reports
- Alexander Korda
+20% Rally Since May 28 Entry, Revised Valuation Shows Further Upside
Recovering from the pandemic is at the forefront of KAR Auction Services, Inc.’s (KAR) most recent earnings, in which the company generated 91% of Y-o-Y revenues despite the nationwide lockdowns. The conclusion of $550m in private equity investments and a deep management pay cut have helped shore up the company’s cash position, positioning KAR to come out the other side of the pandemic stronger than ever. We continue to see upside even after the recent 20% rally. Earnings Update... On Augus...
- Alexander Korda
Significant Upside Ahead for Major Games Publisher
Our findings on how major US video game makers and publishers can narrow their valuation gaps to Chinese media juggernaut Tencent pointed us to an MP entry into Electronic Arts, Inc. (EA). Its Q1FY21 earnings release was the company’s largest first quarterly report to date, and is only the beginning for EA’s upward trajectory into a new console generation. E-sports also remain at the forefront of our growth expectations as the new-age competitions gain traction. Earnings Update… On July 3...
- Alexander Korda
Smart Insider Buys Ahead of Spin, Enters MP
Over three years since being appointed to the Board, insider Ronald Blaylock late last week bought shares of Pfizer, Inc. (PFE) on the open market for the very first time. While every insider buy isn’t an opportunity to enter a stock, Mr. Blaylock's purchase holds all the ingredients of an entry based on the amount of shares bought, his track record and PFE’s upcoming catalyst of a Spinoff. What's Interesting? The Edge Intelligence... Last week (Aug 6, 2020), insider Ronald Blaylock bought ...
- Alexander Korda
MP Entry for Upcoming Spin, VFC Exits
Customer engagement and cyber intelligence services provider Verint Systems, Inc. (VRNT) shows significant upside both pre- and post-Spin of the latter of its segments in early 2021, so we are entering a small stake now while we await a Form 10. We expect the company to narrow its valuation discount to its peers, and we recommend investors also take advantage of current levels. Meanwhile, we are exiting VF Corp. (VFC) from the portfolio to make room for this new idea. Spin Announcement & Ration...
- Alexander Korda
New Spin: Lease-to-Own Retailer Leader and Virtual Services to Separat...
Leading lease-to-own retailer Aaron's, Inc. (AAN) has announced the separation of its branded stores and online portal from its fast-growing leasing partnership segment, Progressive Leasing. This is accompanied by a rejig of the post-Spin management teams, and is expected to close by the end of the year. Progressive was originally acquired in 2014 for $700m and has grown significantly, now accounting for $1.7bn in FY19 revenues (or 54% of total revenue). Break-Up Details… On July 29, 2020, Aa...
- Alexander Korda
MP Increase on Strong Upside, Network Demand
We continue to see strong upside in satellite internet provider EchoStar Corp. (SATS) and increase our Model Portfolio holding accordingly. The company has seen increased network demand in this challenging time as more people are staying home due to either lockdown or working from home as a health precaution, and SATS is strategically poised to benefit from this ongoing environment. The Edge View... For the full earnings alert in May, please see here. While major businesses are globally facing ...
- Alexander Korda
MP Increase on Impressive Residential Growth, Helps Beat Expectations
We are increased our Model Portfolio holding on Trane Technologies Plc's (TT) recent Q2FY20 earnings, which came in above consensus estimates due to a substantial rise in Residential HVAC bookings. The stock has already given a +28% return since entering the MP and has surpassed our Base case target price since entering the Model Portfolio, and we continue to see long-term value for investors. For more, read on. Impressive Residential Growth Assists in Beating Consensus Expectations… Trane Te...
- Alexander Korda
Strategic Review Concludes with Edge-Anticipated Chinese Listing
In January 2020, we highlighted Canadian Solar, Inc.’s (CSIQ) strategic review for the split between its solar panel manufacturing and energy services segments, and our belief in further value in listing the former in China. As of July 27, the company has concluded this strategic review with an IPO of the MSS segment on the Chinese markets. Our previous valuation anticipated a Spinoff of MSS, so we have updated it to reflect the new strategy. What We Said… As of March 27, 2020: We believe t...
- Alexander Korda
Potential Activist Break-Up of Leading Pure-Plays
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. What's the O...
- Alexander Korda
THE EDGE HIGH CONVICTION IDEA: MSGE
Basketball starts up next week (July 30, 2020) and the return of live sports is ongoing through to the end of the year, and Madison Square Garden Entertainment Corp. (MSGE) is an immediate beneficiary to this reopening - making it imperative that investors get involved now ahead of the asset valuation gap closing. The major long-term catalyst is of course the completion and opening of the MSG Sphere in Las Vegas, to be the Mecca of e-sports and live music entertainment. What's Happening? The Ed...
- Alexander Korda
E-Sports Traction & Discounted Valuation Warrants MP Entry
Our examination of the top gaming companies in the US has shown a valuation discount to Chinese media giant Tencent, warranting a Model Portfolio entry into Electronic Arts, Inc. (EA) as it continues to leverage on the growth potential in the gaming space and as e-sports gain traction in the market. The Edge View... Tencent Holdings Ltd. (TCTZF, Market Cap $647bn): Among Tencent's many other media holdings, the company is owner of two of the most successful current gaming franchises, Fortnite (...
- Alexander Korda
Post-Spin Buy for Parent on Value & Takeover Potential
Travis Perkins Plc (TPK LN) announced the Spinoff of its struggling DIY retailer Wickes stores in the UK, leaving the RemainCo with its growing professional home improvement offerings. The company's position as a leader in the space and its improved EBITDA margin profile makes it an attractive post-Spin takeover target for US home improvement players looking for international exposure. The Spin is expected in 2H 2020, and our valuation shows significant upside for the Parent ex-Spin. What's Hap...
- Alexander Korda
Valuation Mismatch Leads to Post-Spin MP Entry, +57% Upside
Yesterday was the first day of trading following the unique European Spin-Merger between Metso Corp. (MEO1V FH) and Outotec Corp. (OTE1V FH). This transaction created what is now Neles Corp. (NELES FH) and Metso Outotec Corp. (MOCORP FH), and the resulting valuation mismatch provides an opportunity for investors to see value creation for the Spin-merged mining equipment services company. Meanwhile, NELES (Parent) looks fully valued. Read on for more on their first day's performance. What's Happ...
- Alexander Korda
+69% Return Prompts IAC Exit, Continue to Hold MTCH
IAC/InterActiveCorp. (IAC) has completed the distribution of its 80.7% stake in Match Group, Inc. (MTCH) aftermarket on June 30, 2020, resulting in the boost to MTCH's free float (which precludes a potential inclusion on the S&P 500 Index) and the continued execution of IAC's "anti-conglomerate" philosophy when it comes to its investments. We're booking our strong profits in IAC and we recommend investors to continue to hold MTCH for long-term benefits. What's Happened? The Edge Intelligence......
- Alexander Korda
Further Upside in High Conviction Q4 2020 Spinoff, Positive Insider Bu...
Synnex Corp. (SNX) released strong Q2FY20 earnings yesterday (June 25), beating estimates and providing impressive guidance for next quarter. Since our recommendation on May 1, 2020, on the back of a key insider buying pattern, the stock has returned +19% (vs. the S&P Index's +9% in the same period), and we believe several key factors provide further upside ahead of its planned Q4 2020 Spinoff. The Edge View... Our high conviction insider buy idea Synnex Corp. (SNX) reported strong Q2FY20 earni...
- Alexander Korda
Hold for Next Week's Distribution & Anticipated Value Creation
We recommend new investors to buy (and current investors to hold) IAC/InterActiveCorp (IAC) heading into its stake distribution in Match Group, Inc. (MTCH), which is expected to be completed next week on June 30, 2020. Since our pre-Spin entry in the Model Portfolio (Feb 18, 2020), IAC has provided a +27% return with more to come for both IAC and MTCH post-Spin. See the updated analysis for our key details and valuations. Model Portfolio Performance... IAC entered our Model Portfolio pre-Spin o...
- Alexander Korda
Leader in Flow Control Business Exhibits 30% Post-Spin
It’s been over 6 years since Finnish investors have witnessed a corporate break-up and next week, Metso Corp. (MEO1V FH) will be back once more to split again. After a successful Spinoff of Valmet Corp. (VALMT FH) in 2014, which jumped +45% in its first year, Metso will be Spinning off its Minerals business to merge with another industrial player, Outotec Corp. (OTE1V FH) while the RemainCo (to be renamed Neles Corp) will be a pure-play Flow Control Business. What's Happening? Metso Corp. (M...
- Alexander Korda
Solar Services Co Becomes Pure-Play in Manufacturing Spin
Solar panel manufacturer and distributor SunPower Corp. (SPWR) is following through on its 2019-22 business restructuring in this Q3 2020 Spinoff of its manufacturing business, Maxeon Solar Technologies, which will result in the removal of potential continued exposure to domestic tariffs. Additionally, SPWR will continue to focus on its solar panel deployment and distribution of renewable energy, simplifying its overall investment thesis. Read on for more details on this upcoming break-up. What...
- Alexander Korda
Accumulate Stable High-Margin Industrial Distributor Pre-Spin
HD Supply Holdings, Inc. (HDS) has a history of value creation through divesting non-core assets since its IPO in 2013, coming to its most recent move: the planned Spinoff of its Construction & Industrials distribution business. We believe the Parent will benefit from this transaction, and additional catalysts are present with the involvement of two activist investors, a director purchasing stock on the open market, and a flexible balance sheet allowing for a higher multiple. Path from Listing ...
- Alexander Korda
Pick of the Fallen Spins: KAR
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. Fallen Spinoff Screening Criteria....
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