The Weekly Wrap-Up provides summaries of recent publications from Hidden Opportunities including links to the full-length research reports.  If you haven’t engaged with the research over the past seven days, the Weekly Wrap-Up will quickly update you on our newest and highest conviction ideas.

Newest Publications & Updates

UPDATE: Garret Motion Inc. (GTX)
April 13, 2023

On April 13, GTX announced an agreement with Centerbridge and Oaktree to convert all of its 11% yielding Series A Preferred stock into common stock on or about July 3, 2023. 

In conjunction, the company will also repurchase ~$570 million of the Series A stock from the aforementioned investors (at ~$8.10 per share in a range of $7.875-$8.50 depending on the VWAP of its common shares over the next 15 days), which will reduce their combined pro forma ownership to ~30% (from ~45%).  As a result, the investors will reduce their allotted Board representation to 2 directors (down from 6).  Also, the investors have agreed to “lock-up” restrictions for 50% of their shares for six months and the remaining 50% for twelve months.

Importantly, this transaction will complete the simplification of GTX’s capital structure into a single class of equity (with a pro forma market capitalization of
~$2 billion based on current market prices), which we expect will widen its investor base, including the potential for index inclusion and increased sell-side research coverage/visibility, while also eliminating ~$160 million of annual dividends paid to the Series A Preferred holders.

Our base case fair value estimate for GTX remains ~$11 per share, reflecting an 8.0x multiple on our 2024E adjusted net income forecast of ~$350 million and a fully diluted share count of ~263.5 million.

INITIATION: APi Group Corp. (APG)
March 21, 2023

APi Group Corp. (NYSE: APG) operates two business segments: (1) Safety Services (69.5% of sales and 73% of adj. EBITDA in 2022), which designs, installs, inspects, monitors, repairs and services occupancy systems, including fire safety, electronic security & HVAC systems; and (2) Specialty Services (30.5% of sales and 27% of adj. EBITDA), which provides similar services for critical infrastructure, including electric, gas, water, sewer & telecommunications lines.

APG operates an asset-light, variable cost, recession resistant/statutorily mandated business that possesses mid-to-high single digit organic growth prospects, numerous tuck-in M&A opportunities in a fragmented market and a clear path to ~300 basis points of incremental margin improvement over the next 2-3 years. Moreover, with shares trading at ~9x 2024E EV/EBITDA and a free cash flow yield of ~10% APG trades at a significant discount to publicly traded peers, which trade at EV/EBITDA multiples of nearly 14x and FCF yields of ~3.5%, as well as relevant private market transaction valuations, which have averaged ~16x EV/EBITDA in recent years. In addition to fundamental upside, we also see the potential for APi to separate/monetize its Specialty Services segment, via spin-off or sale. Such a transaction would unlock value and provide APG with incremental capital to either rapidly de-lever, pursue accretive tuck-in M&A and/or be returned to shareholders via share repurchases (while also increasing focus on the higher margin/faster growing Safety Services business). Recent commentary suggests “everything is on the table”, in terms of unlocking value for shareholders.

Based on management guidance and commentary as well as peer and M&A valuations, APG’s Safety Services and Specialty Services businesses could be valued at ~$34 per share, and $7 per share, respectively. Accounting for corporate costs and projected net debt of ~$11 per share yields a base case sum-of-the-parts fair value of $30 per share (with bull and bear cases of ~$36.50 and ~$23.50 per share, respectively).

Radar Screen – April 2023

Monthly publication providing ongoing analysis on companies where we see potential for a value-unlocking event

Companies discussed this month:  Alphabet Inc. (GOOG), California Resources Corp. (CRC), Carrier Global Corp. (CARR), Crown Holdings Inc. (CCK), FLEETCOR Technologies, Inc. (FLT), Griffon Corp. (GFF), Hasbro, Inc. (HAS), IAC Inc. (IAC), JELD-WEN (JELD), Liberty Broadband Corp. (LBRDK), Matthews International Corp. (MATW), Natura & Co. Holding (NTCO), PAR Technology Corp. (PAR), RCI Hospitality Inc. (RICK), Tiptree Inc. (TIPT), Western Digital Corp. (WDC)

Product Specialist

Rich Albanese
ralbanese@pcsresearchgroup.com
+1 646-839-5566

Newest Publications & Updates

UPDATE: Crane Holding Co. (CR)
April 4, 2023

On April 3, 2023, after the market close, Crane Holding Co. (NYSE: CR) competed the spin-off of Crane Co. The spin company now trades on the NYSE under the ticker “CR”. CR shareholders of record as of March 23, 2023, received one share of New CR for every one shares of Crane Holdings Co. owned. Following the separation, the parent company has adopted the corporate moniker Crane NXT Co. and trades on the NYSE under the symbol “CXT”.

On a post-spin basis, we assign a fair value estimate of $58 per share to Crane NXT.  Given the implied upside to our fair value estimate, combined with our favorable outlook on an eventual re-rating of the company, we recommend shares of Crane NXT and continue to rate Crane Co. at NEUTRAL.

The European Spin-Off Report – Sodexo SA (SW FP) – FLASH
April 5, 2023

On April 5, 2023, Sodexo SA (SW FP) announced the intention to spin-off its benefits and rewards services businesses (“BRS”) into a standalone, publicly traded company. The transaction, which is scheduled to be completed in 2024, is supported by SW’s founding family’s investment firm, Bellon SA, who expects to remain a long-term shareholder in both post-spin entities. Bellon SA controls 42.8% of the shares and 57.5% of the voting rights. Today, the company, which was founded in 1966 and is headquartered in Issy-les-Moulineaux, France, describes itself as “the global leader in sustainable food and valued experiences at every moment in life: learn, work, heal and play.”

Based on management’s guidance for the group and BRS, along with the assumption that growth moderates in F2024 on less benefits from COVID re-openings, it could be projected that BRS would generate EURO 387 million in EBITDA and OSS would generate EURO 1.66 billion in F2024. Based on peer multiples, this would imply BRS and OSS enterprise values of EURO 2.7 billion and EURO 17.4 billion, respectively. Accounting for the current net debt of EURO 1.9 billion and 147.5 million shares outstanding, we assign a preliminary, pre-spin, sum-of-the-parts fair value estimate of EURO 124 to shares of SW.

Radar Screen – April 2023

Monthly publication providing ongoing analysis on companies with potential for a value-unlocking event

Companies discussed this month:  Alphabet Inc. (GOOG), California Resources Corp. (CRC), Carrier Global Corp. (CARR), Crown Holdings Inc. (CCK), FLEETCOR Technologies, Inc. (FLT), Griffon Corp. (GFF), Hasbro, Inc. (HAS), IAC Inc. (IAC), JELD-WEN (JELD), Liberty Broadband Corp. (LBRDK), Matthews International Corp. (MATW), Natura & Co. Holding (NTCO), PAR Technology Corp. (PAR), RCI Hospitality Inc. (RICK), Tiptree Inc. (TIPT), Western Digital Corp. (WDC)

Spin-Off Report Calendar – April 2023

Published monthly, The Spin-Off Calendar provides one-page summaries of every spin-off under coverage from the announcement date, followed by the filing of the Form 10 and continuing 60 days post completion.

Spin-Off Report Compendium – April 2023

Murray Stahl’s commentary on various investing themes and single stock recommendations.

European Spin-Off Compendium – April 2023

Murray Stahl’s commentary on various investing themes and single stock recommendations in Europe. 

Bits & Pieces – April 2023

Covers mispriced stub securities, tracking stocks and other arbitrage opportunities.

Product Specialist

Rich Albanese
ralbanese@pcsresearchgroup.com
+1 646-839-5566

The Weekly Wrap-Up provides summaries of recent publications from the Spin-Off Report including links to the full-length research reports. If you haven’t engaged with the research over the past seven days, the Weekly Wrap-Up will quickly update you on our newest and highest conviction ideas.

Newest Publications & Updates

UPDATE: Crane Holding Co. (CR)
April 4, 2023

On April 3, 2023, after the market close, Crane Holding Co. (NYSE: CR) competed the spin-off of Crane Co. The spin company now trades on the NYSE under the ticker “CR”. CR shareholders of record as of March 23, 2023, received one share of New CR for every one shares of Crane Holdings Co. owned. Following the separation, the parent company has adopted the corporate moniker Crane NXT Co. and trades on the NYSE under the symbol “CXT”.

On a post-spin basis, we assign a fair value estimate to Crane Co. of $74 per share, and $58 per share to Crane NXT. Given the implied upside to our fair value estimate, combined with our favorable outlook on an eventual re-rating of Crane NXT, we recommend shares of Crane NXT and rate Crane Co. at NEUTRAL.

The European Spin-Off Report – Sodexo SA (SW FP) – FLASH
April 5, 2023

On April 5, 2023, Sodexo SA (SW FP) announced the intention to spin-off its benefits and rewards services businesses (“BRS”) into a standalone, publicly traded company. The transaction, which is scheduled to be completed in 2024, is supported by SW’s founding family’s investment firm, Bellon SA, who expects to remain a long-term shareholder in both post-spin entities. Bellon SA controls 42.8% of the shares and 57.5% of the voting rights. Today, the company, which was founded in 1966 and is headquartered in Issy-les-Moulineaux, France, describes itself as “the global leader in sustainable food and valued experiences at every moment in life: learn, work, heal and play.”

Based on management’s guidance for the group and BRS, along with the assumption that growth moderates in F2024 on less benefits from COVID re-openings, it could be projected that BRS would generate EURO 387 million in EBITDA and OSS would generate EURO 1.66 billion in F2024. Based on peer multiples, this would imply BRS and OSS enterprise values of EURO 2.7 billion and EURO 17.4 billion, respectively. Accounting for the current net debt of EURO 1.9 billion and 147.5 million shares outstanding, we assign a preliminary, pre-spin, sum-of-the-parts fair value estimate of EURO 124 to shares of SW.

COMPREHENSIVE: Madison Square Garden Entertainment Corp. (MSGE)
March 20, 2023

Madison Square Garden Entertainment Corp. (NYSE: MSGE) plans to spin-off its traditional live entertainment business from the MSG Sphere, Tao Group, and Networks businesses. The spin-off will be accomplished via a pro-rata distribution of approximately two-thirds economic interest in the spin company.  Following the transaction, the spin company will retain the MSG Entertainment corporate moniker. The parent company will be renamed MSG Sphere Corp. and will retain a one-third economic interest in the spin company. If completed, it is expected that the spin-off transaction would be tax-free to MSGE shareholders.

Radar Screen – April 2023

Monthly publication providing ongoing analysis on companies with potential for a value-unlocking event

Companies discussed this month:  Alphabet Inc. (GOOG), California Resources Corp. (CRC), Carrier Global Corp. (CARR), Crown Holdings Inc. (CCK), FLEETCOR Technologies, Inc. (FLT), Griffon Corp. (GFF), Hasbro, Inc. (HAS), IAC Inc. (IAC), JELD-WEN (JELD), Liberty Broadband Corp. (LBRDK), Matthews International Corp. (MATW), Natura & Co. Holding (NTCO), PAR Technology Corp. (PAR), RCI Hospitality Inc. (RICK), Tiptree Inc. (TIPT), Western Digital Corp. (WDC)

Spin-Off Report Calendar – April 2023

Published monthly, The Spin-Off Calendar provides one-page summaries of every spin-off under coverage from the announcement date, followed by the filing of the Form 10 and continuing 60 days post completion.

Spin-Off Report Compendium – April 2023

Murray Stahl’s commentary on various investing themes and single stock recommendations.

European Spin-Off Compendium – February 2023

Murray Stahl’s commentary on various investing themes and single stock recommendations in Europe. 

Bits & Pieces – March 2023

Covers mispriced stub securities, tracking stocks and other arbitrage opportunities.

Product Specialist

Rich Albanese
ralbanese@pcsresearchgroup.com
+1 646-839-5566

The Weekly Wrap-Up provides summaries of recent publications from Hidden Opportunities including links to the full-length research reports.  If you haven’t engaged with the research over the past seven days, the Weekly Wrap-Up will quickly update you on our newest and highest conviction ideas.

Newest Publications & Updates

UPDATE: Garrett Motion Inc. (GTX)
April 4, 2023

On April 4, before the market open, GTX indicated that it expects fullyear 2023 net income and adj. EBITDA to be at the high end of its initial guidance of $255-$300 million and $555-$615 million, respectively, driven by stronger volumes, solid operational execution and favorable currency fluctuations.

The company expects to report actual 1Q 2023 results as well as formally update its full-year guidance before the market open on Monday, April 24, 2023 (and will hold a conference call that morning at 8:30 a.m.).

Our base case fair value estimate for GTX remains ~$11 per share, reflecting an 8.0x multiple on our 2024E adjusted net income forecast of $420 million and a fully diluted share count of ~320 million.

INITIATION: APi Group Corp. (APG)
March 21, 2023

APi Group Corp. (NYSE: APG) operates two business segments: (1) Safety Services (69.5% of sales and 73% of adj. EBITDA in 2022), which designs, installs, inspects, monitors, repairs and services occupancy systems, including fire safety, electronic security & HVAC systems; and (2) Specialty Services (30.5% of sales and 27% of adj. EBITDA), which provides similar services for critical infrastructure, including electric, gas, water, sewer & telecommunications lines.

APG operates an asset-light, variable cost, recession resistant/statutorily mandated business that possesses mid-to-high single digit organic growth prospects, numerous tuck-in M&A opportunities in a fragmented market and a clear path to ~300 basis points of incremental margin improvement over the next 2-3 years. Moreover, with shares trading at ~9x 2024E EV/EBITDA and a free cash flow yield of ~10% APG trades at a significant discount to publicly traded peers, which trade at EV/EBITDA multiples of nearly 14x and FCF yields of ~3.5%, as well as relevant private market transaction valuations, which have averaged ~16x EV/EBITDA in recent years. In addition to fundamental upside, we also see the potential for APi to separate/monetize its Specialty Services segment, via spin-off or sale. Such a transaction would unlock value and provide APG with incremental capital to either rapidly de-lever, pursue accretive tuck-in M&A and/or be returned to shareholders via share repurchases (while also increasing focus on the higher margin/faster growing Safety Services business). Recent commentary suggests “everything is on the table”, in terms of unlocking value for shareholders.

Based on management guidance and commentary as well as peer and M&A valuations, APG’s Safety Services and Specialty Services businesses could be valued at ~$34 per share, and $7 per share, respectively. Accounting for corporate costs and projected net debt of ~$11 per share yields a base case sum-of-the-parts fair value of $30 per share (with bull and bear cases of ~$36.50 and ~$23.50 per share, respectively).

Radar Screen – April 2023

Monthly publication providing ongoing analysis on companies where we see potential for a value-unlocking event

Companies discussed this month:  Alphabet Inc. (GOOG), California Resources Corp. (CRC), Carrier Global Corp. (CARR), Crown Holdings Inc. (CCK), FLEETCOR Technologies, Inc. (FLT), Griffon Corp. (GFF), Hasbro, Inc. (HAS), IAC Inc. (IAC), JELD-WEN (JELD), Liberty Broadband Corp. (LBRDK), Matthews International Corp. (MATW), Natura & Co. Holding (NTCO), PAR Technology Corp. (PAR), RCI Hospitality Inc. (RICK), Tiptree Inc. (TIPT), Western Digital Corp. (WDC)

Product Specialist

Rich Albanese
ralbanese@pcsresearchgroup.com
+1 646-839-5566

The Weekly Wrap-Up provides summaries of recent publications from Hidden Opportunities including links to the full-length research reports.  If you haven’t engaged with the research over the past seven days, the Weekly Wrap-Up will quickly update you on our newest and highest conviction ideas.

Newest Publications & Updates

INITIATION: APi Group Corp. (APG)
March 21, 2023

APi Group Corp. (NYSE: APG) operates two business segments: (1) Safety Services (69.5% of sales and 73% of adj. EBITDA in 2022), which designs, installs, inspects, monitors, repairs and services occupancy systems, including fire safety, electronic security & HVAC systems; and (2) Specialty Services (30.5% of sales and 27% of adj. EBITDA), which provides similar services for critical infrastructure, including electric, gas, water, sewer & telecommunications lines.

APG operates an asset-light, variable cost, recession resistant/statutorily mandated business that possesses mid-to-high single digit organic growth prospects, numerous tuck-in M&A opportunities in a fragmented market and a clear path to ~300 basis points of incremental margin improvement over the next 2-3 years. Moreover, with shares trading at ~9x 2024E EV/EBITDA and a free cash flow yield of ~10% APG trades at a significant discount to publicly traded peers, which trade at EV/EBITDA multiples of nearly 14x and FCF yields of ~3.5%, as well as relevant
private market transaction valuations, which have averaged ~16x EV/EBITDA in recent years. In addition to fundamental upside, we also see the potential for APi to separate/monetize its Specialty Services segment, via spin-off or sale. Such a transaction would unlock value and provide APG with incremental capital to either rapidly de-lever, pursue accretive tuck-in M&A and/or be returned to shareholders via share repurchases (while also increasing focus on the higher margin/faster growing Safety Services business).  Recent commentary suggests “everything is on the table”, in terms of unlocking value for shareholders.

Based on management guidance and commentary as well as peer and M&A valuations, APG’s Safety Services and Specialty Services businesses could be valued at ~$34 per share, and $7 per share, respectively. Accounting for corporate costs and projected net debt of ~$11 per share yields a base case sum-of-the-parts fair value of $30 per share (with bull and bear cases of ~$36.50 and ~$23.50 per share, respectively).

Radar Screen – March 2023

Monthly publication providing ongoing analysis on companies where we see potential for a value-unlocking event

Companies discussed this month:  Alphabet Inc. (GOOG), Amerco (UHAL), California Resources Corp. (CRC), Crown Holdings Inc. (CCK), Griffon Corp. (GFF), Hasbro, Inc. (HAS), IAC Inc. (IAC) JELD-WEN (JELD), Liberty Broadband (LBRDK), Lions Gate (LGF), Matthews (MATW), Natura & Co. Holding (NTCO), Par Technology (PAR), Penn National Gaming (PENN), RCI Hospitality (RICK), Tiptree Inc. (TIPT), Western Digital (WDC)

Product Specialist

Rich Albanese
ralbanese@pcsresearchgroup.com
+1 646-839-5566

The Weekly Wrap-Up provides summaries of recent publications from the Spin-Off Report including links to the full-length research reports. If you haven’t engaged with the research over the past seven days, the Weekly Wrap-Up will quickly update you on our newest and highest conviction ideas.

Newest Publications & Updates

UPDATE: Madison Square Garden Entertainment Corp. (MSGE)
March 30, 2023

Madison Square Garden Entertainment Corp. (NYSE: MSGE) has announced that it will compete the previously announced spin-off of the company’s live entertainment business after the market close on April 20, 2023.

The spin-off will separate the fairly stable entertainment and bookings business along with the highly valuable Madison Square Garden arena, from a business that is in transition as it looks to stabilize subscriber count at Networks and an unproven Sphere arena. (Management has indicated it is looking to sell its ownership position in Tao).

On a pre-spin, sum-of-the-parts basis, we assign a fair value estimate of $75 per share to Madison Square Garden Entertainment Corp. Our fair value estimate includes $34 per share in value from the parent company (MSG Sphere), and $41 per share in value derived from New MSGE.

COMPREHENSIVE: Madison Square Garden Entertainment Corp. (MSGE)
March 20, 2023

Madison Square Garden Entertainment Corp. (NYSE: MSGE) plans to spin-off its traditional live entertainment business from the MSG Sphere, Tao Group, and Networks businesses. The spin-off will be accomplished via a pro-rata distribution of approximately two-thirds economic interest in the spin company.  Following the transaction, the spin company will retain the MSG Entertainment corporate moniker. The parent company will be renamed MSG Sphere Corp. and will retain a one-third economic interest in the spin company. If completed, it is expected that the spin-off transaction would be tax-free to MSGE shareholders.

The European Spin-Off and Restructuring Report: Melrose Industries PLC (MRO LN))
March 29, 2023

On September 8, 2022, Melrose Industries PLC (MRO LN) announced the intention to spin off the GKN Automotive and GKN Powder Metallurgy businesses into a standalone, publicly traded company. The spin company will adopt the corporate moniker Dowlais Group plc (pronounced dow-lays) and is expected to trade on the London Stock Exchange, which is where the company will be headquartered. The proposed transaction is targeted to be completed on April 20, 2023, subject to shareholder approval at a General Meeting on March 30, 2023. MRO shareholders will receive one share of Dowlais for every one share of Melrose owned. Dowlais will be an automotive platform initially focused on supplying driveline technologies and the production of metal powder and precision metal parts for the automotive and industrial sectors. Dowlais will focus on “profitable organic growth as well as targeted M&A in the automotive sector, where we see opportunities as a consolidator either via an all-cash acquisition or share based transaction.” If the separation is completed, MRO will retain ownership of the GKN Aerospace business and continue its current “Buy, Improve, Sell” business strategy.

On a sum-of-the-parts basis we fairly value shares of pre-spin MRO at GBp 170 per share, consisting of GBp 76 per share from Dowlais and GBp 94 per share from post-spin Melrose. Our fair value estimate suggests less than 10% upside potential from the current share price. The valuation exercises estimate that both post-spin entities operate at margins below their respective targets in 2024, as our revenue forecasts do not result in revenue above those of pre-pandemic levels, which is generally when management states that it would be able to achieve said targets. If the post-spin entities were to achieve the margin targets in 2024, this would add GBp 21 per share in value to our pre-spin sum-of-the-parts valuation, and present upside optionality to our fair value estimate.

Radar Screen – March 2023

Monthly publication providing ongoing analysis on companies with potential for a value-unlocking event

Companies discussed this month:  Alphabet Inc. (GOOG), Amerco (UHAL), California Resources Corp. (CRC), Crown Holdings Inc. (CCK), Griffon Corp. (GFF), Hasbro, Inc. (HAS), IAC Inc. (IAC) JELD-WEN (JELD), Liberty Broadband (LBRDK), Lions Gate (LGF), Matthews (MATW), Natura & Co. Holding (NTCO), Par Technology (PAR), Penn National Gaming (PENN), RCI Hospitality (RICK), Tiptree Inc. (TIPT), Western Digital (WDC)

Spin-Off Calendar – March 2023

Published monthly, The Spin-Off Calendar provides one-page summaries of every spin-off under coverage from the announcement date, followed by the filing of the Form 10 and continuing 60 days post completion.

Spin-Off Report Compendium – January 2023

Murray Stahl’s commentary on various investing themes and single stock recommendations.

European Spin-Off Compendium – February 2023

Murray Stahl’s commentary on various investing themes and single stock recommendations in Europe. 

Bits & Pieces – March 2023

Covers mispriced stub securities, tracking stocks and other arbitrage opportunities.

Product Specialist

Rich Albanese
ralbanese@pcsresearchgroup.com
+1 646-839-5566

The Weekly Wrap-Up provides summaries of recent publications from Hidden Opportunities including links to the full-length research reports.  If you haven’t engaged with the research over the past seven days, the Weekly Wrap-Up will quickly update you on our newest and highest conviction ideas.

Newest Publications & Updates

INITIATION: APi Group Corp. (APG)
March 21, 2023

APi Group Corp. (NYSE: APG) operates two business segments: (1) Safety Services (69.5% of sales and 73% of adj. EBITDA in 2022), which designs, installs, inspects, monitors, repairs and services occupancy systems, including fire safety, electronic security & HVAC systems; and (2) Specialty Services (30.5% of sales and 27% of adj. EBITDA), which provides similar services for critical infrastructure, including electric, gas, water, sewer & telecommunications lines.

APG operates an asset-light, variable cost, recession resistant/statutorily mandated business that possesses mid-to-high single digit organic growth prospects, numerous tuck-in M&A opportunities in a fragmented market and a clear path to ~300 basis points of incremental margin improvement over the next 2-3 years. Moreover, with shares trading at ~9x 2024E EV/EBITDA and a free cash flow yield of ~10% APG trades at a significant discount to publicly traded peers, which trade at EV/EBITDA multiples of nearly 14x and FCF yields of ~3.5%, as well as relevant
private market transaction valuations, which have averaged ~16x EV/EBITDA in recent years. In addition to fundamental upside, we also see the potential for APi to separate/monetize its Specialty Services segment, via spin-off or sale. Such a transaction would unlock value and provide APG with incremental capital to either rapidly de-lever, pursue accretive tuck-in M&A and/or be returned to shareholders via share repurchases (while also increasing focus on the higher margin/faster growing Safety Services business).  Recent commentary suggests “everything is on the table”, in terms of unlocking value for shareholders.

Based on management guidance and commentary as well as peer and M&A valuations, APG’s Safety Services and Specialty Services businesses could be valued at ~$34 per share, and $7 per share, respectively. Accounting for corporate costs and projected net debt of ~$11 per share yields a base case sum-of-the-parts fair value of $30 per share (with bull and bear cases of ~$36.50 and ~$23.50 per share, respectively).

Radar Screen – March 2023

Monthly publication providing ongoing analysis on companies where we see potential for a value-unlocking event

Companies discussed this month:  Alphabet Inc. (GOOG), Amerco (UHAL), California Resources Corp. (CRC), Crown Holdings Inc. (CCK), Griffon Corp. (GFF), Hasbro, Inc. (HAS), IAC Inc. (IAC) JELD-WEN (JELD), Liberty Broadband (LBRDK), Lions Gate (LGF), Matthews (MATW), Natura & Co. Holding (NTCO), Par Technology (PAR), Penn National Gaming (PENN), RCI Hospitality (RICK), Tiptree Inc. (TIPT), Western Digital (WDC)

Product Specialist

Rich Albanese
ralbanese@pcsresearchgroup.com
+1 646-839-5566

The Weekly Wrap-Up provides summaries of recent publications from the Spin-Off Report including links to the full-length research reports. If you haven’t engaged with the research over the past seven days, the Weekly Wrap-Up will quickly update you on our newest and highest conviction ideas.

Newest Publications & Updates

COMPREHENSIVE: Madison Square Garden Entertainment Corp. (MSGE)
March 20, 2023

Madison Square Garden Entertainment Corp. (NYSE: MSGE) plans to spin-off its traditional live entertainment business from the MSG Sphere, Tao Group, and Networks businesses. The spin-off will be accomplished via a pro-rata distribution of approximately two-thirds economic interest in the spin company.  Following the transaction, the spin company will retain the MSG Entertainment corporate moniker. The parent company will be renamed MSG Sphere Corp. and will retain a one-third economic interest in the spin company. If completed, it is expected that the spin-off transaction would be tax-free to MSGE shareholders.

The proposed spin-off will separate the fairly stable entertainment and bookings business, along with the highly valuable Madison Square Garden arena, from a business that is in transition as it looks to stabilize subscriber count at Networks and an unproven Sphere arena. (Management has indicated it is looking to sell its ownership position in Tao).

On a pre-spin, sum-of-the-parts basis, we assign a fair value estimate of $75 per share to Madison Square Garden Entertainment Corp. Our fair value estimate includes $34 per share in value from the parent company (MSG Sphere), and $41 per share in value derived from New MSGE. Given the implied upside from the current share price, combined with our view that MSGE’s assets are undervalued within the current corporate structure, we recommend shares of MSGE prior to the spin-off. Following the separation, we expect investor skepticism surrounding MSG Sphere’s as yet unproven ability to drive profitable revenue at the Las Vegas Sphere will likely weigh on shares, at least initially. That said, we think longer term investors that believe in the Sphere concept could see significant returns over time if the company is able to execute on its strategy to maximize utilization at the facility.

Update: Crane Holdings Co. (CR)
March 10, 2023

Crane Holding Co. (NYSE: CR) announced it will complete the previously announced spin-off of Crane Co. after the market close on April 3, 2023.

On a pre-spin, sum-of-the-parts basis, we assign a fair value estimate to Crane Holdings Co. of $132 per share, consisting of $74 per share in value from new Crane Co. and $58 per share in value from post-spin Crane NXT. Given the implied upside to our fair value estimate, combined with our favorable outlook on an eventual re-rating of Crane NXT, we recommend shares of CR ahead of the planned separation.

Radar Screen – March 2023

Monthly publication providing ongoing analysis on companies with potential for a value-unlocking event

Companies discussed this month:  Alphabet Inc. (GOOG), Amerco (UHAL), California Resources Corp. (CRC), Crown Holdings Inc. (CCK), Griffon Corp. (GFF), Hasbro, Inc. (HAS), IAC Inc. (IAC) JELD-WEN (JELD), Liberty Broadband (LBRDK), Lions Gate (LGF), Matthews (MATW), Natura & Co. Holding (NTCO), Par Technology (PAR), Penn National Gaming (PENN), RCI Hospitality (RICK), Tiptree Inc. (TIPT), Western Digital (WDC)

Spin-Off Calendar – March 2023

Published monthly, The Spin-Off Calendar provides one-page summaries of every spin-off under coverage from the announcement date, followed by the filing of the Form 10 and continuing 60 days post completion.

Spin-Off Report Compendium – January 2023

Murray Stahl’s commentary on various investing themes and single stock recommendations.

European Spin-Off Compendium – February 2023

Murray Stahl’s commentary on various investing themes and single stock recommendations in Europe. 

Bits & Pieces – March 2023

Covers mispriced stub securities, tracking stocks and other arbitrage opportunities.

Product Specialist

Rich Albanese
ralbanese@pcsresearchgroup.com
+1 646-839-5566

The Weekly Wrap-Up provides summaries of recent publications from the Spin-Off Report including links to the full-length research reports.  If you haven’t engaged with the research over the past seven days, the Weekly Wrap-Up will quickly update you on our newest and highest conviction ideas.

Newest Publications & Updates

Update: Crane Holdings Co. (CR)
March 10, 2023

Crane Holding Co. (NYSE: CR) has announced that it will compete the previously announced spin-off of Crane Co. after the market close on April 3, 2023.

The spin company expects to trade on the NYSE under the ticker “CR”. CR shareholders of record as of March 23, 2023, will receive one share of new CR for every one shares of Crane Holdings Co. owned.

On a pre-spin, sum-of-the-parts basis, we assign a fair value estimate to Crane Holdings Co. of $132 per share, consisting of $74 per share in value from new Crane Co. and $58 per share in value from post-spin Crane NXT. Given the implied upside to our fair value estimate, combined with our favorable outlook on an eventual re-rating of Crane NXT, we recommend shares of CR ahead of the planned separation.

COMPREHENSIVE: Crane Holdings Co. ( CR)
January 17, 2023

On March 30, 2022, before the market open, Crane Holdings Co. (NYSE: CR) announced that its Board of Directors had approved a plan to spin off its Aerospace & Electronics (AE) and Process Flow Technologies (PFT) businesses into a separately traded, standalone public company. The separation, if completed, is expected to be accomplished via a tax-free distribution of the Aerospace & Electronics and Process Flow Technologies businesses to CR shareholders. Following the transaction, which is expected to be completed within approximately 12 months from the announcement, CR shareholders will own 100% of the new entity.

On a pre-spin, sum-of-the-parts basis, we assign a fair value estimate to Crane Holdings Co. of $132 per share, consisting of $74 per share in value from new Crane Co. and $58 per share in value from post-spin Crane NXT. Given the implied upside to our fair value estimate, combined with our favorable outlook on an eventual re-rating of Crane NXT, we recommend shares of CR ahead of the planned separation.

Radar Screen – March 2023

Monthly publication providing ongoing analysis on companies with potential for a value-unlocking event

Companies discussed this month:  Alphabet Inc. (GOOG), Amerco (UHAL), California Resources Corp. (CRC), Crown Holdings Inc. (CCK), Griffon Corp. (GFF), Hasbro, Inc. (HAS), IAC Inc. (IAC) JELD-WEN (JELD), Liberty Broadband (LBRDK), Lions Gate (LGF), Matthews (MATW), Natura & Co. Holding (NTCO), Par Technology (PAR), Penn National Gaming (PENN), RCI Hospitality (RICK), Teck Resources (TECK), Tiptree Inc. (TIPT), The J.M. Smucker Co. (SJM), Western Digital (WDC), Whirlpool Corp. (WHR)

Spin-Off Calendar – March 2023

Published monthly, The Spin-Off Calendar provides one-page summaries of every spin-off under coverage from the announcement date, followed by the filing of the Form 10 and continuing 60 days post completion.

Spin-Off Report Compendium – January 2023

Murray Stahl’s commentary on various investing themes and single stock recommendations.

European Spin-Off Compendium – February 2023

Murray Stahl’s commentary on various investing themes and single stock recommendations in Europe. 

Bits & Pieces – March 2023

Covers mispriced stub securities, tracking stocks and other arbitrage opportunities.

Product Specialist

Rich Albanese
ralbanese@pcsresearchgroup.com
+1 646-839-5566

The Weekly Wrap-Up provides summaries of recent publications from Hidden Opportunities including links to the full-length research reports.  If you haven’t engaged with the research over the past seven days, the Weekly Wrap-Up will quickly update you on our newest and highest conviction ideas.

Newest Publications & Updates

UPDATE: IDT Corporation (IDT)
March 9, 2023

On March 9, after the market close, IDT reported a 2Q F2023 consolidated sales decline of 7% to $314 million, as a 14% decline at Traditional Communications offset strong growth at NRS, BOSS Money, and net2phone, where sales were up 87%, 47% and 31%, respectively. Adjusted EBITDA, on a consolidated basis, increased ~25% to $23.4 million while adj. EPS more than doubled to $0.62 (from $0.30 in the prior year period).

Our base case fair value for IDT is ~$55 per share, which values IDT’s Traditional Communications segment at 2.5x 2023E EBITDA, applies sales multiples of 2.5x and ~7.0x to the company’s net2phone and Fintech businesses, respectively, and accounts for projected net cash (see Exhibit 1 on page #2).

UPDATE: ECN Capital Corp. (TSE: ECN)
March 8, 2023

On March 8, before the market open, ECN announced that it has hired advisors to assist in a review of strategic alternatives, which could include strategic funding and capital relationships as well as a wide range of other options, as the company looks to drive continued growth and unlock incremental shareholder value.

Our fair value is ~C$7 per share, which assigns value of $9 per share to Triad Financial, the manufactured housing business, and ~$2 per share to Source One, which is focused on the marine and recreational vehicle verticals (see Exhibit 1 on page #2). [Note: Per share figures are converted from USD at an exchange rate of ~1.35x].

UPDATE: SNC-Lavalin (TSE: SNC)
March 3, 2023

On March 3, before the market open, SNC reported 2022 consolidated sales growth of ~2.4% to $7.5 billion, including 4.9% growth to $6.6 billion at the core SNCL Services business. Total adjusted EBITDA was $453 million (compared with $525 million in 2021) while adj. EBITDA from professional services & project management (PS&PM, which includes SNCL Services and Capital) was $389 million (compared with $434 million in 2021).

Our fair value remains $37.50 per share, which assigns value of $45 per share to SNCL Services, based on a blended multiple of ~9.5x and $10 per share for the Capital segment, wholly comprised of the estimate value of its stake in Highway 407, while accounting for future LSTK losses, corporate overhead and net debt (see Exhibit 3 on page #3).

UPDATE: One Span, Inc. (OSPN)
March 2, 2023

On March 2nd afternoon, Reuters reported that OSPN has hired Evercore as an advisor to explore strategic options, including a sale, in a process that the outlet expects could attract interest from both strategic and financial buyers. (For context, the company has been under pressure by long-term holder Legion Partners, which holds two Board seats, as well as more recent activist entrants, including Ancora Advisors and Altai Capital.)

Our fair value remains $32 per share, valuing OSPN’s Hardware business at 2.5x EBITDA, the legacy/non-recurring licensing and core/recurring software & services businesses at sales multiples of 1.0x and 8.5x, respectively, and accounting for ~$100 million of projected net cash.

INITIATION: Matthews International Corp. (MATW)
February 13, 2023

In our view, MATW could consider a range of potential value-unlocking measures under pressure from activist investor Barington Capital, a ~0.56% holder, which, pursuant to a recent cooperation agreement, is serving as a consultant to MATW’s management & Board (until 30 days prior to the 2024 Annual Meeting). For context, MATW has been previously covered by Hidden Opportunities (in both 2016 & 2017-2018); to that end, we have contended, at various times, that the company is undervalued relative to the sum value of its parts, which include a steady, high-cash-flow-generating death-care business as well as a rapidly expanding energy storage business/industrial technologies segment (along with what we view as a somewhat less attractive, albeit still cash-flow-accretive, packaging/brand management business).

Based on management guidance and commentary as well as peer and M&A valuations, MATW’s Memorialization, Industrial Technologies, and SGK Brand Solutions businesses could be valued at $41 per share, $34 per share, and $14 per share, respectively. Accounting for corporate costs and projected net debt of ~$39 per share yields a base case sum-of-the-parts fair value of $50 per share (with bull and bear cases of ~$57 and ~$42 per share, respectively).Potential catalysts include the separation/monetization of any of MATW’s diverse businesses, accretive M&A, share repurchases, leverage reductions and/or better than expected growth and margins, particularly at the Industrial Technologies segment. 

Radar Screen – March 2023

Monthly publication providing ongoing analysis on companies where we see potential for a value-unlocking event

Companies discussed this month:  Amerco (UHAL), Crown Holdings Inc. (CCK), Griffon Corp. (GFF), Hasbro, Inc. (HAS), IAC Inc. (IAC) JELD-WEN (JELD), Liberty Broadband (LBRDK), Lions Gate (LGF), Matthews (MATW), Par Technology (PAR), Penn National Gaming (PENN), RCI Hospitality (RICK), Teck Resources (TECK), Tiptree Inc. (TIPT), The J.M. Smucker Co. (SJM), Western Digital (WDC), Whirlpool Corp. (WHR)

Product Specialist

Rich Albanese
ralbanese@pcsresearchgroup.com
+1 646-839-5566