EP.009: Cigar Butt Morphing into a Compounder: 50% of NAV & Pivoting to Higher Return Industries

In this episode of Pitch the PM, Doug welcomes Mark Layton, CFO of Mammoth Energy Services (NASDAQ: TUSK), to explore one of his highest conviction investment ideas and his first of twenty lifetime “Buffett punchcard” investments. This small cap company ($132 MM market cap) is valued below cash levels ($150 MM) with the market giving the company no credit for its existing businesses or underutilized equipment that was recently valued at $145 MM by an independent appraiser. The company recently exited its largest industrial business for $110 MM (more than 3x MOIC), has its land drilling rigs held for sale and subsequent to the recording of this episode sold its frac assets for $15 MM. Mammoth, with the help of its largest shareholder - Wexford, is targeting 25-35% unlevered IRR’s in the aviation rental space where it has a robust pipeline. The company is also incubating its engineering, fiber, and rental equipment businesses. Doug views this as a private equity investment in a public shell without the fees. - Growing the rental business. Mammoth has oilfield rental equipment and helicopters in the portfolio and in April 2025 they purchased 8 airplane. Seeing deal flow through Wexford with unlevered IRR’s at 25-35%.- TUSK is in a void in the capital markets and it resembles a private equity company in a public shell. - 2024 was the worst year for natural gas. Historical presence in the Marcellus and Utica from the co-investment of Gulfport and Wexford to form the initial frac company. 6 frac spreads in total, but lack sufficient scale [Note: Mammoth sold their frac equipment on June 16, 2025]. - View capital allocation like a private equity shop.- Accommodations was its own segment after the IPO, it has done well. Formed by Wexford in 2006/07. Renewed interest in the oil sands. Looking at investments there that can increase the room rates. Have a good leader there and has generated steady FCF. Used this unit for Puerto Rico housing.- Opportunity for expansion into construction. Returns are mid to high teens, unlevered.- Engineering and fiber businesses — Built the businesses around the leaders. As we look at incubating the Engineering business, it should trade for low to mid double digits EBITDA multiple. Fiber has taken a little longer to ramp up, but government funds are starting to hit the market. Can potentially do acquisitions as fiber is fragmented- Grow rental business in OFS and aircraft. Aircraft are the most attractive. Continue to evaluate the remote accommodations business. Firm up the fiber business. - Wexford’s waived consulting fee and provides access to deal flow without the $500,000 fee as they own 47%. Thoughtful patient investors.Links:📩 Subscribe to our newsletter for research updates and new high-conviction episodes from top PMs & Analysts: https://pitchthepm.beehiiv.com/subscribe💡 This episode is sponsored by AlphaSense. Use the link here for Complimentary access — https://www.alpha-sense.com/Pitch/Doug Garber on LinkedIn: https://www.linkedin.com/in/doug-garber-42aa508 Mark Layton: https://www.linkedin.com/in/markelaytonMammoth Energy Services: https://www.mammothenergy.com/*Not Investment Advice