Eric DeLamarter presented his in-depth investment thesis on Tower International (NYSE: TOWR) at Best Ideas 2016.

Tower International is an auto parts supplier focused on metal body structures, chassis, suspension and lower vehicle systems for OEMs. Cursory and stale research coverage overlooks several very favorable recent developments that have meaningfully improved the business. The Company trades at a substantial and unwarranted discount principally due to its legacy post-reorg profile. This has presented an opportunity to purchase the stock at a very attractive relative and absolute valuation (3.9x EV/ EBITDA, 16% FCF yield) with several outcome paths offering +75% upside potential over the next twelve months. These near-term catalysts include: 1) share repurchases with the proceeds of the pending sales of its European segment and Chinese JVs; 2) revenue growth and margin expansion from recent contract wins; 3) investor awareness that TOWR is no longer an over-levered, slow growth business; and 4) potential sale of the entire company in 2016 given managements’ compensation structure and incentives.

About the instructors:

Prior to founding Half Moon Capital in 2011, Eric DeLamarter was a research analyst at Stelliam Investment Management, a value-oriented hedge fund. Prior to Stelliam, from 2006 to 2008, Eric was an associate at Lineage Capital, LLC, a middle-market private equity fund. From 2003 to 2006, Eric was an investment banking analyst at RBC Capital Markets, and during 2001, Eric was an equity research associate at Merrill Lynch. Eric earned an M.B.A. from The Heilbrunn Center for Graham & Dodd Investing at Columbia Business School, with a concentration in applied value investing, in 2010 and a B.A. from the University of Michigan in 2002.

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