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Mike Arnold, CFA

 
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  • Dunkin' Brands: High-Quality Business, But Sells For Full Price
       • Sat, Apr. 26 DNKN 6 Comments

    Summary

    • Dunkin' Brands affected by inclement weather in Northeast where it has significant exposure.
    • The business is high-quality with a durable economic moat and high-margin franchise model.
    • While the business is high-quality, it sells for a premium price and high multiples of free cash flow.
  • Overstock.com Looks To Accelerate Growth, Shares Appear Cheap
       • Fri, Apr. 25 OSTK 9 Comments

    Summary

    • Overstock.com missed quarterly estimates, but is building infrastructure for growth.
    • Recent noise around 'philosophical' issues such as Overstock accepting Bitcoin obscure value proposition.
    • International growth and new, adjacent product offerings such as an insurance exchange provide a capital efficient way to scale the business.
  • Bidvest: A Globally Diversified South African Conglomerate
       • Fri, Apr. 25 BDVSY 3 Comments

    Summary

    • Bidvest is a globally diversified conglomerate headquartered in South Africa.
    • Recent comparable transactions shed light on certain of Bidvest's assets' value (e.g., food service).
    • Bidvest remains modestly levered (10x interest coverage), providing capacity for new, accretive acquisitions (e.g., Adcock Ingram).
  • Mr. Market Offers A 'Deal' On Travelzoo
       • Thu, Apr. 24 TZOO 2 Comments

    Summary

    • Travelzoo announces management changes in Local & Search businesses due to continued weakness.
    • Shares trade at 52-week lows, but risk remains with respect to the Local & Search business.
    • Revenue growth in Travel segment is masked by Local & Search weakness, and Travelzoo is not getting credit for investment in new, higher commission, hotel booking platform.
    • Travelzoo has solid long-term potential, but near-term risks remain salient.
  • Free Cash Flow And Deleveraging Is The Word At Realogy Holdings
       • Sat, Apr. 19 RLGY 10 Comments

    Summary

    • Realogy Holdings operates at meaningful scale in the residential brokerage business.
    • The business model includes high-margin, consistent franchise revenue streams from its agent network.
    • Free cash flow is being used to delever the balance sheet, allowing value to accrue to the equity.
  • Cincinnati Bell Turns A Corner
       • Thu, Apr. 17 CBB 6 Comments

    Summary

    • Cincinnati Bell recently agreed to sell its legacy wireless business to Verizon for $210 million.
    • The company holds a 69% interest in CyrusOne with a stated goal of liquidating the investment over the next several years.
    • Asset sales will help Cincinnati Bell delever itself, and focus on its higher growth Fioptics segment.
  • Accor Group Update: 'Asset-Right' Strategy On Track
       • Thu, Apr. 17 ACRFY Comment!

    Summary

    • Accor continues its "asset-right" strategy by defining its new operating model.
    • Most of Accor's owned/operated hotels are located in Europe, and could benefit from a continued economic recovery.
    • Accor remains attractive at current levels for long-term investors.
  • Interactive Brokers Could Benefit From Michael Lewis' Flash Boys
       • Thu, Apr. 17 IBKR 5 Comments

    Summary

    • Interactive Brokers continues to scale its electronic brokerage platform, illustrating operating leverage.
    • The market maker grows, but remains in a precarious position.
    • Industry veteran and Interactive Brokers Founder and CEO Thomas Peterffy believes "Flash Boys" and resultant scrutiny could be a "very big positive" for IBKR.
  • All America Latina Is Getting Taken-Out In A Stock-For-Stock Deal
       • Thu, Apr. 17 ALLAY 6 Comments

    Summary

    • All America Latina is a Brazilian logistics operator with exposure to the growing agriculture sector.
    • The company received a stock-for-stock merger offer from a subsidiary of Cosan with an implied 20% premium to the April 15 closing price.
    • The deal has been approved by the ALL Board of Directors, now the vote goes to shareholders within the next 30 days.
  • Another Attractive Entry Point For Vitacost Shares
       • Sat, Apr. 12 VITC 12 Comments

    Summary

    • Vitacost remains a compelling risk/reward -- and volatile -- investment opportunity.
    • Management acknowledged that it hired Jeffries LLC to evaluate strategic alternatives.
    • Vitacost recently appointed an Osmium Partners recommended board member, further indicating the potential for a value unlocking sale of the business.
  • IAC InterActive Is Unlocking Value By Potentially Breaking Up With Match Group
       • Fri, Apr. 11 IACI 5 Comments

    Summary

    • IAC InterActive provided a "tell" to investors in December 2013, portending a spin off of its online matchmaking and ancillary businesses into the Match Group.
    • Consolidated results are obfuscating the underlying value in the Match Group.
    • Management has a history of effecting spin offs, and appears poised to separate its crown jewel from the rest of its digital properties which face tougher competition.
  • Dundee REIT Will Soon Be Dream REIT
       • Fri, Apr. 11 DRETF 21 Comments

    Summary

    • A name change and corporate rebranding will bring focus to Dream REITs high-quality asset base and management team..
    • "Fed Taper" fears should allay and result in the narrowing of a widening valuation gap.
    • Relative to US peers, Dream REIT is cheaper, a stronger balance sheet and aligned management team.
  • Echostar Is An Enigmatic Satellite Operator
       • Thu, Apr. 10 SATS Comment!

    Summary

    • Echostar owns and operates a disparate set of businesses.
    • Recent transaction with Dish Network caused obfuscation among investors.
    • Certain litigation matters with respect to competitors could impact Echostar's Hughes segment.
  • Dream Picks Up A Couple Of Catalysts
       • Thu, Apr. 10 DRUNF 2 Comments

    Summary

    • Dream Unlimited continues to scale its asset management platform with a pending, $700 million deal with Return on Innovation Advisors.
    • The company raised $50 million via an equity secondary, using the proceeds to reinvest in the business.
    • The company continues to be led by an aligned and competent management team.
  • Identive Group: A Play On Security And The Internet Of Things Theme
       • Mon, Apr. 7 INVE 9 Comments

    Summary

    • INVE is undergoing a significant cost reduction program and business model simplification plan.
    • A negative catalyst - a delisting from NASDAQ - will be removed with two more consecutive closes at or above $1/share.
    • INVE is difficult to analyze, but appears to offer a positive expected value at the current $74 million market cap.
  • RE/MAX Continues To Execute, Shares Look Moderately Undervalued
       • Tue, Apr. 1 RMAX 1 Comment

    Summary

    • Post earnings sell off represents opportunity in RE/MAX Holdings' shares.
    • The business benefits from high margin franchise fees from growing network of agents, and call option on deal flow from broker fees (commissions).
    • Management and shareholders are well aligned. The CEO is part of a consortium who owns a controlling stake.
  • Genesis Land Development Begins To Effect Its Turnaround
       • Mon, Mar. 31 GNLAF 1 Comment

    Summary

    • Genesis Land Development made a number of corporate governance changes in 2013 which aligned shareholders interests with management.
    • The balance sheet is significantly delevered, providing flexibility to further effect turnaround.
    • New strategic plan is announced; management seeking to unlock value for shareholders.
  • Brookfield Canada Office Properties Remains A Go-Private Candidate
       • Sat, Mar. 29 BOXC 5 Comments

    Summary

    • Brookfield Canada Office Properties ("BOXC") has a limited float, as Brookfield Property Partners ("BPY") owns the majority share.
    • BPY is in the process of cleaning up its asset base, including taking private minority stakes held in the public float.
    • BOXC turned in solid 2013 numbers, trades at an attractive valuation and has a strong balance sheet.
  • Tucows Is A Scrappy Tech Company Cannibalizing Itself
       • Sat, Mar. 29 TCX 13 Comments

    Summary

    • Tucows is an under the radar technology company with growth prospects at a reasonable price.
    • The business is led by a savvy and shareholder friendly CEO with solid capital allocation skills.
    • A recently announced $20 million share buyback plan provides share price support and is a tax friendly way to remunerate shareholders.
  • SFX Entertainment: A Pure Play On Electronic Dance Music That Can Wait
       • Fri, Mar. 28 SFXE 15 Comments

    Summary

    • SFX Entertainment management is embarking on an aggressive roll up strategy in the electronic dance music ("EDM") sector.
    • SFXE is a "busted" IPO, with shares trading meaningfully below the $12 IPO price.
    • Too early to invest, but levered to an attractive, growth industry.
  • Lend Lease Still Looks Attractive
       • Thu, Mar. 27 LLESY 2 Comments

    Summary

    • Lend Lease continues to execute on its stated strategy.
    • Catalysts remain with respect to certain asset recycling initiatives.
    • Lend Lease remains conservatively managed from a balance sheet perspective, providing equity holders downside protection.
  • Lakes Entertainment Is Dealt A Balance Sheet Flush With Cash
       • Thu, Mar. 27 LACO 4 Comments

    Summary

    • Lakes Entertainment has a strong balance sheet after receipt of cash under a Debt Termination Agreement with a customer.
    • Lakes Entertainment growth will be fueled by a newly opened casino, Rocky Gap Casino Resort.
    • Lakes Entertainment owns minority interests in a number of other casino properties, providing potential for catalysts (e.g., asset sales).
  • NCR Corp.: Hardware Enabled, Software Driven
       • Wed, Mar. 26 NCR 5 Comments

    Summary

    • NCR is transforming into a higher margin software and services business, enabled by its hardware solutions.
    • Earnings power is masked by GAAP rules related to pension accounting.
    • Recent Digital Insight acquisition sets the foundation for revenue growth and margin expansion.
  • Leighton Holdings Is Slowly Being Acquired
       • Wed, Mar. 26 LGTHY 3 Comments

    Summary

    • Leighton Holdings is being slowly acquired by its controlling shareholder, Hochtief.
    • The company reports solid 2013 numbers and 2014 guidance.
    • Leighton has recently suffered from various bribery allegations.
    • With all the moving parts, the risks may not outweigh the potential rewards of owning Leighton shares.
  • Dundee Trades At A Wide Discount To NAV
       • Tue, Mar. 25 DDEJF 18 Comments

    Summary

    • Dundee Corporation remains cheap on a book value basis.
    • Dundee shares are afflicted by "analyst fatigue" and exposure to out of favor sectors.
    • Founder and CEO Ned Goodman will likely continue to look for ways to unlock value.
  • Exchange Income Corporation Still Looks Undervalued
       • Sat, Mar. 15 EIFZF 6 Comments

    Summary

    • Exchange Income Corporation is a diversified holding company operating in two segments: (1) aviation and (2) manufacturing.
    • Growing pains at subsidiary WesTower mask underlying earnings power of the holding company.
    • Management remains disciplined and strategic in terms of capital allocation.
  • Image Sensing Systems: An Undervalued Opportunity In The Intelligent Traffic Solutions Industry
       • Fri, Mar. 14 ISNS 24 Comments

    Summary

    • High margin royalty income protects downside and provides upside potential.
    • License Plate Recognition ("LPR") hardware/software solutions offer upside optionality.
    • Management has multiple levers to drive cash flow generation and profitability.
    • Ongoing FCPA investigation creates uncertainty; 2013 earnings results hampered by non-recurring professional services costs. Management believes all FCPA related expenses are finished except for potential fine.
    • Image Sensing Systems is a takeover candidate; the company adopted a shareholder's rights plan in 2013 to avoid being acquired at a discount.
  • Update On Steinhoff International: Market Recognizes Value
       • Sat, Mar. 8 SNHFY Comment!

    Summary

    • Steinhoff International is a holding company based in South Africa.
    • Operating businesses include a vertically-integrated furniture and household goods manufacturer, and industrial businesses in Africa.
    • Operating results significantly improve on a variety of measures, including revenue, margin and free cash flow growth.
  • Bona Film Group Continues To Scale
       • Fri, Mar. 7 BONA Comment!

    Summary

    • Bona continues to build its vertically integrated film production, distribution and exhibition business in China.
    • Secures strategic investment from Fosun Group, a renowned Chinese holding company.
    • Bona has a strong pipeline of films for distribution in 2014.
    • Shares look close to fairly priced, but continued growth supports share price.
  • Is Spark Networks At An Inflection Point?
       • Fri, Mar. 7 LOV 23 Comments

    Summary

    • Spark networks owns two internet franchises (1) JDate.com and (2) ChristianMingle.com.
    • JDate remains "steady as she goes" while investors remain perplexed regarding the growth property, Christian Mingle.
    • Activism continues as largest shareholder is seeking board representation, and attempts to unlock shareholder value.
  • Synacor Makes For A Tasty Takeout Target
       • Fri, Mar. 7 SYNC 4 Comments

    Summary

    • Synacor is misunderstood by investors.
    • Synacor's TV Everywhere service offerings and strong balance sheet would make for a nice tuck in acquisition.
    • Synacor announces CEO succession planning, a 3-year extension to advertising agreement with Google and a $5 million share buy back program.
  • Ascent Capital Is Unmonitored Even With A 20% Free Cash Flow Yield
       • Thu, Mar. 6 ASCMA 25 Comments

    Summary

    • Ascent Capital is a holding company which has undergone considerable change; now, its primary asset is 100% ownership of Monitronics, a home security services and home automation business.
    • Monitronics operates in a fragmented market, characterized by customer acquisition costs, highly recurring revenue and a capital-light business model.
    • Low penetration rates and opportunities to sell adjacent, value-added services such as home automation provide growth opportunities.
    • Recent sell-off and solid earnings report create excellent buying opportunity before the market re-rates recent, accretive acquisition of security network.