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
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
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
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
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
In our continued efforts to find fundamentally sound companies that offer a value buy proposition from where these businesses are trading at today, The Edge have analyzed the current database of previous Global Spinoffs over the last few years creating several custom screening criteria. As a result of this screening, we’ve identified Perspecta, Inc. (PRSP) as a “Fallen Spinoff” worth looking at, having shown a recovery as the market begins to recognize the positives head to this story.
16 July 2019
Covetrus, Inc. (CVET), the leading pure-play animal health distribution company with a global presence, is -45% down from its listing in February 2019 (counter to its peers, which are all either flat or up in the same period) – but with several positives ahead, we believe CVET is a medium risk investment at current levels with significant room to grow.
09 July 2019
Following the Spin-merger of its Entertainment assets to The Walt Disney Co. (DIS) in March 2019, Fox Corp. (FOXA) has underperformed the S&P 500 Index by 8.7% and its peers Comcast Corp. (CMCSA) and CBS Corp. (CBS) by 14.3% and 4.1%, respectively - but there are many positives behind the leading sports and news broadcaster that we expect will bring the company to value (including a long-term takeover play). Click inside for our valuations on both a Base and takeover cases.
25 June 2019