A broken growth stock that pays you to wait for activists to turn things around
Here's another interesting stock that's right up TMF's alley...a former pick of one of the services, Ambassadors Group (EPAX). There was an interesting SA article on it the other day. As an aside, i know that many people criticize it, much of the criticism is warranted, but cruising through Seeking Alpha is a great way for me personally to find investment ideas. I'm all about the story with investments. if a stock has interesting special situation-esque angle that can unlock value, I'm interested. I use SA to find interesting stories and then dig into the numbers myself rather than relying on the author of the article to do so. Trust but verify. This works really well for me because I like to keep things simple in investing. If a stock's balance sheet is in good shape, it's cheap by some metrics and even better it pays a dividend that it can easily cover I don't worry about all of the rocket science, calculating DCF out 10 years based upon variables that no one on Earth could possibly know. As the saying goes, garbage in, garbage out. All of those fancy calculations don't mean a hill of beans if the assumptions are wrong.
Any how, back to EPAX. I was never wild about the stock when it was owned by TMF, but almost everything is a buy at the right price. Activist investors are now involved in this completely broken growth stock. They are slashing costs and trying to sell non-core assets, such as Ambassadors' headquarters building and another non-core ebusiness that I have to do more research on.
Another potential catalyst would be the revamping if the Company's marketing. There appears to be some nepotism in the marketing department. If sales don't improve, the activist's new board members will likely push for a change there.
There's a lot to like here. Despite all of its issues, mainly declining sales, EPAX remains profitable. Furthermore, Ambassadors is returning money to shareholders in bunches with massive buybacks and a 5%+ dividend. I'm not wild about the student travel business, but at this price I'm getting paid to wait for activists to turn around this company with a solid balance sheet.
Given the fact that this is a former TMF pick there has to be people out there in CAPS who are familiar withAmbassadors Group. I would love to hear your thoughts on the company. If we continue to work together, finding and researching ideas I have absolutely no doubt that we will crush the market.
Please forgive how brief this particular write-up is...I'm writing it from my son's hospital room on my iPad. Technology is amazing. I am thrilled to report that he has successful surgery to remove his tonsils and adenoids. Whew. I love that little guy.
How Activist Insiders Are Unpacking Hidden Value At Ambassadors Group
Thanks for reading everyone. Have a great day!