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Hillenbrand International: Why Shares Present A Compelling Short Opportunity


Hillenbrand International (NYSE:HI) management had a choice 4 years ago to manage the Batesville casket business for cash flow and return capital to shareholders, or to diversify away from the casket business. Management chose diversification, and that decision, so far, seems to have been a poor capital allocation decision from an operational perspective. After spending $1.1bn on 3 acquisitions, Hillenbrand now has a significant amount of net debt on the balance sheet, generated less than $100mn in free cash flow in FY13 (~5% Free CF yield), has seen its EBITDA margin fall more than 1000 bps since FY09, and has failed to generate meaningful organic growth. After a couple of disappointing quarters, management has pinned investors' hopes...

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