Hidden Value Stocks issue for the first quarter ended March 31, 2020, featuring Upslope Capital Management and their stock idea, AptarGroup, Inc. (NYSE:ATR).
Upslope Capital Management: Introduction
George K. Livadas - Upslope Capital Management
George K. Livadas is the founder of Upslope Capital Management, which is based in Englewood, Colorado. His experience includes 15 years on “Wall Street” across sectors and functions, including buy- and sell-side equity research and investment banking. George earned an MBA from the University of Chicago (Booth) and a BA in Russian from Georgetown University.
Upslope’s objective is to deliver attractive, equity-like returns with significantly reduced market risk and low correlation vs. traditional equity strategies. To meet this objective, Upslope utilizes a long/short equity strategy focused mostly on midcaps in the U.S. and developed markets. Upslope invests across sectors, with some concentration in those the portfolio manager has deep professional experience. The strategy is currently managed in a separately-managed account format. Upslope also manages a long-only version of the strategy for a subset of AUM.
Stock Idea One - AptarGroup, Inc. (NYSE:ATR)
Your first pick is AptarGroup, Inc. Let’s start with the basics. What does this business do?
Historically, most of AptarGroup, Inc. (NYSE:ATR)’s revenue has come from businesses that look like that of a traditional packaging company with a niche focus on dispensing solutions – think of the sprayer mechanism on a perfume bottle, an aerosol valve for sunscreen, or a sport cap on a Gatorade bottle. The focus is on the dispensing components and system – not on the bottle or container itself. This is a decent niche within packaging, as there is some element of “technology” and a greater potential to add value. Aptar buckets these traditional business lines into Food + Beverage and Beauty + Home segments. Aside from significant exposure to fragrances, these endmarkets are not cyclical.
Aptar also has a Pharma segment. The segment is a gem and the most interesting part of the business. Aptar’s Pharma products look a lot like simple medical devices. Products mostly include various drug delivery devices (e.g. inhalers, nasal spray pumps, syringe plungers, etc.). Aptar’s solutions are often tied-in to their customer’s own regulatory processes – providing Aptar with a strong shield against competition.