investor roundtable

Over the past few weeks, I have been talking to private investor Lee Roach about The Stephan Company’s (SPCOQ) November 2025 bankruptcy filing. It’s a pretty fascinating case, so I just said, “What the heck? It would make for a great roundtable discussion.”

SPCOQ makes barbershop products, shaving creams, and grooming stuff. It’s a small business with about $10 million in revenue that is generally free cash flow positive and doesn’t carry much debt. The company has been executing a roll-up strategy.

So, on April 2, 2026, to discuss the bull and bear case for SPCOQ, I recorded a roundtable with:

• Lee Roach (@thevalueroad on Substack and @leevalueroach on X)
• Lucas Milosic (@pixelresearch_ on Substack, @Pixelresearch_ on X), and
• GeoInvesting analyst Diego La Torre (@Diego_La_Torre_ on X)

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Lee’s background is interesting because he comes at this from a risk-first mindset, heavily influenced by Benjamin Graham. He basically built his approach around not losing money, which led him down the value path and eventually into doing this full-time through his Substack Lee was actually a Skull Sessions guest in 2025. You can watch that here.

Diego is focused on understanding the Internal Rate of Return (IRR) of a potential investment, and, like Lee, is focused on short time frames, usually 12 to 24 months, and he’s constantly scanning for setups where something can re-rate quickly. That mindset fits really well with microcap turnarounds or theme-based investing. Understanding SPCOQ Chapter 11 exit catalysts fits perfectly within this framework

Lukas doesn’t box himself into one style and is willing to go wherever the opportunity is. He’s influenced by guys like Warren Buffett and Seth Klarman, but he’s not trying to copy anyone directly.

Why Look at SPCOQ?

Stephan was actually one of the first stocks I invested in earlier in my career.

The company didn’t file Chapter 11 because it’s a broken operating company. The Chapter 11 filing is tied to talc lawsuits stemming from acquisitions they made decades ago. Back in 1988 and 1995, they acquired businesses with talc-based products that were later linked to asbestos contamination. That’s where all of this comes from.

So you’ve got this weird setup where the business is steady with an ok balance sheet, but the potential legal liability forced them into bankruptcy. To be clear, the company had been winning all of the talc lawsuits, but it was getting to a point where its insurance coverage would probably no longer be sufficient to “fight.”

What got our attention was the chapter 11 exit plan they put together. As Lee pointed out during our conversation, Chapter 11 restructurings often wipe out existing equity. Once a Chapter 11 restructuring is confirmed, stock is often issued to those owed money. However, the wrinkle here is that the claimants are not debt holders, but potential plaintiffs in the talc lawsuit. Stock isn’t much of an incentive for them.

So, the idea is to put all current and future talc claims into a trust, isolating the risk from the core business. That trust gets funded through an insurance arrangement with a $1 million note over five years, along with 4.17M shares as collateral. 

There is a catch, though. If SPCOQ can’t pay the note, the share count could increase by 4.17M, bringing the total diluted share count to 8.32M. Furthermore, the structure still has to get approved by the bankruptcy court.

That’s where it gets interesting.

If they can handle the note, equity might not be altered at all, with no dilution. You don’t see that often in Chapter 11. Also, as explained below, there’s a strong chance the structure gets confirmed.

Perspectives on probabilities

Lukas framed it the right way. This is really a probability exercise. You’re asking: what are the odds the plan gets approved, and can they meet that obligation without blowing out the share count?

Diego dug into the structure and pointed out that this trust setup isn’t new. It’s been used before in over 60 similar cases since the 1980s. That gave us more confidence the plan has a realistic shot of getting approved.

Lee made another good point. He’s been digging through bankrupt companies lately, and said this is one of the few situations where he’s even considering equity might not go to zero.

Laying out valuation scenarios

Bull Case: The plan is approved with no dilution, as the company is able to fund the million-dollar obligation through cash flow, allowing it to emerge cleanly from bankruptcy. In this scenario, Diego and Lee think the stock could return to prior levels around $0.80 to $0.90, with potential for further upside as uncertainty is removed.

Base Case: The plan is approved, but dilution occurs to satisfy the note, leading to a more modest valuation around $0.40, the price the stock is currently sitting at.

Bear Case: The plan is rejected, resulting in equity being wiped out.

Glass half full?

What we all kept coming back to is how this business looks without the overhang.

Their SG&A most likely blew up because of all the legal and bankruptcy-related costs. Strip that out, and you’re looking at a business that was hovering around break-even or slightly profitable.

Lee pointed out that margins actually improved even while revenue dipped, which tells you something about the underlying operations. They’ve also been working on small acquisitions and improving their product mix.

So there’s a version of this where the noise goes away, expenses normalize, and the company just goes back to normal operations.

The other angle we talked about is how the market might approach this.

A lot of investors won’t touch this until the plan is confirmed. So you’ve got this window where the situation is still unclear, but the upside starts to get priced in as probabilities shift.

So how can this actually play out?

Lee’s approach is pretty clear. If the thesis plays out, he gets out quickly. He’s not trying to stick around for years after the fact.

Lukas pushed back a bit on that, saying that once the situation resolves, you have to reassess. At that point, it becomes a different investment, and you decide whether it still makes sense versus other opportunities.

For me, I’ve been on both sides of that. I’ve held too long in situations like this, waiting for the bigger move, and sometimes the stock just sits there after the catalyst plays out. 

For full disclosure, I was able to buy a couple of thousand “buy now, ask questions later” shares at around $0.25 when the company announced its trust proposal. 

The stock is probably too illiquid for me to build a big position. This one’s more of something that’s fun for me. I might try to add around $0.40 or so. I’m a little more optimistic of the price that SPCOQ could eventually reclaim compared to the scenarios we laid out.

Before it became apparent that the lawsuits were going to be a problem, the stock had been as high as $1.10 over the past 18 months. Getting back to that price might take time, but it depends on how the market views the company’s ability to service the $1 million obligation.