. We see significant long-term growth potential in the expanding aerospace, defense, and avionics markets. Analysts at Freedom Broker have set a fair price of $61 for the stock over a one-year horizon.

One Liberty Properties (OLP) is a self-managed REIT focused on industrial real estate. The company’s portfolio comprises 103 properties across 32 states, characterized by high occupancy rates and a stable rental base. OLP’s stock maintains upside potential and is appealing for several reasons: 1) there still are significant organic growth prospects – notably, 36% of the leases expiring in 2028-2029 are below current market rates, providing a foundation for cash flow growth in the foreseeable future. 2) OLP’s strategic emphasis on industrial assets and high-quality tenants enhances the predictability and quality of cash flows. As of Q1 2025, industrial properties account for 73% of net rental income, with prominent tenants including FedEx, Northern Tool & Equipment, NARDA-MITEQ, and others. 3) The company’s dividend yield of 7.8% also attracts investors, backed by a stable operational base and a weighted capital allocation strategy. According to analysts at Freedom Broker, the current market valuation does not adequately reflect the portfolio’s quality and growth potential, and the fair price of the stock over a one-year horizon is $26.