Jeremy Raper on Bragg Gaming (BRAG.V)

Episode Summary

Executive Summary: Andrew Walker and Jeremy Raper discuss a sharply different market environment since August, with Raper arguing that U.S. markets are dominated by retail-fueled mania, making shorts dangerous and pushing him to focus more on Europe and Japan. They review StoneX’s still-intact thesis and then dive into Bragg, a Canadian microcap online-gaming software company they both like for its growth, cheap valuation, and potential uplisting catalysts despite real regulatory risk in Germany.

Main Topics: Market mania, retail speculation, and short-selling risk (Priority: 5/5): Raper says the market has become highly speculative, driven by retail money, popular narratives, and technical flows. He argues shorts are especially dangerous in the U.S. because even obviously flawed names can keep rising. Portfolio positioning: less U.S. short exposure, more Europe and Japan (Priority: 5/5): He explains that he has reduced U.S. short exposure, lowered position sizes, and shifted attention to European and Japanese opportunities where valuation discipline is stronger and market reactions are less manic. Long ideas in post-COVID recovery and off-the-run beneficiaries (Priority: 4/5): Raper discusses names that benefit from reopening or behavioral shifts, emphasizing that he prefers less obvious, underfollowed situations outside the U.S. rather than headline work-from-home winners. StoneX thesis remains intact (Priority: 4/5): The prior StoneX idea has performed well and the core thesis remains unchanged: undiscovered business, potential refinancing of expensive debt, and continued benefit from market volatility and optionality on rates. Bragg investment case (Priority: 5/5): The bulk of the conversation centers on Bragg/Oryx, a B2B online casino software provider growing rapidly, trading cheaply, and potentially re-rating on uplisting to the TSX main board and NASDAQ. Germany regulatory overhang and guidance conservatism (Priority: 5/5): A key risk for Bragg is the new German online-gambling regime, which could temporarily cut revenues. Raper argues management’s guidance is likely very conservative and that the market may ultimately expand after regulation. Management quality, incentives, and catalyst-driven upside (Priority: 5/5): They spend significant time on leadership turnover, the importance of the chairman/CEO candidates, and why insider alignment—especially the founder’s equity rollover at 73 cents—supports the thesis.

Key Arguments: Retail speculation and online narratives are distorting price discovery, so shorting obvious overvalued names in the U.S. is now very risky. A rational response is to reduce U.S. short exposure, size down positions, and look for opportunities in Europe and Japan where valuation still matters more. StoneX still looks attractive because the market has not fully recognized synergies, debt refinancing upside, and leverage to higher volatility/rates. Bragg is growing quickly, has many clients, and is cheaper than comparable listed gaming-software peers despite being a smaller, less liquid company. Bragg’s founder/operating leader, Matez Majdi, aligning his compensation at a 73-cent strike price is a strong signal that intrinsic value is meaningfully higher. The new German gambling regime is a real near-term headwind, but it may also legitimize the market and create longer-term growth opportunities for regulated operators and B2B providers. Management appears deliberately conservative in guidance to avoid missing numbers as a small-cap, newly visible public company. Compared with GAN, Bragg appears better diversified by customer count and may have better underlying economics, even if GAN has a stronger market narrative and better listing venue.

Data Points: Bragg market cap: Under C$100 million - The company is described as a very small Canadian microcap Bragg enterprise value: About C$60–70 million - Used to highlight valuation and size of the company Bragg client count: Over 90 clients - Raper cites rapid customer growth for the Oryx business New clients added this year: 20–30 clients - Recent growth in Bragg’s customer base Pipeline clients for Q4: 10–15 clients - Additional expected customer wins Bragg growth rates: 75% last quarter; 100% the quarter before - Illustrates rapid revenue growth before German normalization impact Bragg 2021 guidance: ~15% revenue growth midpoint; ~20% EBITDA growth midpoint - Management’s publicly guided outlook for the coming year Germany revenue share: At least one-third of Bragg revenue - Used to frame the significance of German regulatory changes Germany impact assumption: €6 million revenue hit year over year - Embedded in Bragg’s guidance German market contraction implied: ~35% decline - Derived from management guidance and current Germany revenue mix Bragg equity rollover strike: C$0.73 per share - Founder Matez Majdi’s equity conversion strike price Implied premium to then stock price: About 40% - Strike price was set above the market price at the time SNEX move since last podcast: +20% in four months - Raper and Walker discuss StoneX’s performance Annualized return equivalent: ~60% annualized - Walker jokingly frames SNEX performance as strong NSA/market multiple example for GAN: 2x revenue in London vs 8x revenue in the U.S. - Used to illustrate how listing venue changes valuation

Pivotal Quotes: "the stupidest person you know is getting the richest this year" — Andrew Walker (quoting another podcast speaker): Used to describe the speculative, retail-driven market environment "if the market is willing to fund the dream, there's no limit to how big the dream can get before the market decides not to fund" — Jeremy Raper: Explaining why overvalued growth stories can stay irrationally strong for a long time "you're paying 10% more than the guy who knows this business inside it out and built it" — Andrew Walker: Describing why Bragg’s founder equity strike price at C$0.73 gave him confidence in the valuation "this is a very attractive story and a very attractive niche, notwithstanding the fact that it's also a very small company" — Jeremy Raper: Summarizing the Bragg investment case while acknowledging microcap risk

Implications: For listeners, the key takeaway is that market structure now matters as much as fundamentals: U.S. speculation makes shorts hazardous, while small-cap international names with real catalysts may offer better risk/reward. Bragg’s upside depends on execution, Germany, and uplisting progress.