Founder at Stock Spin-off Investing, Stock Spin-Off Investing

Richard Howe

Founder at Stock Spin-off Investing

Stock Spin-Off Investing

Generate attractive returns by taking advantage of inefficiencies in the stock spin-off market.

Stock Spin-offs

Event-Driven

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<li>
<p data-start="773" data-end="1118">Some of my favorite setups are stocks that are cheap on both an absolute and sum-of-the-parts (SOTP) basis.</p>
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<p data-start="773" data-end="1118">Ziff Davis fits that profile well. At ~3.7× EBITDA and ~5× free cash flow, the stock is clearly cheap on an absolute basis.</p>
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<p data-start="773" data-end="1118">On a SOTP basis, one can reasonably argue the stock is worth 50% to 100% more than where it currently trades.</p>
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Some of my favorite setups are stocks that are cheap on both an absolute and sum-of-the-parts (SOTP) basis.


Ziff Davis fits that profile well. At ~3.7× EBITDA and ~5× free cash flow, the stock is clearly cheap on an absolute basis.


On a SOTP basis, one can reasonably argue the stock is worth 50% to 100% more than where it currently trades.



Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Index Rebalance

<ul>
<li>The S&amp;P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.</li>
<li>In this insight, we take a look at the upcoming constituent changes in the run up to the September 2024 index rebal event.</li>
<li>We expect two regular changes in September 2024. There are also several live M&amp;A events which could trigger intra-review index changes in the late-2024/early-2025.</li>
</ul>


The S&amp;P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
In this insight, we take a look at the upcoming constituent changes in the run up to the September 2024 index rebal event.
We expect two regular changes in September 2024. There are also several live M&amp;A events which could trigger intra-review index changes in the late-2024/early-2025.


Quiddity Leaderboard S&P500 Sep 24 Rebal: Palantir, Apollo, Workday Racing for Mega$ Flows

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Equity Bottom-Up

<ul>
<li>Following takeover rumors surrounding <a href="https://www.smartkarma.com/entities/new-relic-inc" target="_blank" data-smartkarma-citation="entities:16283:1" rel="noopener">New Relic Inc (NEWR US)</a> , private equity firms finally agreed to acquire a US-based low-cost observability provider for ~$6.5B.</li>
<li>American private equity firm Francisco Partners and global alternative asset manager TPG offered $87 per <a href="https://www.smartkarma.com/entities/new-relic-inc" target="_blank" data-smartkarma-citation="entities:16283:1" rel="noopener">New Relic Inc (NEWR US)</a> share in an all-cash transaction.</li>
<li>The <a href="https://www.smartkarma.com/entities/new-relic-inc" target="_blank" data-smartkarma-citation="entities:16283:1" rel="noopener">New Relic Inc (NEWR US)</a> Board of Directors approved the buyout deal, and is expected to close in late 2023 or early 2024.</li>
</ul>


Following takeover rumors surrounding New Relic Inc (NEWR US) , private equity firms finally agreed to acquire a US-based low-cost observability provider for ~$6.5B.
American private equity firm Francisco Partners and global alternative asset manager TPG offered $87 per New Relic Inc (NEWR US) share in an all-cash transaction.
The New Relic Inc (NEWR US) Board of Directors approved the buyout deal, and is expected to close in late 2023 or early 2024.


New Relic Takeover Valuation Analysis: The Buyout Price Looks Reasonable

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/freshworks-inc" target="_blank" data-smartkarma-citation="entities:34147:1" rel="noopener">Freshworks (FRSH US)</a> announced its <a href="https://www.pymnts.com/news/ipo/2021/freshworks-aims-to-go-public-with-9b-valuation/" target="_blank" rel="noopener">IPO price range</a> of $28 to $32 per share and it is selling 28.5 million shares. At the high end of this price range, the company would raise $912 million and it would be valued at nearly <a href="https://goodwordnews.com/what-to-think-of-freshworks-first-ipo-price-range-techcrunch/" target="_blank" rel="noopener">$9.6 billion</a> (assuming fully diluted shares outstanding of 300 million).</p><div class="content-highlight">
<p>Our base case valuation of Freshworks is implied market cap of US$13.5 billion or US$45 per share, which is 41% higher than the high end of the IPO price range (US$32). Given the solid upside, we have a POSITIVE view of this IPO. </p>
<p>Our valuation of Freshworks is based on an EV/S multiple of 22.6x using our estimated sales of $546 million in 2022. The EV/S multiple of 22.6x is based on 30% premium to the average multiple of the comps in 2022.</p>
</div>

Freshworks (FRSH US) announced its IPO price range of $28 to $32 per share and it is selling 28.5 million shares. At the high end of this price range, the company would raise $912 million and it would be valued at nearly $9.6 billion (assuming fully diluted shares outstanding of 300 million).
Our base case valuation of Freshworks is implied market cap of US$13.5 billion or US$45 per share, which is 41% higher than the high end of the IPO price range (US$32). Given the solid upside, we have a POSITIVE view of this IPO. 
Our valuation of Freshworks is based on an EV/S multiple of 22.6x using our estimated sales of $546 million in 2022. The EV/S multiple of 22.6x is based on 30% premium to the average multiple of the comps in 2022.


TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

<p>Crowdstrike continues to put up impressive quarterly results and guidance that blows away even heightened expectations. The two high profile cyber hacks in the past few months have given a major tailwind to FY2022...and despite guiding 1000bps ahead of consensus revenue growth, we expect 50% growth to be conservative. We remain long. </p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  </p></div>

Crowdstrike continues to put up impressive quarterly results and guidance that blows away even heightened expectations. The two high profile cyber hacks in the past few months have given a major tailwind to FY2022...and despite guiding 1000bps ahead of consensus revenue growth, we expect 50% growth to be conservative. We remain long. Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  

United States

SolarWinds Corporation designs and develops information technology management software. The Company offers solutions such as network performance monitoring, configuration, virtualization, database management, hosted logs, security, and configuration. SolarWinds serves customers globally.

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SolarWinds (SWI US)

[Alert] Buy Ziff Davis

Some of my favorite setups are stocks that are cheap on both an absolute and sum-of-the-parts (SOTP) basis. Ziff Davis fits that profile well. At...

Richard Howe

Quiddity Leaderboard S&P500 Sep 24 Rebal: Palantir, Apollo, Workday Racing for Mega$ Flows

S&P500 rebals are notoriously difficult to predict because of significant index committee discretion. Sep24 could see two adds, two deletes. Q4...

Travis Lundy

New Relic Takeover Valuation Analysis: The Buyout Price Looks Reasonable

Private equity firms Francisco Partners and TPG have agreed to acquire New Relic for ~$6.5B, with the deal expected to close in late 2023 or early...

Andrei Zakharov

Freshworks IPO Valuation Analysis

Our base case valuation of Freshworks is market cap of US$13.5 billion or US$45 per share, which is 41% higher than the high end of the IPO price...

Douglas Kim

Crowdstrike 4Q21: Scaling the Heights

Crowdstrike retains its place as the highest quality high valuation software company, once again beating and raising by a wide margin.

Aaron Gabin

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[Alert] Buy Ziff Davis

Some of my favorite setups are stocks that are cheap on both an absolute and sum-of-the-parts (SOTP) basis. Ziff Davis fits that profile well. At...

Richard Howe

Quiddity Leaderboard S&P500 Sep 24 Rebal: Palantir, Apollo, Workday Racing for Mega$ Flows

S&P500 rebals are notoriously difficult to predict because of significant index committee discretion. Sep24 could see two adds, two deletes. Q4...

Travis Lundy

New Relic Takeover Valuation Analysis: The Buyout Price Looks Reasonable

​Private equity firms Francisco Partners and TPG have agreed to acquire New Relic for ~$6.5B, with the deal expected to close in late 2023 or early...

Andrei Zakharov

Freshworks IPO Valuation Analysis

Our base case valuation of Freshworks is market cap of US$13.5 billion or US$45 per share, which is 41% higher than the high end of the IPO price...

Douglas Kim

Crowdstrike 4Q21: Scaling the Heights

Crowdstrike retains its place as the highest quality high valuation software company, once again beating and raising by a wide margin.

Aaron Gabin

Private equity firms Francisco Partners and TPG have agreed to acquire New Relic for ~$6.5B, with the deal expected to close in late 2023 or early...