Theme of the Week
The Return of the Fallen Angels
When KEDM was launched back in 2020, one of the most popular sections was the Fallen Angel monitor. This monitor flagged a handful of companies that had fallen completely out of favor and whose shares traded at inexplicably low prices.
As the saying goes: You can make a lot of money when something goes from hopelessly screwed to somewhat shitty.
In hindsight, 2020 and 2021 were the perfect years to make money with this monitor. The world went on lockdown, and many businesses deemed non-essential were forced to close.
Without customers or employees showing up for work, most businesses were hopelessly screwed, and they had the share price to show for it.
We’re not a single-stock newsletter, and we do not intend to be. But at the same time, we scan so many names across our various screens, and we continuously call out underappreciated companies.
It would be a shame not to track some of the real outliers in their special monitor. We’re also seeing increasing evidence that being able to take the ‘long’ view does occasionally pay off, at least once you’re past the vicious cycle of earnings revisions.
For that reason, we’ve decided to bring back the Fallen Angels monitor.
Kuppy’s Tweet of the Week
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Kliff Note of the Week
Investor Day Monitor: We have been reviewing our recent investor day monitor and have noted PROG (PRG).
Management has been guiding a 17-20% adj EPS CAGR over 2025-2028. PROG holds a few interesting businesses, and we are surprised to see it trading at <6x 2026 earnings.
Too low if the company executes. Some investors have been pushing for the sale of its Four Technology business, which would unlock some of that SOTP value.
IPO Monitor: Holdco D’Ieteren (DIE BB) seems to be moving ahead with the IPO of Belron, the Carglass/Safelite business you call when your windshield cracks. Reports are now even mentioning a potential valuation of €30bn+.
That would be nice, considering D’ieteren owns roughly 50% and is still trading at a sub-€10bn market cap. Belron is huge, trusted, and makes good money because modern car glass is complicated and keeps getting more expensive to fix, especially with ADAS sensors.
That means steady demand, strong cash flows, and good visibility.
CEO Turnover Monitor: Alstom (ALO FP) issued a major warning on its 2026-27 FCF outlook after ‘execution problems’. Recent 2025-26 results actually show solid orders and decent organic growth, but margins disappointed due to production delays, cost overruns, and sourcing issues.
The new guidance keeps growth targets roughly unchanged but cuts the margin outlook and offers only a vague promise of positive FCF. That said, shares are now down over 40% in a few months.
The new CEO will present their strategic plan later this year. This used to trade at a double-digit EV/ EBITDA.
13D Monitor: Radoff disclosed a 7.6% stake in online retailer Genesco (GCO), intending to ‘engage constructively’. We’ll see. Not much growth at Genesco, but still $2.4bn revenues at high-40s gross margins, and decent FCF conversion. But man, that OPEX base.
Strategic Alternatives Monitor: Aquaculture tech company AKVA (AKVA NO) has started a strategic review (ic looking for buyers). Good timing, as years of investment are showing results, with significant improvements in revenue and profitability.
The company says momentum is strong and is targeting 2030 revenues of NOK 7bn and an EBIT margin above 10%. That’s over 20% EBIT CAGR. Nice for a LDD EV/EBITDA on 2025 EBIT.
Its two largest shareholders (holding almost 70% of the shares) support the strategic alt process.
Other Interesting ED Action: If you have a strong stomach, you might want to take a look at pharma packaging company Gerresheimer (GXI GY). In theory, a good and defensive business, but horribly managed in the past.
Gerresheimer extended the deadline for its FY25 accounts to September, removing the risk of a near‑term credit squeeze. Banks have also agreed to extend facilities and temporarily waive key leverage covenants.
The delay stems from ongoing investigations into some 2024-25 transactions. Audited results are now targeted for June. Meanwhile, GXI is selling assets. Plenty of hair, but strong upside IF they manage to return to a modicum of stability.
KEDM Event Driven Monitor scans over 20 corporate events for market moving information and distills them into our propietary “Kliff Notes.” One profitable trade should more than cover an annual subscription and access to the Event Driven chatroom!