Stephen Renerai just started a fund called LionEye Capital Management. Bill Ackman recommended investing in the fund.
DST provides software for many types of companies; including investment management firms.
The company was started in Kansas City in 1969. The core business has barriers to entry, long term contracts, margains, and generates a lot of free cash flow.
Top value fund managers are ready for the small cap bear market to be done
During the bull market, small caps haven't been performing well, but some believe that could be about to change. Breach Inlet Founder and Portfolio Manager Chris Colvin and Gradient Investments President Michael Binger both expect small caps to take off. Q1 2020 hedge fund letters, conferences and more However, not everyone is convinced. BTIG strategist Read More
DST is diversiging from investment management to healthcare and other sectors. DST also mails and prints statements. DST owns private equity assets, real estate assets.
They own a lot of productive assets. They own all these different assets because they believe in these companies. The board is highly experienced.
Catalyst: George Argyros is a self made billionare. He owns 22% of the company and is on the board. DST recently added Larry Highy to the board, he was on the board of Argyros, which George founded. The business was fixed by Higby and sold to BlackStone.
Argyros filled a 13D in November 2011, which disclosed a large change after 13 years of nothing happening.
Argyros added in the filling that they may may change management, capital structure, and explore strategic alternatives. The language was very different than previous fillings. The board added two members to the board and announce plans to add two members. This will lead to them getting control of the board, or at least a significant change in the board structure.
They own $540million in stocks owned. It is worth $12.25 after tax per share. Private investments are worth $7.50 per share after tax. Real estate assets are woth $8.25 per share in after tax. The RE assets are core assets.
Core business is worth $72.00 a share, the company is currently trading at 48.00 a share.
Potential catalysts: Less taxes. They are legendary in legal tax evasion.
DST invented the tax free split which Yahoo is now attempting. The valuation of Ausrion was estimated at $200million several years ago. That was valued before smart phones quadrupled in share. The $72.00 calculation ignores these factors.
Argyros cannot liquidate his stake without a sale. The company reports earnings next week. Stephen is looking at trends in accounting. New board nomineees, selling non-operating assets.
Asked about deadline to become a board member: The deadline to file to become a board member is February 10th for this company.
Did you show company to Carl Icahn? Stephen answered that there is an activist and joked that he knows a lot more than Carl Icahn. The company has bought back two thirds of its shares since 1998. Argyros has not sold one share.