LM, HBI & LBTYK recently profiled by Boyar Research

Since 1975, investors have been relying on Asset Analysis Focus (AAF), an independent equity research publication produced by Boyar’s Intrinsic Value Research, for new idea generation.

We believe that AAF would be a valuable resource to you too, and to demonstrate the quality of our research we would like to offer you a complimentary issue in its entirety.

To download this issue (with no further obligation), please click here.

AAF takes a private equity approach to public market investing by identifying securities trading at a substantial discount to our estimate of their intrinsic or private market value. Since 2009, the average return for each company profiled in AAF has been 83.7%, compared with an average return of 53.3% for the S&P 500.*

Your complimentary issue includes reports on:

Hanesbrands Inc.

  • Hanesbrands, the world’s largest basic apparel company, boasts a portfolio of first-rate brands that hold the #1 or #2 market share position in underwear, intimate apparel, hosiery, and active wear in 12 countries.
  • Several issues have weighed on HBI shares over the past two years, culminating in a sharp sell-off in the stock after the Company reported poor 4Q 2016 results. HBI’s innerwear segment, which comprises 43% of sales and nearly 60% of operating profit, exhibited surprising weakness during that quarter due to soft retail traffic not being fully offset by their rapidly growing online sales. However, we do not believe that this recent weakness represents a secular shift in the purchasing frequency of HBI’s products. Rather, we believe this is a temporary situation caused by a shift of customer purchasing behavior from brick-and-mortar establishments to online distribution channels.
  • By 2019, we believe the U.S. transition from brick-and-mortar sales to online sales will have matured, contributing to greater stability of HBI’s revenues. Our intrinsic value estimate is $30.48 at the end of 2019.

Legg Mason, Inc.

  • Legg Mason, Inc. is a formidable player within the asset management industry, possessing impressive scale (~$710 billion of AUM) and a diverse line of well-established products catering to a full range of investment styles and asset classes.
  • Approximately 70% of LM’s strategies are outperforming benchmarks from one-year and three-year perspectives, and the figure for the five-year and ten-year perspectives exceeds 80%.
  • The Company has also reduced its shares outstanding by 40% and has raised its dividend seven times since 2010. However, LM shares have failed to achieve significant outperformance despite the Company’s strategic advances. In large part, this likely reflects the difficult fundamentals currently impacting the actively managed fund sector.
  • LM is trading at approximately 0.7% of AUM, a substantial discount from how comparable firms have historically been valued in transactions.
  • We have assumed a blended price/AUM multiple of ~1%. This 1% blended multiple implies an intrinsic value of ~$62 per share for LM. If LM’s valuation remains at current levels for an extended period, the Company could be an attractive target for a strategic or financial buyer.

Liberty Global plc

  • Liberty Global is the largest European cable systems operator.
  • Liberty Global is underpenetrated in its existing network and has plans to expand its footprint by 6-7 million homes in the coming years.
  • Liberty Global shares have de-rated to ~9x EV/OCF, below their longer-term average of ~10x—offering a bargain, in our view, for a high-margin, recession-resistant business best positioned to capitalize on the secular growth in internet data usage.
  • Placing a 9.5x EV/OCF multiple on 2019 projections, our intrinsic value estimate is approximately $51 per share.

*Past performance is no guarantee of future success. These results are not audited. Asset Analysis Focus is not an investment advisory bulletin, recommending the purchase or sale of any security. Rather it should be used as a guide in aiding the investment community to better understand the intrinsic worth of a corporation. The service is not intended to replace fundamental research, but should be used in conjunction with it. Additional information is available on request. The statistical and other information contained in this document has been obtained from official reports, current manuals and other sources which we believe reliable. While we cannot guarantee its entire accuracy or completeness, we believe it may be accepted as substantially correct. Boyar’s Intrinsic Value Research LLC its officers, directors and employees may at times have a position in any security mentioned herein. Boyar’s Intrinsic Value Research LLC Copyright 2017.

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