The Ironwood SMID Cap Value portfolio declined 6.89% in September. Stocks in the utilities and financial services sectors were among the biggest contributors to the performance, while energy and consumer staples picks were off during the month.
Continue Reading Below
During the month, we initiated a position in CBS Outdoor Americas (CBSO), which was spun-off from CBS Corporation (CBS) through a partial IPO in March, 2014. The remaining shares will be distributed to shareholders in July.
Continue Reading Below
One of the largest outdoor advertising companies in the U.S., the company has confirmed its conversion to a REIT. In my opinion, this move may boost its price multiple and lead to acquisitions. The company has already completed a $690 million deal.
Under new CEO Jeremy Male, CBS Outdoor aims to improve its operational efficiency, develop its use of digital billboards and pursue other as-yet-undefined opportunities for value creation.
Importantly, the REIT structure will, in my opinion, allow the company to return much of its substantial free cash flow directly to shareholders.
On another front, the portfolio sold off its position in Micron Technology (MU), which we’ve owned for a while.
We purchased the stock due to our belief that MU’s then-pending acquisition of Elpida would help lead to a more rational DRAM market.
The acquisition also gave MU access to Apple (AAPL) as a customer which would help lead to faster revenue and earnings growth.
We sold the stock in tranches as the transition unfolded and, in our opinion, the fundamental benefits of a better DRAM market were realized.
Like what you read?
Subscribe to our once-weekly email newsletter and get the best posts delivered to you in one convenient place, to browse at your leisure:
DISCLAIMER: The investments discussed are held in client accounts as of September 31, 2014. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.
The post Why we bought CBS Outdoor Americas appeared first on Smarter InvestingCovestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures.