Thread/ Special situation $DTY
Dignity is vertically integrated funeral services business in the UK. Stock price is down ~80% from all-time high.
Previous management made bad acquisitions and increased prices as volumes declined.
Dignity is vertically integrated funeral services business in the UK. Stock price is down ~80% from all-time high.
Previous management made bad acquisitions and increased prices as volumes declined.
1/
Thanks to Simon Caufield and his presentation at MOI ‘Best Ideas’ conference @manualofideas @JMihaljevic
Also thanks to @bkaellner for putting this list of companies together, so I could filter straight to the small-caps.
Thanks to Simon Caufield and his presentation at MOI ‘Best Ideas’ conference @manualofideas @JMihaljevic
Also thanks to @bkaellner for putting this list of companies together, so I could filter straight to the small-caps.
https://twitter.com/bkaellner/status/1481750633426292737?s=21
2/
UK value firm Phoenix took advantage of beaten down stock price in 2018 and & have played an activist role.
They have increased their position twice, now owning ~30%. The CIO of Phoenix, Gary Channon is temporary CEO at $DTY currently. Old management has been replaced.
UK value firm Phoenix took advantage of beaten down stock price in 2018 and & have played an activist role.
They have increased their position twice, now owning ~30%. The CIO of Phoenix, Gary Channon is temporary CEO at $DTY currently. Old management has been replaced.
3/
The cremation segment of the business has an avg. ROC >30% and is somewhat of a hidden asset that may be worth more than the current enterprise value of $DTY.
It may be partially listed this year which could be a catalyst.
The cremation segment of the business has an avg. ROC >30% and is somewhat of a hidden asset that may be worth more than the current enterprise value of $DTY.
It may be partially listed this year which could be a catalyst.
4/
$DTY has 40% of residential real estate properties that are vacant. Phoenix are having the properties valued currently.
Possibly a huge hidden asset that could be leased, sold or repurposed.
$DTY has 40% of residential real estate properties that are vacant. Phoenix are having the properties valued currently.
Possibly a huge hidden asset that could be leased, sold or repurposed.
5/
Debt is very long term at ~4% interest. Although they have dropped close to hard convent (1.5x EBITDA/interest) but will move away as profitability normalises back to pre-2017 levels.
The debt should not be a problem as long $DTY improve margins.
Debt is very long term at ~4% interest. Although they have dropped close to hard convent (1.5x EBITDA/interest) but will move away as profitability normalises back to pre-2017 levels.
The debt should not be a problem as long $DTY improve margins.
6/
Operational and margin improvement is likely after previous managements poor decisions and such as 70% of fleet not being utilised.
Cost reductions are taking place and they will begin reinvestment into exisiting branch estate that has be allowed to deteriorate.
Operational and margin improvement is likely after previous managements poor decisions and such as 70% of fleet not being utilised.
Cost reductions are taking place and they will begin reinvestment into exisiting branch estate that has be allowed to deteriorate.
7/
Phoenix is pushing for $DTY to become the low cost provider of funeral services in the UK. Which will ideally drive volumes higher as customers are becoming much more price sensitive than historically has been the case.
Phoenix is pushing for $DTY to become the low cost provider of funeral services in the UK. Which will ideally drive volumes higher as customers are becoming much more price sensitive than historically has been the case.
8/
If management can return to pre-2017 profits (before prior management destroyed value) it could justify a 2-3x in prices.
They are currently trading at ~6x adjusted earnings assuming the can return to 15-18% margins.
If management can return to pre-2017 profits (before prior management destroyed value) it could justify a 2-3x in prices.
They are currently trading at ~6x adjusted earnings assuming the can return to 15-18% margins.
9/
There is multiple catalysts that could lead to great returns for shareholders.
I am not long $DTY. Still have work to do. Anyone that knows the business well feel free to DM or share resources.
There is multiple catalysts that could lead to great returns for shareholders.
I am not long $DTY. Still have work to do. Anyone that knows the business well feel free to DM or share resources.
10/
$DTY will likely be a future write-up for my newsletter.
Subscribe for free to get a monthly deep-dive on my best idea.
Seekingvalue.Substack.com
$DTY will likely be a future write-up for my newsletter.
Subscribe for free to get a monthly deep-dive on my best idea.
Seekingvalue.Substack.com
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