Chris Karlin of Aquitania Capital Management is presenting his in-depth investment thesis on Avaya Holdings (OTC: AVYA) at Best Ideas 2018.
Avaya provides unified communications and contact center products and services to a global customer base. The business is characterized by high software and services content provided over long-term contracts to a broad customer base. Avaya recently emerged from bankruptcy, shedding much of the debt it had incurred in a 2007 leveraged buyout. The company has sharply reduced operating costs and pension liabilities. Avaya appears well-positioned going forward as a strong cash generator. The equity appears underfollowed and undervalued due to the bankruptcy overhang. Several visible catalysts should help unlock value. Recently trading at an FCF yield of 11% on FY18 and 14% on FY19 and a cash P/E of 7.6x FY18 and 6.5x FY19, Avaya could re-rate to an FCF yield of 9% and a cash P/E of 10x, resulting in ~70% upside over the next two years. If the company is effective in investing to restart growth, additional upside potential exists.
About the instructor:
Christopher Karlin has been in the investment business since 1991. Prior to founding Aquitania Capital Management in 2012, Christopher held positions as a Research Analyst and Portfolio Manager at First Pacific Advisors, Kestrel Investment Management and Fairview Capital Investment Management. Christopher interned with Farallon Capital Management while pursuing his MBA. He began his career with Wells Fargo Nikko Investment Advisors which later became a part of Blackrock. Christopher received his BBA from the University of Wisconsin in 1990 his MBA from Yale University in 1998 and has held the CFA designation since 1994.
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