Frank Brosens Of Taconic Sees Value In JOSB, MW Saga

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Frank Brosens is a co-founder of Taconic Capital Advisors, a multi-strategy firm primarily focused on event investing in the Americas and Europe with assets under management exceeding $8 Billion. He is primarily involved in management and risk control, and oversees Taconic’s investment activities. Frank Brosens spoke today at the Capitalize For Kids Conference in Toronto and presented his favorite idea. Below are some (very) informal notes from Brosens who presents a case study for The Men’s Wearhouse, Inc. (NYSE:MW).

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Frank Brosens

Taconic Capital Advisors — Multi Strat firm

focused on event driven ideas

 

Going over case study for The Men’s Wearhouse, Inc. (NYSE:MW)

Short term traders flooded the stock during the merger battle with Jos. A. Bank Clothiers Inc (NASDAQ:JOSB)

 

The stock has sold off hard over last 2 weeks and they think it looks interesting again

Think they can do $5.50 in earnings a couple years out

 

Catalyst

New CEO took over reigns in 2011, but has just recently started implementing new plans and changes since chairman retired last year

 

Identified $100m of synergies by 2017

Frank Brosens on Men’s Wearhouse’s upside opportunities

Tuxedo

Slimfit

 

Men’s Wearhouse has 400m in tux rentals, while Jos. A. Bank Clothiers only does 30m in tuxedo rentals

every $50m in incrmental revenue gain for JOSB in tuxedos, adds $.55 to eps

 

JOSB margins are 600bps below peak

-Need to limit the number of promotion days

 

MW margins are more than 400  bps below peak

 

They estimate MW can delever to 2.5x by 2018

-after 1x integration costs, FCF should exceed net income

 

Downside case  -2.3%

Base case $63 (+41% upside)

Upside scenario $76 (71% upside)