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MRO.L - Melrose Industries Plc


Jurgis
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UK based kinda private equity firm acquiring, turning around, and selling mostly industrial companies. https://en.wikipedia.org/wiki/Melrose_Industries

They had good historic returns (share drop in 2016 is from large distribution: http://www.melroseplc.net/investors/dividends/ ).

Share price collapsed during the pandemic.

They are affected by closures across couple of their businesses: https://www.melroseplc.net/media/announcements/2020/agm-trading-statement/

 

I'm starting the thread for discussion. It's not a recommendation to buy. I have a small position.

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  • 2 weeks later...

It is interesting, have followed for some time. They're obviously hit hard in both auto and aviation and leverage is high. 3,4b net debt in recent FY while analysts expect ebitda per Sentieo to fall 44 pct to 894m. So they'll probably trip covenants, but I'm not so worried about that. Per their model they have a long relationsship with lenders, whom would probably like to keep doing business, so I assume they'll get a waiver like pretty much everyone else. Combination of leverage, operationel improvements and a cyclical turn can result in signifcant upside, obviously, but risks in their end markets is real and I'm already very long auto via Linamar, which has lower upside but also much lower risk, so I'm on the sideline but keep following. Insiders have been buying some and I believe Sequioa has a stake as well.

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