Chemed Corp. (CHE) offers a rare opportunity to Spinoff into two pure-play services companies with very little leverage, creating immediate value for shareholders in the event of a split. This potential activist break-up would separate the currently unrelated hospice care (VITAS Healthcare) and plumbing services (Roto-Rooter) segments, both of which are dominant players in their respective spaces. Read the attached analysis for more of our thoughts on why this break-up makes sense.
30 Jul 2020
For those interested in our break-up thesis and valuation on BMW and Rolls-Royce Motor Cars, please click the attached.
05 Jun 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 Apr 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 Apr 2020