Snowball Research Blog
Most activist letters and proxy documents contain heavy arguments about the management and the Board. These arguments range from capital allocation to poison pill.
Many fund managers evaluate a stock when it gets hit by some “headline” issues like fraud, investigation etc. The crux of the research is to figure out whether the “headline problem” is repairable or not.
Ryan Drexler of Consac, LLC: A micro cap activist investor with rich operational experience in the health and wellness industry
Ryan Drexler, a micro cap activist investor, is currently the CEO of musclepharm. His prior activist target include Vistacost.
How to spot potential merger by reading activist investor’s settlement agreement [ Settlement agreement research series #1 ]
In order to avoid a costly proxy fight, the company enters into a “settlement agreement” with the activist. Typically, these agreements are filled with legal terms and buried inside the SEC filings. If you pay close attention to the settlement terms, you may discover few interesting scenarios.
In today’s series, we will review three companies: i) Clearone Incorporated ii) KMG Chemicals, Inc. and iii) Lannett Company, Inc….
I’ve compiled the list of “interesting” excerpts from his letters. Also, the complete letters can be found in the “exhibits” section. The purpose of reading this? Readers can use it for “idea generation” and to improve their research skills.
Nobility Homes: A case study of a micro cap company which hasn’t hiked its CEO’s base salary for 20 years!
Nobility Homes is an unknown micro cap company based out of Florida. The company designs, manufactures and sells a broad line of manufactured and modular homes through its own retail sales centers throughout Florida…..
If I were to choose one topic that makes a profound impact on way I look at stocks, it would be “Competitive Advantage”. In this series, you will be presented with a list of a few companies which show “signs” of competitive advantage.
Market share: The company services approximately 65% of North America’s commercial hazardous incineration volume and 24% of North America’s hazardous landfill volume. High switching cost: Many customers desire to audit disposal facilities prior to their qualification as approved sites and to limit the number of facilities to which their hazardous wastes are shipped in order to reduce their potential liability under…
The company is the only one currently capable of building, refuelling and defueling the US Navy’s nuclear-powered aircraft carriers. The company is the only builder of large deck amphibious assault and expeditionary warfare ships for the US Navy. The company is the sole supplier of NSCs for the US Coast Guard. The company is one of only two companies currently designing and building…
Huge market share: Highest market share in major products: Polyetheramines (85%), Ethyleneamines (40%). Oligopoly: The company is one of three North American producers of PO. PO is an intermediate chemical used mainly to produce a wide range of polyols and PG. Customization: In specialty markets, there are few competitors for many of the company’s products due to the considerable customization of product formulations…
The automotive and HVOR sensor markets are characterized by high switching costs and barriers to entry, benefiting incumbent market leaders. Sensor application-specific products require close engineering collaboration between the sensor supplier and the OEM or the Tier 1 supplier. OEMs and Tier 1 suppliers make significant investments in selecting, integrating, and testing sensors as part of their product development. Switching to a …
Westinghouse Air Brake Technologies Corp.: Huge market share, patent rich and significant aftermarket revenue
The company holds an approximate 50% market share in North America for its primary braking-related equipment. Dating back to 1869 and George Westinghouse’s invention of the air brake, the company is an established leader in the development and manufacture of pneumatic braking equipment for freight and passenger transit vehicles. Huge aftermarket sale: The company’s substantial installed base of products with end users..
Market share: ADESA, the company’s whole car auction services business, is the second largest provider of used vehicle auction services in North America. Oligopoly: As per company estimates, Manheim, a subsidiary of Cox Enterprises, and ADESA together represent approximately 70% of the North American whole car auction market. The company estimates that ADESA represents approximately 24% of the North American whole car …
TransDigm Group, Incorporated: Proprietary products, significant aftermarket sales with little competition and barriers to entry
Proprietary products: As per company estimates, about 90% of net sales are generated by proprietary products. The company does not compete for non-proprietary “build to print” business because it frequently offers lower margins than proprietary products. Sole source provider: Nearly 80% of total sales are generated from products for which the company is the sole source provider. Significant aftermarket revenue for which …
The company claims (10-K, 2015) that it holds the number one market position inthe vascular closure device market. Vascular closure devices are used to close femoral and radial artery puncture sites following percutaneous coronary interventions (PCIs), diagnostic procedures and certain peripheral procedures. Oligopoly: The company is one of three principal manufacturers of neurostimulation devices. Neurostimulation therapies and structural heart defect devices have higher barriers…
Valuation insights from multiple activist investors
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