Activist Target In Play courtesy of the Burry Portfolio

On August 16th, 2023 we wrote up an article on a Micheal Burry stock pick that has an activist engaged catalyst. The thesis was simple:

• Over a five-year period the stock has collapsed 70%

• The management team recently cut the dividend, resulting in an even steeper valuation decline as dividend investors have abandoned ship

• The management team is focused on extreme debt reduction which should benefit equity over the long haul

• Working capital is getting monetized at rapid rates and converting into cash

• The company is a global powerhouse with brands worth in excess of the current enterprise value.

But this is where things get even juicer.

On September 20th, 2023, the company announced strategic alternatives of one of their core businesses. Said differently, the company is actively looking to sell this asset.

The stock has not reacted at all.

In fact, it is down.

But if the company can successfully sell this asset, there is potential to bring in $1-2 billion in sale proceeds.

The market cap is only $1.4 billion. And the enterprise value is $4.8 billion.

The stock is cheap and now an asset is in play.

Let’s dig in…