connoisseur of the untold stories on wall street, skewed toward activism

Super Mario Gets More Bullish On His Small Caps

Added on by Gordon Gekko .

Super Mario’s (Mario Gabelli) and his Gamco Investors fund got more active on some of its small-cap plays last week. These include Myers Industries ($MYE) and Pep Boys ($PBY). Gamco upped its stake in MYE to 6.4mm shares and now owns 20% of the company. As far as PBY goes, Gamco now owns 9.2mm shares -- or 17% of the company.

Most notably, Gamco took a new stake in Chiquita Brands ($CQB), now owning 3mm shares and 6.5% of the banana company. The fund bought shares between $13 and $15 a share. CQB has plans to be acquired by Cutrale-Safra for $1.4.50 a share.

Activist Owned Allscripts $MDRX And The Selloff That Was

Added on by Gordon Gekko .

While shares of Allscripts ($MDRX) are down 7% over the last month, both $ATHN and $CERN are up over 10%. The market doesn't see the MDRX weakness as industry-driven, rather company-specific inefficiencies, which are items that can be addressed and remedied. Management noted along with 3Q earnings that it was seeing operating improvements. This despite the fact that its operating margin missed expectations.

We made the bet earlier this month that MDRX was cheap. Well, now it has to be even cheaper, right? The valuation is certainly more compelling following the sell-off, with MDRX now trading sub 2x EV/sales. And, with MDRX still expected to grow EPS at a CAGR that's nearly double the industry average, 25x forward earnings isn't as expensive as it sounds. With a multi-year horizon, we're still buyers at these levels with this being a mid-cap activist portfolio holding.

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Why Activist Fund ValueAct Owns Allison Transmission $ALSN

Added on by Gordon Gekko .

We feel that 15x FCF is a justified multiple for Allison Transmission (NASDAQ: ALSN). That puts our 12-18 month price target for ALSN at around $42/share. Couple the stock appreciation potential with the total yield returns, and the upside is over 30% for the next year or so.

The reason ALSN isn't getting more respect in the market is that management has been lackluster in laying out its capital returns plan. And the other part is that ALSN is a relatively new capital returns story. It is just now working its debt down to a level that the company can focus more on its dividend and buybacks.

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Clinton Group Pusing For A Sale At NutriSystem ($NTRI)

Added on by Gordon Gekko .

The crux of Clinton's thesis lies in the free cash flow generating capabilities. Ultimately, Clinton thinks that NutriSystem (NASDAQ: NTRI) could be valued as has as the mid-$30s in a year or so in the event that it remains public. This is based on its possible cash flow generation and current balance sheet strength.

Although the PE interest might be there, for a 4% free cash flow yield, we're not willing to pay up for the potential buyout. We're on pause with NTRI, noting the competition and alternatives available when it comes to weight management. Recall that other weight management favorite , Weight Watchers, whose stock has been cut in half in the last two years. It's also worth noting that Clinton owns just under 1.5% of NTRI.

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Bank of New York Mellon ($BK) Gets 2x The Activist Love

Added on by Gordon Gekko .

There's now 2 activist investors at Bank of New York Mellon (NYSE: BK). Marcato Capital joings Peltz's Trian Partners. 

Nelson Peltz has also pointed out that some cost savings could be achieved by simply reducing staff and cutting out office space. Regardless, we think Peltz will push for the asset management spinoff as the main catalyst, with the potential for major share buybacks once this is completed.

While we're on pause with BK, given the fact that we don't see the valuation as all that appealing, we are encouraged by the fact that Peltz and Marcato are entering unchartered territory. If they are successful in breaking up the bank, it'll be a big win for the activist community.

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