I enjoy being a buy-ide member of SumZero and reading how their hedge fund contributors see value (or lack thereof) in stock market participants. This isn't just a guy penning a blog or a newspaper guy cranking out his weekly 1000 words but real hedge funds with money on the line. Quite interesting. This is just one example of what they share each week. Chime in and let us know if you agree/disagree with their thesis. Enjoy!
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"Eliminate Redbox Instant JV with Verizon" Letter to the Board Of Directors of Outerwall, Inc.
Contributor: Adam Wyden.
Firm: ADW Capital.
Firm Type: Hedge Fund.
Location: New York, NY.
Timeframe: 1-2 Years.
Recent Price: $59.50.
Target Price: $150.00.
Strategy: Other.
Quick Thesis:
As a shareholder of Outerwall, Inc. (Nasdaq: OUTR) (the "Company"), we are very concerned about the Company's current direction. While the Company has seen EBITDA from its Redbox unit grow from roughly $50 mm in 2008 to over $400 mm expected in 2013, the Company's market capitalization has yet to reflect this growth. We believe that the Company's share appreciation has been stunted by investor concern over the long term viability of Redbox, management's inability to manage a mature business and effectively deploy capital beyond Redbox, along with the workings of an entrenched board that has very little invested in the Company. In order to reverse this situation, and create value for its shareholders, we strongly urge the Company to reduce its wasteful spending and return excess capital to its shareholders, most of whom have seen very little return from their investment over the past few years. In particular, we urge that the following actions be taken immediately: READ MORE
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