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Computer Task Group: An Attractive Takeover Target Or Stand-Alone Investment

Philip MacKellar profile picture
Philip MacKellar


  • Computer Task Group is an attractive takeover target for many reasons.
  • The company is a strong standalone investment if no takeover or shareholder activism appears.
  • Owners of Computer Task Group face a few unique risks, however, which should be considered before investing.


Computer Task Group (NASDAQ:CTG) is a Buffalo-based corporation that provides IT services in North America and Europe. The company offers a variety of IT services to clients, including supplemental IT staffing and custom technology support solutions. CTG's customers span a variety of industries, including healthcare, life sciences, manufacturing, finance, energy, telecom, and government. The organization was founded in 1966 and has been publicly traded since 1988.

The stock first caught my attention in late 2014. At the time, the ticker had been falling for over a year after an excellent runup between 2010 and 2013. Adding to the organization's woes was the tragic and unexpected loss of its then CEO and Chairman, James Boldt, at age 62. Thus, in late 2014, CTG fit into the "contrary stock" category we look to for investment opportunities. In December 2015, Contra the Heard Investment Newsletter took a position in the organization at $6.46.

Since then, the c-suite has seen a number of CEOs come and go, and the stock has traded over $9.00, under $3.50, and everywhere in between. At times, management's actions have been baffling, but today the prospects appear more promising than in the past, and the stock possesses many attractive buyout characteristics.

CTG's Attractive Takeover Characteristics

In early 2019, long-time insider Filip Gydé took over as CEO, and since then the firm has started moving in the right direction. Shortly after Filip took the helm, he issued a letter to shareholders stating that CTG would focus on its higher margin "IT Solutions" business rather than its lower margin "IT Services" division. In December 2019, Filip's vision was expanded to include growth in Europe, balance sheet strength, and bolt-on M&A.

Filip and staff have been successfully executing on this vision. The higher margin IT Solutions division went from 32.1% of revenues in

This article was written by

Philip MacKellar profile picture
Philip MacKellar is an analyst, portfolio manager, and investor at Contra the Heard Investment Newsletter. He has been with the company since 2011 and has been investing since 2004. The newsletter’s primary focus is on contrarian and value-oriented investment opportunities traded in the United States and Canada. In addition, Philip sometimes engages in M&A, other special situations, and holds bonds, preferred shares, and convertible securities. Contra the Heard is a Toronto based company and was founded in 1995. Philip also blogs about personal finance topics on his own website called mymoneymoves.ca in his free time. You can also follow Philip at the Globe & Mail, on Twitter @Rallekcam, and catch him on YouTube at Contra the Heard.

Analyst’s Disclosure: I am/we are long CTG, DSX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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