Out Fox The $treet

  Kohl's activists want the company to sale-leaseback up to $4 billion worth of real estate. In theory, the company could boost EPS substantially by repurchasing shares, but actual net income would fall. The stock is cheap at only 7.5x FY22 EPS targets while trading with a market valuation equal to real estate holdings. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More » Activists continue to circle at the gate due to  Kohl's  ( KSS ) being an extremely cheap stock. The company has very valuable real estate on top of a strong earnings stream which is why a group of activists are lining up to bid on the retailer. My  investment thesis  remains very Bullish on the stock trading at 7x FY23 EPS targets. Read the full article on Seeking Alpha.  Disclosure: Long KSS. Please review the disclaimer page for more details.  Update - March 21 Kohl's didn't provide much in the way of details ...

SodaStream recently hit all-time highs following strong Q2 results. Pepsi agreed to buy SodaStream at $144 per share in cash. The premium valuation offers an ideal time to exist a winning position. Only a few weeks ago,   SodaStream   ( SODA ) exploded above $100 after strong   Q2 results . The manufacturer of home beverage systems benefited from strong quarterly sales and incredible leverage in the system to boost earnings. The company has now accepted an offer for $144 in cash allowing investors an opportunity to quickly exit on the top after a massive rally from the 2016 lows. Read the f ull article on Seeking Alpha.  Disclosure: No positioned mentioned. Sold SODA on the deal announcement. Please review the disclaimer page for more details.   

Twitter is down 20% as bidders disappear from making premium bids for the social media service. The company has plenty of catalysts with live-streaming deals and the emergence of generous video ad revenue sharing with content creators. The dip below $20 provide opportunity as either the video catalyst will launch Twitter back into growth mode or the company will accept likely bids in the mid-$20 range. Twitter (NYSE: TWTR ) is in freefall today as the market comes to the realization that a deal isn't imminent. Despite constant media rumors, the company never really signaled that the social media site was for sale and definitely not at prices anybody would pay. Read the full article on Seeking Alpha.  Disclosure: Long TWTR. Please see the disclaimer page for more details. 

Reports of interests in bidding for Twitter sent the stock to multi-month highs. The difference between what bidders will pay and where Twitter values the social media site suggests a deal is highly unlikely. Investors wrongly confuse exploring options with accepting any imminent bid. The good numbers from week 2 in the NFL support buying Twitter on any dips if the buyout surge deflates this week. Twitter (NYSE: TWTR ) shot up 21% on Friday to a recent high of $22.62 on news that the social media service was moving closer to being sold. The  CNBC report  suggested that Alphabet (NASDAQ: GOOG )(NASDAQ: GOOGL ) and Salesforce (NYSE: CRM ) were seriously looking at making bids. Read the full article at Seeking Alpha.  Disclosure: Long TWTR. Please review the disclaimer page for more details. 

Twitter (TWTR) is soaring 20% today on news today that the company is in informal discussions regarding a sale of the business. According to the news, Alphabet (GOOG) and s alesforce.com (CRM) are looking at a bid for the social media giant. The big question is whether a Twitter shareholder even wants a deal. After the gains the stock has a market value of $15.7 billion. A decent value for the current revenue base, but the potential remains massive. What if the NFL streaming deal and the host of shows lining up for the site starts expanding the user base. Facebook (FB) now has a market value of over $370 billion. Maybe it isn't possible to ever reach that level, but one could argue that these streaming deals with the likes of 120 Sports and Cheddar provide a compelling case for users to return to the service. If Twitter can really show that 800 million people view the site, than Twitter actually has half the user base of Facebook and no where near half the market valuat...

Last week, Freeport-McMoRan Copper & Gold Inc. (FCX) announced monumental mergers that sent the stock plunging 20% over the next two trading days. While the deals appear attractively priced compared to the assets obtained, the market clearly doesn't appreciate complex investments in the current environment. For those investors living under a rock, the company agreed to purchase both Plains Exploration & Production Company (PXP) and McMoRan Exploration (MMR) . Since both of these companies focus on oil and gas exploration, the purity of being a strictly copper focused producer attracted plenty of investors that might disappear now. Another major issue is that investors actually don't understand the McMoRan Exploration potential. Too many investors focus squarely on the failures of the exploratory Davey Jones No. 1 well and miss all the other wells under drilling programs. These wells are drilled with the benefits learned from the failures of the original Ultra-Deep Sha...

News came out from Flightglobal today that AerCap Holdings (AER) has placed itself on the auction block. With the stock floundering in the $10-12 range for the last few years, it wouldn't surprise me if big investors would be willing to walk away with a sizable premium. AerCap is the world`s leading independent aircraft leasing company and has one of the youngest fleets in the industry. AerCap has a portfolio of 350 aircraft with a focus on fuel-efficient narrowbodies and widebodies. AerCap is a New York Stock Exchange-listed company (AER) headquartered in The Netherlands with offices in Ireland, the United States, China, Singapore, and the United Arab Emirates. The stock is currently trading up 15% so clearly enough people believe the deal is on the table. Or at least the deal news has brought attention to the stock trading significantly below book value. Once aircraft values are marked up to current appraisal levels, the company might fetch closer to $20 then the sugges...

Before the open today, Campbell Soup (CPB) announced a $1.55B deal to purchase Bolthouse Farms . The deal gives Campbell access to the rapidly growing market for packaged foods. The deal is expected to be accretive by $.06 in 2013 with the use of cash and/or debt to finance the purchase price. Founded in 1915, Bolthouse is a vertically integrated food and beverage company focused on developing, manufacturing and marketing proprietary, high value-added natural, healthy products. The company has leading market positions in fresh carrots and super-premium beverages in the U.S., along with a growing presence in refrigerated salad dressings. While an intriguing deal, it does bring up an interesting dilemma for our Net Payout Yields (NPY) model that owns Campbell Soup. The company expects to suspend the strategic share repurchase plan in order to use the cash to pay for this deal. Campbell was recently yielding around 11% with only 3.5% coming from d...

The WSJ reported around noon on Friday that Liz Claiborne (LIZ) has been in talks with private equity firms over a potential deal around $20 a share. Currently, it doesn't appear that any of the firms, such as KKR & Co (KKR) , Permira or Warburg Pincus LLC, find that price appealing. Not to mention that the Liz management has denied any interest in selling the company. The news was enough to send the stock soaring. It closed at $13.36, up nearly 13% at a new 52-week high. At $20, Liz would have a value around $2B. Is that an appealing price for long investors? First, lets look back to the recent transformation of the company. Back in October, I wrote an article about the transformation of the company. Just prior to that article, an investor could've bought Liz's stock in the $4s. Now the stock has tripled and a deal around $20 would've given an investor a 300% gain in less than six months. Read the full article at Seeking Alpha. Disclosure: Long LIZ. Please r...

As we wrote back on Monday, the official announcement of Monster Worldwide (MWW) hiring an advisor was a promising sign. The CEO had mentioned on the 1st that the stock was too cheap and that the company would seek a strategic deal to enhance shareholder value. Then on the 2nd, Oppenheimer questioned the true seriousness of a deal causing the stock to sell off. Not too surprising to see some doubters as Monster is always rumored as a buyout candidate. A rumor that so far has not come true. This time though appears different. Monster has actually acknowledged the interest and followed through with the hiring of an advisor. Possibly suggesting that some of the rumors in the past came from executives unhappy with the stock price and contemplating a deal. Read the full article at Seeking Alpha. Disclosure: Long MWW. Read the disclaimer page for more details. 

A day after Oppenheimer questioned whether Monster Worldwide (MWW) was serious about selling the business, news leaked after the close that it had indeed hired investment bankers. Clearly this doesn't mean a deal will be done, but it shows the intent does exist. To step back a little, Monster's CEO had made an announcement at a conference earlier last week suggesting the company was looking for strategic alternatives to boost the stock price. The stock sprang up nearly 20% that day, but quickly settled back down as reality set in helped by Oppenheimer. Trading should be interesting tomorrow and the rest of the week. The stock remains very cheap and any real intent to sell the company could likely fetch numbers back towards the July level of $13-15. SunTrust analyst Tobey Sommer suggests an acquirer could ring out $100M in costs savings from reducing redundant management, marketing, and general administrative expenses. It has long been suggested that Monster has a bloated...

Interesting surprise when checking the financial news on a lazy Sunday afternoon. Kinder Morgan (KMI) agrees to buy El Paso (EP) for over $21B. The deal provided a 37% premium to the closing price on Friday. It also amounted to 20%+ above the 52 week high. Numerous interesting facts about this deal. First, this deal involves natural gas pipelines at a time that nat gas prices remains in the dumps. Second, KMI was willing to pay such a premium over the 52 week high when most investors have fled the markets. Third, KMI was recently re-joined the public markets in February after a nearly four year haiedus. The combination will form the largest natural gas pipeline network in North America. It also creates the fourth largest energy company in North America with an enterprise value of $94B. Even more importantly, the deal with be cash flow accretive from the beginning. The deal also provides approximate cost savings of $350M per year amounting to 5% of EBITDA. So again another reason...

Our philosophy isn't to pick stocks based on ones potential for a buyout, but this theStreet.com report caught our attention. Harry Rady of Rady Asset Management owned biotech company Cephalon (CEPH) that recently got a buyout offer from Valient International (VRX). Since Stone Fox Capital also owned CEPH in our Opportunistic folios it was intriguing to see what else he picks, since we might have similar investment styles. Looking over his list we actually already own one of his top picks in Savient Pharma (SVNT). He also lists Activision Blizzard (ATVI) and NuVasive (NUVA) that have been on our radar. Might be time to double up research on these picks. Rady sees 100% gains in both SVNT and NUVA and interesting that they are both in the medical/health sector like CEPH. SVNT has been a long term holding that we've ridden to the $20s only to see it crash back below $10 when the sale of the company failed. With the new management team in place, they appear to be the stronges...

Barron's has a good summary of the Cephalon (CEPH) buyout announcement from yesterday. What's interesting and has kept us in the stock is that Valeant Pharma (VRX) traded up 12.8% today. This is unheard of for the bidder in a hostile deal to increase especially that dramatically. Apparently the market thinks the deal is very cheap with the analyst from Hapoalim Securities speculating on a significant increase in the bid of up to $86. Several of the analysts increased their targets on VRX suggesting that the cost savings and ability to borrow low cost debt makes this deal very appealing. The $300M in savings would be incredible for a $5.7B deal and essentially covers all of the interest payments. All of this points to a likely bump in the bid assuming the BOD at CEPH doesn't out right block the deal. An offer potentially in the $80s would likely be deemed attractive. It will keep us around for a while. Eventually though the potential upside might be limited and risk gre...

Interesting news after the bell today on Cephalon (CEPH). Valeant Pharma (VRX) went public with a $73 all cash offer to buy CEPH. The deal would be valued at $5.7B and represents a roughly 25% premium from the closing price. Naturally VRX claims a 29% increase from the 30 day trading average, but going back the last year CEPH recently traded at 52 week lows. Shareholders are likely happy to see an offer with the stock swooning of late, but anybody holding the stock for most of the year sure expected a higher valuation and isn't exactly happy. The claims by VRX are normal of hostile bids suggesting that the management of CEPH has done everything to prevent this deal even going so far as to make several acquisitions themselves in order to block the deal. Possibly valid, but this isn't a scorching high valuation. CEPH is a key holding in our Opportunistic funds, but honestly the investment has been slightly disappointing having a loss on the investment until this announcement...

According to the WSJ , Massey Energy (MEE) is reviewing a buyout offer from Alpha Natural Resources (ANR). Oddly though the title of the article currently says Arch Coal (ACI) instead of ANR. For the last couple of weeks, its been speculated that MEE was on the auction block. MEE is a major holding of our Opportunistic and Growth portfolios since the stock swooned down to the $30 area following the mine explosion in April. The stock is up roughly 12% to $47 providing for a major gain already so any large premium over this level would be sweet. Unfortunately, these portfolios are also heavily invested in ANR so a buyout by them would likely dilute the gain as their stock will possibly drop similar to todays reaction where MEEs gain has doubled ANRs loss. Still very positive, but naturally we'd prefer another suitor over ANR. Since ANR has a lot of similarities to MEE especially the US met coal production and reserves and outside buyer would also drive up their price. Oh well, ...