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The Weekly Wrap-Up – February 24, 2023

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: Crane Holdings Co. (NYSE: 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 – February 2023

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

Companies discussed this month:  Alphabet Inc. (GOOG), 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), 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 – February 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 – February 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 – February 17, 2023

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: Crane Holdings Co. (NYSE: 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 – February 2023

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

Companies discussed this month:  Alphabet Inc. (GOOG), 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), 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 – February 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 – February 2023

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

Product Specialist

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

Matthews International Corp. (MATW)

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: 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).
MATW’s segments have limited synergies, and, in addition to any potential re-rating benefits, the elimination of its conglomerate structure could improve longer-term operations with respect to growth, margins, and/or capital allocation (while also allowing investors to better target their investment dollars). Moreover, we think MATW’s share price performance, which has materially lagged both the S&P 500 and Russell 2000 indexes over the last three- and five-year periods, weaken management’s potential rationale for the maintenance of the current operating model/status quo, particularly given the current scale of each of its businesses.(To that end, over the last three years MATW shares are up ~6.5% versus gains of ~21% and 13.5% for the S&P and Russell, respectively, while over the last five years, MATW’s stock is down ~29% compared with gains of 53.5% and 28.5% for the S&P and Russell.)
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. Risks include management execution, shifts in technology or consumer preferences, competition, commodity and currency fluctuations, regulation, geopolitical disruptions and/or a recession.

UPDATE:  IAC Inc. (IAC)
February 14, 2023

After the market close, on Feb 14, IAC reported 4Q 2022 sales up 8% to $1.247 billion with adjusted EBITDA of $99.7 million (compared with $3.5 million in 4Q 2021). For the full year 2022, sales increased 42%, primarily driven by the Meredith acquisition, to $5.235 billion with adj. EBITDA of $199.6 million (compared with $107.3 million in 2021).

In terms of valuation, among its private holdings, based on IAC’s guidance and commentary, as well as peer and M&A valuations, we value Dotdash Meredith at $26 per share and Emerging & Other at $10 per share, which awards per share values of $7 and $3 to Care.com and Vivian Health, respectively, while assigning zero value to the other businesses (i.e., Mosaic, The Daily Beast, IAC Films and Newco). Search’s profits are assumed to partially offset corporate costs, while Turo is valued at ~$3 per share. For its public holdings, based on discounted prices of ~$2.20 and ~$34 per share, we value ANGI at ~$11 per share and MGM at ~$25 per share. Accounting for remaining corporate costs as well as net debt yields a total sum-of-the-parts value of ~$67 per share (with bull and bear cases of ~$92 and ~$43 per share, respectively).

UPDATE:  Garrett Motion Inc. (GTX)
February 14, 2023

On Feb 14, before the market open, GTX reported 4Q 2022 sales up 4% (or ~15% on a constant currency basis) to $898 million with 8.5% growth in adj. EBITDA to $140 million. Net income and adj. free cash flow were $112 million and $132 million, respectively, compared with $132 million and $151 million in the prior year period.

Our base case fair value estimate for GTX is ~$11 per share, reflecting an 8.0xmultiple on our 2024E adjusted net income forecast of $420 million and a fully diluted share count of ~320 million (see Exhibit #3 on page 2).

 

Radar Screen – February 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), 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)

Product Specialist

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

The Weekly Wrap-Up – February 10, 2023

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:  Griffon Corp. (GFF)
January 9, 2023

On January 9 GFF announced a cooperation agreement with Voss Capital, a ~6% holder, that would see its chief investment officer, Travis Cocke, appointed to the company’s Board (as well as add him to the Nominating, Governance and Strategic Consideration committees). Additionally, following the 2023 Annual Meeting, Voss will “select and appoint” an additional independent director (with the Board overall size not to exceed 13 members).

Our base case fair value estimate for Griffon Corp. (GFF) remains $46.50 per share, reflecting a blended multiple of 9.3x on F2023 adjusted EBITDA of $427.7 million along with projected net debt of ~$1.44 billion (see Exhibit #1 on page 2).

INITIATION:  IAC Inc. (IAC)
December 28, 2022

IAC has a long history of value unlocking transactions, in which it has typically acquired relatively nascent businesses, grew them, both organically and by acquisition, and ultimately monetized them via spin-off or sale, including, among others, Ticketmaster, ILG, Lending Tree, HSN, Expedia, TripAdvisor, Trivago, Match Group, Angi, Inc. and, most recently, Bluecrew.

In our view, shares are currently undervalued with the implied value of its private holdings (the so-called “stub”), based on the current market prices of its public holdings inclusive of net debt, at $1.06 billion, which is notably the lowest implied value seen over the last two years and well below our $3.23 billion fair value estimate.

In terms of its private holdings, based on IAC’s guidance & commentary, as well as peer and M&A valuations, we value Dotdash Meredith at $26 per share and Emerging & Other at $10 per share, which awards per share values of $7 and $3 to Care.com and Vivian Health, respectively, while assigning zero value to the other businesses (i.e., Mosaic, The Daily Beast, IAC Films & Newco). Search’s profits are assumed to partially offset corporate costs while Turo is valued at ~$3 per share. For its public holdings, based on the current market prices, we value ANGI at ~$11 per share and MGM at ~$25 per share. Accounting for remaining corporate costs as well as net debt yields a total sum-of-the-parts value of ~$67 per share (with bull and bear cases of ~$92 and ~$43 per share, respectively).

Radar Screen – February 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), 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)

Product Specialist

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

The Weekly Wrap-Up – February 10, 2023

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: Crane Holdings Co. (NYSE: 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 – February 2023

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

Companies discussed this month:  Alphabet Inc. (GOOG), 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), 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 – February 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

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 – February 3, 2023

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: Jefferies Financial Group Inc. (GEHC)
January 17, 2023

Jefferies Financial Group Inc. (NYSE: JEF) announced the completed spin-off of Vitesse Energy (NYSE: VTS) after the market open on January 17, 2023. JEF shareholders received one share of VTS for every 8.49668 shares of JEF owned. Shares of VTS closed trading on January 13, 2023, at a price of $15.29.

We approach our valuation under the assumption that little to no value was being attributed to Vitesse Energy within the consolidated JEF stock price. Further, we view the current JEF institutional shareholder base as unlikely to have a meaningful interest in holding shares of the oil and gas entity following the distribution, as their probable reason for owning Jefferies is for financial market exposure.

We value shares of JEF at $36 per share and rate shares at NEUTRAL. We fairly value shares of VTS at $23 per share and rate shares of VTS at a BUY.

Radar Screen – February 2023

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

Companies discussed this month:  Alphabet Inc. (GOOG), 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), 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 – February 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

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 – February 3, 2023

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:  Griffon Corp. (GFF)
January 9, 2023

On January 9 GFF announced a cooperation agreement with Voss Capital, a ~6% holder, that would see its chief investment officer, Travis Cocke, appointed to the company’s Board (as well as add him to the Nominating, Governance and Strategic Consideration committees). Additionally, following the 2023 Annual Meeting, Voss will “select and appoint” an additional independent director (with the Board overall size not to exceed 13 members).

Our base case fair value estimate for Griffon Corp. (GFF) remains $46.50 per share, reflecting a blended multiple of 9.3x on F2023 adjusted EBITDA of $427.7 million along with projected net debt of ~$1.44 billion (see Exhibit #1 on page 2).

INITIATION:  IAC Inc. (IAC)
December 28, 2022

IAC has a long history of value unlocking transactions, in which it has typically acquired relatively nascent businesses, grew them, both organically and by acquisition, and ultimately monetized them via spin-off or sale, including, among others, Ticketmaster, ILG, Lending Tree, HSN, Expedia, TripAdvisor, Trivago, Match Group, Angi, Inc. and, most recently, Bluecrew.

In our view, shares are currently undervalued with the implied value of its private holdings (the so-called “stub”), based on the current market prices of its public holdings inclusive of net debt, at $1.06 billion, which is notably the lowest implied value seen over the last two years and well below our $3.23 billion fair value estimate.

In terms of its private holdings, based on IAC’s guidance & commentary, as well as peer and M&A valuations, we value Dotdash Meredith at $26 per share and Emerging & Other at $10 per share, which awards per share values of $7 and $3 to Care.com and Vivian Health, respectively, while assigning zero value to the other businesses (i.e., Mosaic, The Daily Beast, IAC Films & Newco). Search’s profits are assumed to partially offset corporate costs while Turo is valued at ~$3 per share. For its public holdings, based on the current market prices, we value ANGI at ~$11 per share and MGM at ~$25 per share. Accounting for remaining corporate costs as well as net debt yields a total sum-of-the-parts value of ~$67 per share (with bull and bear cases of ~$92 and ~$43 per share, respectively).

Radar Screen – February 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), 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)

Product Specialist

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

The Weekly Wrap-Up – January 27, 2023

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:  Griffon Corp. (GFF)
January 9, 2023

On January 9 GFF announced a cooperation agreement with Voss Capital, a ~6% holder, that would see its chief investment officer, Travis Cocke, appointed to the company’s Board (as well as add him to the Nominating, Governance and Strategic Consideration committees). Additionally, following the 2023 Annual Meeting, Voss will “select and appoint” an additional independent director (with the Board overall size not to exceed 13 members).

Our base case fair value estimate for Griffon Corp. (GFF) remains $46.50 per share, reflecting a blended multiple of 9.3x on F2023 adjusted EBITDA of $427.7 million along with projected net debt of ~$1.44 billion (see Exhibit #1 on page 2).

UPDATE:  RCI Hospitality Holdings Inc. (NASDAQ: RICK)
December 29, 2022

Close coverage of RICK with shares trading roughly in-line with our fair value estimate; we will look to re-recommend if/when valuation shifts or incremental steps toward strategic alternatives emerge.

For context, RICK has returned ~95.5% (compared with a ~1% increase in the S&P 500 and a ~2.75% rise in the Russell 2000) since our initial recommendation in June 2022.

INITIATION:  IAC Inc. (IAC)
December 28, 2022

IAC has a long history of value unlocking transactions, in which it has typically acquired relatively nascent businesses, grew them, both organically and by acquisition, and ultimately monetized them via spin-off or sale, including, among others, Ticketmaster, ILG, Lending Tree, HSN, Expedia, TripAdvisor, Trivago, Match Group, Angi, Inc. and, most recently, Bluecrew.

In our view, shares are currently undervalued with the implied value of its private holdings (the so-called “stub”), based on the current market prices of its public holdings inclusive of net debt, at $1.06 billion, which is notably the lowest implied value seen over the last two years and well below our $3.23 billion fair value estimate.

In terms of its private holdings, based on IAC’s guidance & commentary, as well as peer and M&A valuations, we value Dotdash Meredith at $26 per share and Emerging & Other at $10 per share, which awards per share values of $7 and $3 to Care.com and Vivian Health, respectively, while assigning zero value to the other businesses (i.e., Mosaic, The Daily Beast, IAC Films & Newco). Search’s profits are assumed to partially offset corporate costs while Turo is valued at ~$3 per share. For its public holdings, based on the current market prices, we value ANGI at ~$11 per share and MGM at ~$25 per share. Accounting for remaining corporate costs as well as net debt yields a total sum-of-the-parts value of ~$67 per share (with bull and bear cases of ~$92 and ~$43 per share, respectively).

Radar Screen – January 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

The Weekly Wrap-Up – January 27, 2023

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: Jefferies Financial Group Inc. (GEHC)
January 17, 2023

Jefferies Financial Group Inc. (NYSE: JEF) announced the completed spin-off of Vitesse Energy (NYSE: VTS) after the market open on January 17, 2023. JEF shareholders received one share of VTS for every 8.49668 shares of JEF owned. Shares of VTS closed trading on January 13, 2023, at a price of $15.29.

We approach our valuation under the assumption that little to no value was being attributed to Vitesse Energy within the consolidated JEF stock price. Further, we view the current JEF institutional shareholder base as unlikely to have a meaningful interest in holding shares of the oil and gas entity following the distribution, as their probable reason for owning Jefferies is for financial market exposure.

We value shares of JEF at $36 per share and rate shares at NEUTRAL. We fairly value shares of VTS at $23 per share and rate shares of VTS at a BUY.

Radar Screen – January 2023

Monthly publication providing ongoing analysis on companies with 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)

Spin-Off Calendar – January 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.

Bits & Pieces

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 – January 20, 2023

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:  Griffon Corp. (GFF)
January 9, 2023

On January 9 GFF announced a cooperation agreement with Voss Capital, a ~6% holder, that would see its chief investment officer, Travis Cocke, appointed to the company’s Board (as well as add him to the Nominating, Governance and Strategic Consideration committees). Additionally, following the 2023 Annual Meeting, Voss will “select and appoint” an additional independent director (with the Board overall size not to exceed 13 members).

Our base case fair value estimate for Griffon Corp. (GFF) remains $46.50 per share, reflecting a blended multiple of 9.3x on F2023 adjusted EBITDA of $427.7 million along with projected net debt of ~$1.44 billion (see Exhibit #1 on page 2).

UPDATE:  RCI Hospitality Holdings Inc. (NASDAQ: RICK)
December 29, 2022

Close coverage of RICK with shares trading roughly in-line with our fair value estimate; we will look to re-recommend if/when valuation shifts or incremental steps toward strategic alternatives emerge.

For context, RICK has returned ~95.5% (compared with a ~1% increase in the S&P 500 and a ~2.75% rise in the Russell 2000) since our initial recommendation in June 2022.

INITIATION:  IAC Inc. (IAC)
December 28, 2022

IAC has a long history of value unlocking transactions, in which it has typically acquired relatively nascent businesses, grew them, both organically and by acquisition, and ultimately monetized them via spin-off or sale, including, among others, Ticketmaster, ILG, Lending Tree, HSN, Expedia, TripAdvisor, Trivago, Match Group, Angi, Inc. and, most recently, Bluecrew.

In our view, shares are currently undervalued with the implied value of its private holdings (the so-called “stub”), based on the current market prices of its public holdings inclusive of net debt, at $1.06 billion, which is notably the lowest implied value seen over the last two years and well below our $3.23 billion fair value estimate.

In terms of its private holdings, based on IAC’s guidance & commentary, as well as peer and M&A valuations, we value Dotdash Meredith at $26 per share and Emerging & Other at $10 per share, which awards per share values of $7 and $3 to Care.com and Vivian Health, respectively, while assigning zero value to the other businesses (i.e., Mosaic, The Daily Beast, IAC Films & Newco). Search’s profits are assumed to partially offset corporate costs while Turo is valued at ~$3 per share. For its public holdings, based on the current market prices, we value ANGI at ~$11 per share and MGM at ~$25 per share. Accounting for remaining corporate costs as well as net debt yields a total sum-of-the-parts value of ~$67 per share (with bull and bear cases of ~$92 and ~$43 per share, respectively).

Radar Screen – January 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