This Company Will Get Sold Thesis

[spartansaver]

I'm curious if anyone here has any experience in handicapping the odds of a company being sold. One of the companies I own has quite a few factors that lead me to believe it is going to be sold (controlling owner who passed away, CEO at or over retirement age, CEO recently followed a newsletter on LinkedIn devoted to selling companies), but I'm not sure if I should let something like that creep into my thoughts around owning shares in the company. Trying to keep the question somewhat broad here. 

[KJP]

I've had some luck with this approach.  Some examples of my thoughts in real time are in these threads:

 

 

 

Edited July 26 by KJP

[spartansaver]

Thank you for the response. Have you had it as a thesis in the past where you ended up being wrong? If so what were reasons?

[KJP]

5 hours ago, spartansaver said:

Thank you for the response. Have you had it as a thesis in the past where you ended up being wrong? If so what were reasons?

 

Probably, but nothing is immediately coming to mind. 

[valueventures]

On 7/26/2024 at 5:18 PM, KJP said:

 

Probably, but nothing is immediately coming to mind. 

Any current ideas for companies that you could see being acquired?

[scorpioncapital]

I can't even seem to make money on companies that have already announced to be acquired these days much less 'might be acquired' lol.

 

[Saluki]

Those are too hard to predict because there are so many companies out there and even if there was industry that was consolidating, I wouldn't invest based solely on that.  

 

However, putting on my thinking cap:

 

Curiosity Stream, which someone posted about is a tiny, subscale content platform that could be absorbed by Discovery or someone very easily. It's not big enough to survive on it's own. 

 

Intrepid Potash is a minnow compared to the multibillion dollar whales in the oligopoly Potash industry and now that the founder CEO had to step down for health reasons, that might make them a target.  

 

I own a small position in Taylor Devices and Kraken Robotics.  Both are tiny compared to other defense companies and look like good targets to get acquired.  Taylor has a poison bill in place, so it would have to a friendly takeover and Kraken seems to like being on their own, so I wouldn't bet on those happening. 

 

Seaport Entertainment, which was just spun off of Howard Hughes is tiny and Ackman already owns a bunch of it, so maybe it can be his Berkshire. 

 

Fairfax India.  It seems to perpetually trade at a discount to NAV.  Maybe at some point Prem will buy it and it will give the holders a one time boost and be accretive to FFH.  However, it seems to benefit from being small and nimble, so who knows? 

[gfp]

I wouldn't be surprised if someone made an offer for CarMax down here around $11 Billion.  Offer $100/share and see if they take it?  

 

I've thought Berkshire might even do it now that KMX doesn't own any new car dealerships but I'm not sure BRK would be interested in the financing securitizations and they probably don't want to retain a bunch of weaker credit auto loans for reputation issues if nothing else.

 

I'm not going to invest based on that thesis however.

[UK]

6 hours ago, gfp said:

I wouldn't be surprised if someone made an offer for CarMax down here around $11 Billion.  Offer $100/share and see if they take it?  

 

I've thought Berkshire might even do it now that KMX doesn't own any new car dealerships but I'm not sure BRK would be interested in the financing securitizations and they probably don't want to retain a bunch of weaker credit auto loans for reputation issues if nothing else.

 

I'm not going to invest based on that thesis however.

 

Maybe Carvana could, using its shares:)

[KJP]

On 8/5/2024 at 3:34 PM, valueventures said:

Any current ideas for companies that you could see being acquired?

 

TransAct Technologies (TACT).  Unfortunately I think it's a lower quality business than most of the others I mentioned in my prior post, so I don't have a large position in it.

[gfp]

I would add Bentley Systems - BSY - I have no position in the stock and these software companies are never "cheap" but the family has seemed to indicate they are willing to / looking to sell.  Negotiations with Schneider didn't lead to a deal at that point.  Wouldn't be surprised to see them taken out as infrastructure is still a strong theme for acquirers.