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Full Analysis
Our previous Fallen Spinoff analysis (July 2019) saw value creation in Perspecta, Inc. (PRSP), and our entry recommendation at $23.70 rallied to its pre-pandemic high of $29.50 in February 2020 (a +25% return, now back to our recommendation levels dropping with the market). Our newest screening process yielded KAR Auction Services, Inc. (KAR), which we believe has several catalysts for growth and will create value in the post-pandemic used auto auctions space.
28 May 2020
Full Analysis
Our screening process for insider buying and selling has yielded three short ideas: Arrowhead Pharmaceuticals, Inc. (ARWR), CDK Global, Inc. (CDK), and Computer Programs & Systems, Inc. (CPSI). Aside from each company's insiders selling into price weakness (a sign of future underperformance), we have identified further pressures expected to push the share prices lower, offering short opportunities.
26 May 2020
Full Analysis
Value creation comes in many forms in the Special Situations space, and often companies need a friendly (or not-so-friendly) push from activist investors in the “right direction” to achieve shareholder returns. We took ten of the major US activist firms and examined the positions taken over the last 15 years to determine who is King of the Activists in terms of absolute (buy on date of entry and hold for two years) overall returns and compared to their respective market cap and sector indices.
27 April 2020
Full Analysis
Through screening and identifying positive insider buying patterns and how this may indicate future returns, we’ve picked our top three previous Spinoffs that have the strongest signal to outperform in the months to come. With an opportunity to enter at lower levels than the insiders themselves ahead of their earnings coming up shortly, click here for our analysis on our current top 3 situations.
21 April 2020
Full Analysis
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 March 2020
Full Analysis
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 March 2020
Full Analysis
The French Government's privatization of state lottery company Francaise des Jeux (FDJ) will see approximately 52% of shares offered to retail and institutional investors between November 7 and November 20, with the first day of public trading on November 21, 2019. Our analysis of the situation indicates strong growth in the near-term driven by stable fundamentals, attractive dividend payments, and a long-term exclusivity deal made with the French State. Read on for more details.
11 November 2019
Full Analysis
After years of operational underperformance by the management of Bed Bath & Beyond, Inc. (BBBY), which translated into diminishing returns for shareholders, a trio of activist investors called for a strategic overhaul in March 2019. After revamping the board in May 2019, our interest turned to the recent hiring of CEO Mark Tritton. Drawing similarities from covering and analyzing successful turnaround stories, we believe there is more to come for BBBY.
11 November 2019
Full Analysis
Following Fluor Corp.'s (FLR) strategic review which completed on September 24, the management highlighted plans to several business segments on the block to refocus on engineering, construction, and maintenance services. However, in the process, they've undervalued the Government segment in their targeted sale price, and we believe there's further value to be had in performing a Spinoff instead. With the right activist-led push, that Spinoff (and resulting upside) can be made a reality.
11 October 2019
Full Analysis
By Q1 2020, Danaher (DHR) would have completed two Spinoffs in four years with the successful Spinoff of Fortive Corp. (FTV) in July 2016. However, before DHR distributes shares of its dental segment Envista Holdings Corp. (NVST) to shareholders, it will raise $602m by IPOing 17.3% of its stake this week (Sep 18th). While we have infrequently seen this play as an alternative to a straight Spinoff, when it does take place, past transactions have reflected muted returns from IPO to Spin date.
17 September 2019