EVINE Live: Clear Path to Improving Profitability, Capex to Decline

Keith Rosenbloom presented his in-depth investment thesis on EVINE Live (Nasdaq: EVLV) at Wide-Moat Investing Summit 2017.

EVINE, formerly known as ValueVision Media, operates as a multiplatform video commerce company in the U.S. The company markets, sells, and distributes products to consumers through television, online, mobile, and social media in various merchandise categories, such as jewelry and watches, home and consumer electronics, beauty products, and fashion and accessories. It has access to ~87 million cable and satellite television homes. The company has revenue of $650+ million, adjusted EBITDA of $18-22 million, and an FCF yield of 10+%. Keith sees a clear path to improving profitability. The enterprise trades at ~6.2x 2017E adjusted EBITDA, or ~5.6x excluding TV assets held for sale. Capex is essentially completed ($8 million ongoing, after $57 million – used cash to expand distribution facilities and transition to HD channels). Most of the debt is working capital-related (PNC Bank vs. “hard money” lenders in 2016). Management turmoil and related expenses are completed, and Keith regards the current team as solid. The logical exit for EVINE might be an acquisition by Amazon, Walmart, Google, Apple, or Macy’s. Amazon recently tried to enter the space via their “style code” live show, which they cancelled after a year.

About the instructor:

Keith Rosenbloom has over 20 years of direct investing experience, with a focus on applying traditional private equity value oriented perspectives to both special situations and structured investments. Keith co-founded and managed the CARE Capital Group of Hedge Funds from 2002 to 2010. Since then he has managed discretionary capital and invests opportunistically in public and private entities. Previously he served as the Portfolio manager of the CAR Fund and co-managed Comvest Venture Partners. He served as the Director of Merchant Banking for Commonwealth Associates from 1996 to 2001 where he specialized in making primary investments in public and private companies (approximately 80 transactions representing approximately $800mm). Keith became a Partner at Commonwealth Associates in 1994. Previously Keith worked with Prudential Capital and Merrill Lynch Venture Partners. He has invested in or managed investments in over 100 hedge funds and private equity funds. Keith currently sits on the board of PAWSAFE, LLC, a private pet health insurance distribution company. In addition, he serves on several charitable boards including UJA -Federation of New York, Hillel International (Board of Governors), Hatzalah (Israel’s private EMT service) and serves on the investment committee for Hillel International. He also serves on the investment committees of two family offices. He graduated cum laude from Yale University.