For those interested in our break-up thesis and valuation on BMW and Rolls-Royce Motor Cars, please click the attached.
05 June 2020
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
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
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
With no significant domestic 5G vendor, the US is losing to international players like Ericsson (Sweden), Nokia (Finland) and Huawei (China). Therefore, we believe there is a strong case for an activist investor to bring 5G to the US by pursuing a suitor to acquire Nokia, which is available at a discounted valuation. With the right leadership, financial muscle, and US government backing, Nokia will make a formidable competitor and eliminate US concerns over the risk of losing the 5G struggle.
24 April 2020
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
In a screen for potential break-ups originally conducted in November 2019, we found that Gilead Sciences, Inc. (GILD) will benefit in performing a Spinoff of its HCV business. The current environment reinforces our thoughts on this split. Please read on for more and see the attached analysis included.
15 April 2020
One of the top players in the agribusiness and food industry and part of the big “ABCD” four that dominates the space (Archer Daniels Midland (ADM), Cargill and Louis Dreyfus), Bunge Ltd (BG) witnessed fourteen different open market purchases in 2020, with two of those buys holding a stronger buying signal than others. With additional factors at play include the presence of activist investors, new CEO and a potential separation on the table, we’re going to take an initial stake.
09 April 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 March 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 March 2020