Following a complete company takeover offer and a suggestion from a "friendly activist" to break-up the Grains and Malts businesses, Graincorp Ltd's (GNC AU) strategic review concluded with the Spinoff of its malts business into United Malt Group Ltd (UMG AU), to separate next week (April 2, 2020). We believe this Spinoff simplifies any attempt to have the independent entities acquired by larger players in their space and provides the management control over the value in that potential takeover.
26 Mar 2020
To inform our analysis into finding the next value ideas in this current market environment, we started by examining the sectors that outperformed the S&P 500 Index following the 2008 financial crisis (recovery started on March 2, 2009). The data shows six sectors (out of the total 11) that have consistently outperformed the S&P 500 Index in the five years after the recovery. We have narrowed down to three names (one European and two US) that are worth buying at current levels.
25 Mar 2020
The ongoing Coronavirus outbreak has led to the suspension of the current NBA season and the broad implementation of curfews around the country on non-essential travel, resulting in the selloff in the major indices. The Madison Square Garden Co. (MSG) has decreased by -34.3% YTD compared to the S&P Total Market Cap Index return of -27.6% to date, making the upcoming Spinoff of the Entertainment business even more attractive at these lower levels.
17 Mar 2020
We entered Arconic, Inc. (ARNC) in May 2019 on the back of major insider buying patterns (we booked partial profit of +18% within three months), and now the long-awaited Spinoff of Arconic Corp. (ARNC, Spin) is upon us, scheduled for April 3, 2020. ARNC (Parent) is renaming to Howmet Aerospace, Inc. (HWM), and with many different elements involved, our analysis lays out how best to play this aerospace/aluminum split.
17 Mar 2020
After years of share price underperformance by Parent Investec Plc (INVP LN) against the FTSE 100 Index (-26.5% in the last year vs. -16.4% and -40.5% vs. -4.1% in five years, respectively), the management has decided to IPO its best-performing segment into an independent global asset management company, Ninety One Plc (N91 LN). Despite the separation being a positive move for the company, the current IPO price band shows very little upside on our Bull case - read on for our thoughts.
12 Mar 2020
The Cheesecake Factory, Inc. (CAKE), the upscale dining chain known for its large menu and strong brand value, is an interesting situation the market loves yet continues to underperform peers. However, with the recent addition to its Board of Directors of a sell-side restaurant research analyst, we believe activism is beginning to influence the company. JANA Partners has also been exploring the sale of peer Bloomin' Brands. On our valuation and potential activism, it's a good time to enter CAKE.
05 Mar 2020