AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

Robert Sassoon has been an equity analyst for more than twenty years focusing primarily on global special situations. Robert has worked in research for several large sell-side institutions, including Credit Suisse, Natwest Capital Markets and Societe Generale. During his career, he has achieved top 5 rankings in various analyst surveys, including the Extel and Greenwich surveys.

In 2017, Robert founded AlphaSituations, an idea-generating investment research service with the goal of delivering a unique portfolio of ideas to drive client growth and returns by uncovering compelling and highly profitable value propositions as well as lucrative shorter-term trading situations arising from select dislocating corporate restructuring events and catalysts. Currently, the main geographical focus of the research is North America. Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%.

In January 2022, AlphaSituations was contracted  by Water Tower Research,  an investor engagement and stakeholder communication platform to provide coverage of Special Situations.

AlphaSituations-Event/Catalyst Driven Research

ActivistTalk:Land & Buildings/Hudson's Bay Co - The Conundrum In HBC Management's Go-Private Bid

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

Event-Driven

On October 21, 2019, North American department store group Hudson’s Bay (HBC CN) announced that it had entered into a definitive agreement with a management backed buyout group which collectively owns approximately 57% of the common shares of the company on an as-converted basis, whereby the buyout group would purchase the remaining outstanding equity capital of HBC for C$10.30/share, a 9% increase over initial C$9.45 proposal. However, the basis upon which the agreed proposal was made  incorporates an $8.75/share appraisal of HBC's real estate portfolio which is  well below the $35/share highlighted by the company itself only 2 years ago.While some of the discrepancy can be explained away by asset sales and an increase in share count, the biggest single factor behind the value drop is from an unexpected source- HBC's most coveted property, the Saks Fifth Avenue Flagship site whose value has dropped from ~C$16 to ~C$1.7.  The value of the Saks Fifth Avenue Flagship was a key premise upon which activist investor Land &amp; Buildings launched its campaign against HBC management in June 2017 aimed at unlocking the value trapped in HBC's real estate. The significantly lower value for the property raises questions over whether HBC had misled shareholders inviting the prospect of unwanted litigation.Leaving aside the litigation risk, it looks like the buyout proposal will not pass the threshold of minority votes required to approve the deal.The Special Committee’s value assessment for HBC  of a C$10-C$12.25 value range does open the door for a further sweetening of the offer, but that should be weighed against a lack of desire or ability by the buyout group which includes troubled WeWork to raise more capital for a higher bid. A collapse of the buyout plan will likely have negative ramifications for the HBC share price, which we believe will likely return to the C$6s from whence it came when the initial proposal was made back in June. We opine that this situation has potentially more downside than upside risk.

On October 21, 2019, North American department store group Hudson’s Bay (HBC CN) announced that it had entered into a definitive agreement with a management backed buyout group which collectively owns approximately 57% of the common shares of the company on an as-converted basis, whereby the buyout group would purchase the remaining outstanding equity capital of HBC for C$10.30/share, a 9% increase over initial C$9.45 proposal. However, the basis upon which the agreed proposal was made  incorporates an $8.75/share appraisal of HBC's real estate portfolio which is  well below the $35/share highlighted by the company itself only 2 years ago.While some of the discrepancy can be explained away by asset sales and an increase in share count, the biggest single factor behind the value drop is from an unexpected source- HBC's most coveted property, the Saks Fifth Avenue Flagship site whose value has dropped from ~C$16 to ~C$1.7.  The value of the Saks Fifth Avenue Flagship was a key premise upon which activist investor Land &amp; Buildings launched its campaign against HBC management in June 2017 aimed at unlocking the value trapped in HBC's real estate. The significantly lower value for the property raises questions over whether HBC had misled shareholders inviting the prospect of unwanted litigation.Leaving aside the litigation risk, it looks like the buyout proposal will not pass the threshold of minority votes required to approve the deal.The Special Committee’s value assessment for HBC  of a C$10-C$12.25 value range does open the door for a further sweetening of the offer, but that should be weighed against a lack of desire or ability by the buyout group which includes troubled WeWork to raise more capital for a higher bid. A collapse of the buyout plan will likely have negative ramifications for the HBC share price, which we believe will likely return to the C$6s from whence it came when the initial proposal was made back in June. We opine that this situation has potentially more downside than upside risk. 

ActivistTalk: Hudson's Bay Go Private Proposal - Why It Raises Questions & Could Invite Lawsuits