Why Turning Point Brands' Institutional Backing and Niche Growth Signal a High-Conviction Buy for 2026

Institutional investors are increasingly positioning themselves for high-conviction opportunities in 2026, and Turning Point Brands (TPB) has emerged as a standout candidate. With a year-to-date (YTD) stock price surge of 66.16% as of November 26, 2025-significantly outperforming the S&P 500-TPB has captured the attention of both retail and institutional players according to market data. This momentum is underpinned by robust institutional backing, explosive growth in its Modern Oral nicotine pouch segment, and a resilient EBITDA outlook. However, investors must also weigh risks such as category volatility and rising SG&A pressures.

Institutional Investment Patterns: A Vote of Confidence

The institutional appetite for TPB has intensified in 2025, with Cannell Capital LLC emerging as a key player. The firm significantly increased its stake in the third quarter, adding 119,821 shares to reach a total position of 180,100 shares valued at $17.80 million. This represents 2.71% of Cannell Capital's reportable assets, signaling a strategic allocation to TPB amid macroeconomic uncertainty. Other institutional entrants, such as Connor Clark & Lunn Investment Management Ltd., have also bolstered their positions, with a $1.07 million investment in the second quarter.

Broader trends in institutional investment further validate TPB's appeal. According to a report by QuiverQuant, firms like CIBC Private Wealth Group LLC and Sulzberger Capital Advisors have shown heightened interest in alternative investment vehicles like Taxable Preservation Bonds (TPBs), driven by the search for yield and tax-efficient structures. While these products differ from Turning Point Brands' core business, the overall shift toward niche, high-growth assets underscores a macro-level reallocation of capital that benefits TPB.

Niche Market Momentum: Modern Oral's Explosive Growth

Turning Point Brands' Modern Oral segment has been a catalyst for institutional optimism. In Q3 2025, the division reported a staggering 627.6% year-over-year revenue increase to $36.7 million, accounting for 30.8% of total company sales. This outperformance has driven net income growth of 70.3% to $21.1 million for the same period. The segment's success has prompted the company to raise its 2025 Modern Oral sales guidance to $125.0–$130.0 million, up from a prior forecast of $100.0–$110.0 million.

The company's capital-raising efforts further reinforce its growth trajectory. An "At the Market" equity offering generated $97.5 million in net proceeds, expanding liquidity to $201.2 million in cash and $66.6 million in credit facility availability. This funding is earmarked to accelerate Modern Oral's expansion, a critical lever for sustaining its 628% YoY growth rate.

EBITDA Resilience and Stock Performance

Turning Point Brands' financial resilience is evident in its adjusted EBITDA guidance, which was raised to $115.0–$120.0 million for 2025, up from $110.0–$114.0 million. This upward revision reflects strong operational leverage despite rising SG&A expenses. For Q2 2025, SG&A costs reached $40.3 million, or 34.5% of net sales, driven by white pouch-related expenses and increased marketing investments. While this margin pressure is notable, the company's net income still grew by 70.3% YoY, demonstrating EBITDA's ability to absorb cost increases according to financial reports.

The stock's 66.16% YTD outperformance has been fueled by this earnings resilience and niche market dominance. However, volatility remains a factor, with a weekly price fluctuation of 5% reported in recent months. This volatility, while concerning for risk-averse investors, aligns with the company's high-growth profile and institutional enthusiasm.

Risks to Consider: Category Volatility and SG&A Pressures

Despite the bullish case, investors must remain cautious. The nicotine pouch category is inherently volatile, with regulatory shifts and consumer preferences posing long-term risks. Additionally, SG&A expenses have risen from $29.2 million in Q2 2024 to $40.3 million in Q2 2025, raising questions about margin sustainability. Insider selling over the past three months has also introduced a minor risk, though its impact on valuation remains limited according to market analysis.

Conclusion: A High-Conviction Buy for 2026

Turning Point Brands' institutional backing, Modern Oral's explosive growth, and EBITDA resilience create a compelling case for a high-conviction buy in 2026. While SG&A pressures and category volatility warrant monitoring, the company's ability to outperform the S&P 500 by 66.16% YTD and its strategic capital allocation position it as a top-tier growth opportunity. For investors seeking exposure to a niche market with institutional validation, TPB offers a rare combination of momentum and structural potential.