Mammoth Energy Services (TUSK) - Wooly Mammoth or just a Wild Pig?

This week on the QAV podcast, I dug into Mammoth Energy Services, a company that has the ticker "TUSK" because mammoths had tusks. But so do wild pigs. Which one this is, well... let's find out. It’s a classic deep-value turnaround story where the old life has been burned to the ground, leaving behind a pristine balance sheet and a lot of "dirty" history. It’s the kind of play where you’re basically buying a bank account at a discount and getting a sand mine and a fleet of planes for free. ### The Origin Story Mammoth was engineered as a high-testosterone "roll-up" by **Wexford Capital**, a private equity firm known for distressed plays. They smashed together several energy service companies in 2014 to create a vertically integrated giant. The goal was to be the "Mammoth" of the oilfield, handling everything from mining the sand to fracking the well. Wexford still owns nearly 46% of the stock, so they are the ones truly steering this beast. ### The Cobra Bite Scandal Mammoth’s subsidiary, **Cobra Acquisitions**, won a massive contract to rebuild Puerto Rico’s power grid after Hurricane Maria. A $200 million dollar contract with FEMA soon turned into a **$1.8 billion** contract... and then it turned into a true-crime thriller. The CEO of Cobra was eventually sentenced to prison for bribing a top FEMA official with personal helicopter use, hotel accommodations, airfare, personal security services, and the use of a credit card, while buying himself a 40-foot luxury catamaran (among other things). The scandal left the company's reputation in the toilet and tied up hundreds of millions of dollars in the PREPA bankruptcy courts for years. The Cobra CEO went to jail in December 2022, as did the nice lady FEMA Deputy Regional Administrator who was the beneficiary of his generosity. The feds also stripped him of **$4.4 million in assets**. ### The Radical Surgery By 2025, the company realized it couldn't win new government contracts with that "stink" on it, so it began selling its organs to reinvent itself. They replaced their CEO, and the new CEO sold their primary infrastructure division to **Peak Utility Services** for $108.7 million and even sold off their entire hydraulic fracturing fleet. The new CEO left to join the buyer, and his 37-year-old son, **Bernie Lancaster**, took the reins of what’s left: a cash-heavy "stub" pivoting into aviation rentals and fiber optics. ### Why is it so cheap? The market is pricing TUSK like a "wild pig" rather than a mammoth (and fair enough, too): - **Revenue Collapse**: Total revenue has slid significantly as they’ve exited their biggest businesses. - **The Sand Trap**: Their sand mining segment is currently bleeding money, selling less product at lower prices than it costs to produce. - **Reputation PTSD**: Most institutional investors won't touch a company associated with a federal bribery conviction. ### The Value Play If you can look past the 40-foot catamaran, the numbers are actually bonkers: - **Negative Net Debt**: They have zero bank debt and roughly $111 million in cash and marketable securities. - **Insane Cash Multiplier**: The price to operating cash flow is a staggering 0.85. - **Asset Play**: It trades at a deep discount to its $5.17 book value. - **Shareholder Return**: Management has the facility for a $50 million buyback, which is a massive signal given their $112M market cap. Whether or not it goes ahead is another story. ### Final Verdict TUSK is a "cigar butt" that might still have a few puffs of Perdomo left in it. You’re buying a debt-free cash box and a growing aviation fleet at a price that assumes the company is already dead. It might be an acquisition target. Or it might go belly-up. The question is really what Wexford do with it. **Disclaimer**: This is not financial advice. I’m just a guy who likes a good turnaround story and is fascinated by corporate scandals involving catamarans. I added this to my portfolio this week as a "stub" play on Wexford’s ability to re-allocate that cash.