Please see the attached Hidden Opportunities Update on Amerco (NASDAQ: UHAL).

Close coverage of UHAL with shares trading toward the high-end of our bull/bear cases

• For context, UHAL has returned 126.5% (compared with a 68% increase in the S&P 500 and a 40.5% rise in the Russell 2000) since our initial recommendation in June 2018.
• That said, with shares trading toward the high-end of our bull/bear valuation scenarios (see Exhibit #1 on page 2), we prefer to maintain our disciplined approach and close coverage/withdraw our recommendation, as of today’s close.
• While we think UHAL is a high-quality operator in a space where it has durable competitive advantages, we do think the shares could see a degree of increased volatility as the company begins to re-engages in self-storage investments, which were put on hold during the pandemic (to the benefit of near-term profitability), in coming quarters; to that end, we will continue to monitor shares for the opportunity to re-recommend as valuation shifts or if incremental steps toward potential strategic alternatives materialize.

J2 Global Completes Spin-Off of Consensus Cloud Solutions, Changes Name to Ziff Davis; Rate Ziff Davis at BUY with a $167 FVE; Rate Consensus at SELL with $38 FVE

• On October 7, 2021, after the market close, J2 Global Inc. (formerly trading on the NYSE under the ticker “JCOM”) completed the spin-off of its digital fax business into a standalone publicly traded company, which adopted the corporate moniker Consensus Cloud Solutions Inc. (“Consensus”)
• Shares of Consensus will trade on the NASDAQ under the ticker “CCSI”.
• JCOM Shareholders of record as of October 1, 2021, received one share of CCSI for every three JCOM shares owned. JCOM retained a 19.9% stake in CCSI with the expectation that the company will ultimately monetize its ownership position.
• Following the separation, J2 Global changed its corporate name to Ziff Davis Inc., and now trades on the NASDAQ under the symbol “ZD”.
• In terms of rationale, the separation will allow Consensus to adopt a differentiated growth strategy of expanding its healthcare business, while the transaction will reduce leverage at what will become Ziff Davis, as Consensus is expected to be capitalized with $800 million in new debt, with the proceeds being paid as a dividend to the parent company. Consensus is expected to have cash balance of $30 million at the time of separation. With dedicated management and industry expertise, Consensus will attempt to capture market share in the healthcare industry, while for ZD it can be expected that the enhanced financial flexibility will allow it to continue its growth-via-acquisition strategy, which has proven successful historically.
• Following the separation, J2 Global will be focused on its vertically integrated internet platforms (tech and gaming, health, shopping, and cybersecurity) and will be able to achieve greater top-line growth, with lower margins than Consensus. On a pro forma basis, post-spin J2 is expected to generate $1.29-$1.33 billion in revenue and approximately 35% EBITDA margins in 2021. The revenue growth guidance implies ~20% year-over-year growth, fueled by both organic growth and the benefits of past acquisitions. For reference, on a pro forma basis, J2 ex Consensus has exhibited a revenue CAGR of approximately 29% since 2013. The parent company has invested $2.4 billion in more than 70 acquisitions since 2013, and it can be expected to continue an acquisition strategy following the separation.
• Post-spin, we find the investment case for Ziff Davis more compelling than that for Consensus, as the programmatic acquisition strategy ZD employs has shown successful returns over the years, a trend we expect to continue to drive mid-teens-plus revenue growth over time, at stable margins. For Consensus, on the other hand, growth will be primarily predicated on its Consensus Unite platform’s ability to capture market share in the healthcare industry, which if successful could change the perception of the company as a legacy online fax provider into more of a healthcare SaaS platform. If successful in making that shift, Consensus could prove over time to be a highly successful spin-off; however, in the near term we would expect the shares to trade at a relatively low multiple (versus the former JCOM and ZD) until a clearer path to market share gains emerges.
• We fairly value shares of Ziff Davis at $167 per share, which includes about $3 per share in value from the CCSI ownership position, and rate shares at BUY. Shares of ZD closed in the when-issued market at $123.00 last night on light volume
• We fairly value shares of Consensus at $38 per share and rate shares at SELL given downside potential to the when-issued share price as of the close on October 6, 2021. Given our opinion that the company should be viewed more as a legacy electronic fax service provider and less a healthcare SaaS company, which in our view is fair given the percentage revenue contribution of the Consensus Unite platform (for which profitability is not clearly disclosed) likely lag that of the legacy business for a least several years. In our view a multiple of a legacy software/computer companies that are in transition to a cloud services model appears appropriate as a valuation comparable set to value CCSI. We acknowledge that this may prove conservative in the long-term (2+ years) as the company transitions, however we view it as appropriate in terms of the current and near-term business and in context of the spin-off. At $56.04 per share (last-nights closing price), represents a 8.8x multiple on our 2022 EBITDA estimate which represents a multiple that would give more credit for the company’s attempt to be a healthcare SaaS player than we view as appropriate. Anecdotally, when-issued trading volume was fairly light overall.
• For more details, please refer to The Spin Off Report dated September 29, 2021.

Drop Coverage of Meredith Corp. Effective Immediately

• On October 6, after the market close, IAC/InterActiveCorp. (NASDAQ: IAC) announced plans to acquire Meredith Corp.’s (NYSE: MDP) National Media Group, which controls MDP’s digital and print publishing businesses.
• Previously, on May 3, 2021, before the market open, Meredith Corp. announced plans to spin-off its National Media Group (“NMG”) business to shareholders as a standalone publicly traded company. Following the planned spin-off, the parent company, which will control the Local Media Group (“LMG”) business, will be sold to Gray Television Inc. (NYSE: GTN) for $2.7 billion in cash. MDP shareholders of record will receive one share of the spin company, which will retain the Meredith Corp. company name, for each share of MDP owned, as well as $14.50 per share in cash.
• The end result of the IAC acquisition of NMG and GTN’s acquisition of LMG will not result in a new publicly traded company. As such we DROP coverage of Meredith Corp. effective immediately.
• Our prior estimates and fair value for MDP should no longer be relied on.

Sell-Off in Sylvamo Presents Increasingly Attractive Risk Reward Scenario; Upgrade SLVM to BUY (from NEUTRAL), Maintain $45 Fair Value Estimate

• On October 1, 2021, before the market open, International Paper Co. (NYSE: IP) completed the spin-off of its printing papers business into a standalone publicly traded company, which adopted the corporate moniker Sylvamo Corp. (NYSE: SLVM).
• IP Shareholders of record as of September 15, 2021, received one share of SLVM for every 11 IP shares owned. IP retained a 19.9% stake in SLVM with the expectation that IP will ultimately monetize its ownership position.
• Since the close of the first day of regular way trading, shares have declined 24.8%, with total volume of 15.8 million shares having been traded. Over the same time period, the S&P SmallCap 600 has declined 0.9%.
• Our initial NEUTRAL recommendation was rooted in the belief that investors in pre-spin IP would likely exit their ownership position in SLVM for a variety of reasons, including the lack of a dividend at Sylvamo, its inclusion in the S&P SmallCap 600 versus IP’s S&P 500 membership, and the printing paper industry’s structural issues (i.e., the secular decline demand for printing paper).
• Given the recent decline in share price, we think the current quote represents an attractive risk reward scenario for investors who may be shorter term in nature.
• In terms of valuation, at the current price shares trade at 4.4x our 2022 EBITDA estimate, while other paper companies trade at 6.8x average. We believe the forced selling dynamics resulting from the spin-off will ease over time and shares of SLVM will trade in closer proximity to the peer group.
• We do note that continued selling may occur before our expected return to a peer trading multiple as total shares traded since beginning regular way only represents 36% of Sylvamos’s 44 million shares outstanding.
• From a sampling of recent spin-offs, initial high-volume trends typically trail down towards a normalized trading level (in terms of shares traded per day) over a six-to-eight-day period following the distribution, irrespective of the price direction. Given this framework, shares of SLVM could see around four more days of “heavy” volume before reaching a normalized/sustainable volume level, which could be an indicator that the shareholder rotation has been mostly completed and the supply demand has normalized.
• Investors interested in initiating a position in SLVM may wish to average down if the selling pressure persists through this initial period of shareholder rotation.
• In support of our view that shares may be reaching a tipping point on selling pressure, we point to the company’s ability to generate free cash flow. Pre-COVID the company generated more than $400 million in annual cash flow in 2018 and 2019. Through 1H 2021 free cash flow has totaled $190 million. Assuming a normalized free cash flow generation capability of $400 million shares currently yield ~16% while peers trade with free cash flow yields closer to 12%. By our calculation, if SLVM were to trade at a 12% free cash flow yield (and generate $400 million in free cash flow) the shares would be valued at $44 per share.
• We acknowledge the structural issues within the printing paper industry, however SLVM’s vertically integrated business model allows for the company to be a low-cost producer, which should be viewed positively versus peers.
• We fairly value shares of SLVM at $45 per share by applying a 6.0x multiple to our unchanged 2022 EBITDA estimate of $563 million.
• For more details, please refer to The Spin Off Report dated August 27, 2021, and UPDATE on October 1, 2021.

Please see the attached Hidden Opportunities Update on Everi Holdings (NYSE: EVRI).

EVRI tightens full-year 2021 adj. EBITDA and net income guidance at the high-end of its previous range ahead of this week’s G2E conference; fair value increased to $27 per share (from $25)

• Last night, after the market close, EVRI tightened its previously articulated adj. EBITDA and net income guidance at the high-end; to that end, the company projects full-year 2021 adjusted EBITDA $337-$342 million with net income of $90-$95 million (previously the company had expected $332-$342 million and $87-$95 million, respectively.)
• The company did not specifically update its prior revenue and free cash flow guidance, which called for full-year 2021 sales of $615-$635 million and $168-$177 million, respectively.
• For context, current consensus estimates for sales, adj. EBITDA, net income and FCF are $628.3 million, $337.3 million, $91.4 million and $170.5 million respectively.
• Notably, EVRI made this disclosure in conjunction with its appearance at this week’s global gaming conference, G2E, in Las Vegas where the company will be displaying, among other things, its line-up of three-wheel mechanical gaming cabinets, its digital/iGaming capabilities as well as its cashless wallet technology, CashClub Wallet.
• As previously intimated, with leverage below 2.5x and no maturities until 2028, EVRI is seemingly more willing to re-engage in small, tuck-in M&A; to that end, the company recently acquired some strategic assets from Meter Image Capturing, a provider of progressive meter reporting technology. Financial terms were not disclosed but EVRI expects the transaction will be accretive to earnings and operating cash flow.
• Our fair value estimate is increased to $27 per share (up from $25; see Exhibit #1 on page 2), reflecting a blended multiple of ~9.5x on 2023E EBITDA of $365 million (up from $339.5 million) as well as net debt of ~$784.5 million and a diluted share count of ~100.5 million. [Note: our forecasts do not add back stock-based compensation.]

Rexnord and Regal Beloit Announced Completion of RMT, Ticker, and Corporate Name Changes; Rate Regal Rexnord at BUY with a $173 FVE; Rate Zurn Water Solutions at NEUTRAL with a $26 FVE

• On October 4, 2021, the planned Reverse Morris Trust (RMT) between Rexnord Corp. (formerly “RXN”) and Regal Beloit Corp (formerly “RBC”) was completed. Rexnord separated its Process & Motion Control business via a spin-off to shareholders, which immediately merged with Regal Beloit. RXN shareholders of record as of September 29, 2021, received 0.2230 shares of RBC for every share of RXN owned.
• Following the transactions, Rexnord changed its corporate moniker to Zurn Water Solutions Corp. and now trades on the NYSE under the ticker “ZWS”, while Regal Beloit changed its name to Regal Rexnord Corp. and its symbol to “RRX”, while remaining on the NYSE.
• Former RBC shareholders received a special cash dividend of $6.99 per share prior to merger completion that was intended to account for the significant overlap in current RXN and RBC shareholders and the SEC and IRS requirements ruling post-RMT ownership percentages.
• We now fairly value shares of Regal Rexnord at $173 per share (previously we fairly valued pre-merger RBC shares at $180 per share). The change in FVE accounts for the special cash dividend paid.
• With the pre-merger RBC fair value representing approximately 15% upside from the current share price, we expect the trading price of RRX to increase from current levels due to multiple expansion, to more closely approximate peers. We believe that multiple expansion is warranted based on the improved margin profile of RRX when incorporating the earnings contribution of P&MC, combined with the expectation of expanding end-markets driving sustainable mid- to- high single-digit revenue growth in the coming years. RRX should see increased demand, which combined with an improved cost structure is expected to result in sustainable margin improvement. Factoring in cost synergies to be realized from the merger with P&MC, RRX’s earnings outlook should be viewed in a positive light. We acknowledge that cost pressures for raw materials and transportation may temper some of the margin expansion, but we expect the benefits of the merger to mostly offset inflationary pressures. As such, we rate shares of RRX at BUY.
• We fairly value shares of Zurn Water Solutions at $26 per share on a post-spin basis and we rate shares at NEUTRAL. At yesterday’s closing price of $31.28 per share, shares of ZWS are trading at the high end of the peer group, which we think limits further upside in the near term.
• For more details, please refer to The Spin Off Report dated September 21, 2021, and UPDATE dated September 28, 2021.

International Paper Completes Separation of Sylvamo; Rate Post-Spin IP at NEUTRAL with a $60 FVE, and SLVM at NEUTRAL with a $45 FVE

• On October 1, 2021, before the market open, International Paper Co. (NYSE: IP) completed the spin-off of its printing papers business into a standalone publicly traded company, which adopted the corporate moniker Sylvamo Corp.
• Shares of Sylvamo will trade on the NYSE under the ticker “SLVM”.
• IP Shareholders of record as of September 15, 2021, received one share of SLVM for every 11 IP shares owned. IP retained a 19.9% stake in SLVM with the expectation that IP will ultimately monetize its ownership position.
• We lower our fair value estimate for SLVM based on a lower anticipated market multiple for the printing papers focused business. Our prior estimate valued shares at the higher end of printing paper peers, while we now think a lower peer multiple is warranted given the view that structural issues within the industry and near 3x net debt to EBITDA will weigh more heavily on valuation than previously thought.
• We now fairly value shares of SLVM at $45 per share by applying a 6.0x multiple to our unchanged 2022 EBITDA estimate of $563 million. (Previously we valued shares at 7.5x.)
• While our SLVM fair value estimate represents greater than 30% upside from the current share price (when-issued pricing on very thin volume), we rate share at NEUTRAL given we expect near term selling pressure to manifest as IP shareholders likely prefer the packaging business that remained with the parent company over the printing paper industry. Further pressure could arise as indiscriminate index selling from the fact that Sylvamo will be included in the S&P SmallCap 600 versus IP’s S&P 500 current membership (index reconstitution is expected to occur on Monday October 4, 2021, before the market open). Lastly SLVM will not pay a dividend, which we believe the current IP shareholder base will view negatively. If SLVM shares do see heavy selling pressure, we would revisit our rating.
• Our revised post-spin IP FVE reflects a slight lowering of the applied valuation multiple to reflect peer trading and slightly lower value attributable to the SLVM ownership stake given the above noted lower fair value estimate. We now fairly value shares of post-spin IP at $60 per share by applying a 8.6x multiple to our unchanged 2022 EBITDA estimate of $3.3 billion and add $1 per share in value from the Sylvamo ownership. (Previously we applied a 8.8x multiple.)
• While the fundamental demand drivers for IP’s product portfolio remain strong, we are concerned about increasing competition for raw materials and freight cost impact on margins despite the recent price increase taken by IP. Given our concerns we would need to see a larger margin of safety to our fair value before becoming constructive on shares. As such we rate post-spin IP at NEUTRAL.
• For more details, please refer to The Spin Off Report dated August 27, 2021.

Drop Coverage of IAC/InterActiveCorp and Vimeo Inc. Effective Immediately

• On May 25, 2021, before the market open, IAC/InterActiveCorp. (NASDAQ: IAC). completed the spin-off of Vimeo Inc. (NASDAQ: VMEO).
• Given the transactions have now passed our coverage mandate of 90 days post-spin, we DROP coverage of IAC/InterActiveCorp and Vimeo Inc. effective immediately.
• Our prior estimates and fair values for IAC, and VMEO should no longer be relied on.

RXN and RBC Announced Exchange Ratio and Special Cash Dividend Amount; Maintain BUY and $183 FVE on RBC; Maintain Neutral and $63 FVE on RXN

• On August 27, 2021, after the market close Rexnord Corp. (NYSE: RXN) and Regal Beloit Corp. (NYSE: RBC) announced the exchange ratio and RBC special cash dividend in relation to the previously announced spin-off of RXN’s Process & Motion Control (P&MC) business, and subsequent merger of P&MC with RBC.
• After the spin-off and merger are completed on October 4, 2021, RXN shareholders of record as of September 29, 2021, will receive 0.2230 shares of RBC for every share of RXN owned.
• RBC shareholders will receive a special cash dividend of $6.99 per share prior to the merger completion that is intended to account for the significant overlap in current RXN and RBC shareholders and the SEC and IRS requirements ruling post-RMT ownership percentages. The dividend will be calculated to ensure that the transaction meets the tax-free requirements.
• Following the transactions, Rexnord will change its corporate moniker to Zurn Water Solutions Corp. and is expected to trade on the NYSE under the ticker “ZWS”, while Regal Beloit will change its name to Regal Rexnord Corp. and its symbol to “RRX”, while remaining on the NYSE.
• We now fairly value shares of Regal Rexnord, post-merger, at $173 per share (previously $176 per share). On a pre-merger basis, when incorporating the $6.99 per share special dividend, we fairly value pre-merger Regal Beloit at $180 per share (previously $183 per share). The changes in FVE were a result of a slightly higher post-merger share count due to the distribution ratio.
• With the pre-merger RBC fair value representing approximately 20% upside from the current share price, it is our opinion that investors could purchase the shares pre-merger to capture the special dividend, while we expect the trading price of RRX to increase from RBC’s current levels due to multiple expansion, to more closely approximate peers. We believe that multiple expansion is warranted based on the improved margin profile of RRX when incorporating the earnings contribution of P&MC, combined with the expectation of expanding end-markets driving sustainable mid- to- high single-digit revenue growth in the coming years. Post-merger RRX should see increased demand, which combined with an improved cost structure is expected to result in sustainable margin improvement. Factoring in cost synergies to be realized from the merger with P&MC, RBC’s earnings outlook should be viewed in a positive light. We acknowledge that cost pressures for raw materials and transportation may temper some of the margin expansion, but we expect the benefits of the merger to mostly offset inflationary pressures. As such, we rate pre-merger shares of RBC at BUY.
• We fairly value shares of Zurn Water Solutions at $26 per share on a post-spin basis Incorporating the 38.6% ownership position of Regal Rexnord that will be distributed to RXN shareholders. On a pre-spin basis we fairly value shares of Rexnord Corp. at $63 per share. Given that the shares currently approximate our fair value estimate, we rate shares of Rexnord Corp. at NEUTRAL prior to the spin-off of the P&MC segment.
• For more details, please refer to The Spin Off Report dated September 21, 2021.

Drop Coverage of Brooks Automation Inc. Effective Immediately

• On September 20, 2021, Brooks Automation Inc. (NASDAQ: BRKS) announced that the company has entered into a definitive agreement to sell its Semiconductor Solutions Group to Thomas H. Lee Partners, L.P. for $3.0 billion in cash.
• Given the Semiconductor business sale, the company will no longer pursue the spin-off of its Life Sciences Business, which was originally announced in May 2021.
• Given the announcement, we DROP coverage of BRKS effective immediately.
• Our prior estimates and fair values for BRKS should no longer be relied on.