Dr. Hugh Akston
Hedge fund manager, long/short equity, value

Costa Buyout Price Is Too Low, Fair Value $24-28

Investment Thesis: Costa Inc. (NASDAQ:ATX) has undergone a tremendous transformation over the past 12 months. The company shed its declining (and unprofitable) Cross Accessory Division in July which left the company with the rapidly growing and highly profitable Costa business (formerly called the Cross Optical Group). Last week, Costa reported strong Q3 results. This was the first quarter without the drag of the Cross Accessory Division. The company saw revenue grow +25% yr/yr and EBITDA grow at even faster rate of +50% yr/yr.

This is clearly great performance and a testament to the strategic review that led to the divestiture of the Cross Accessory Division. The company is destined to live happily-ever-after, right?

It looked that way until...

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