AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

AlphaSituations-Event/Catalyst Driven Research

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bausch-health-companies-inc" target="_blank" data-smartkarma-citation="entities:941:1" rel="noopener">Bausch Health Companies (BHC US)</a>'s share price reversal over the past year has eliminated the substantial  gains achieved after it announced plans for a major corporate overhaul in August 2020.</li>
<li>No substantive change to BHC's current holding company structure and leverage ratio will result from the imminent execution of the Bausch &amp; Lomb IPO which is less transformational than expected.</li>
<li>The potential for a more value-creating overhaul remains, but timing is uncertain. Until the relevant catalysts come into play, we expect the BHC share price to tread water at best.</li>
</ul>



Bausch Health Companies (BHC US)'s share price reversal over the past year has eliminated the substantial  gains achieved after it announced plans for a major corporate overhaul in August 2020.
No substantive change to BHC's current holding company structure and leverage ratio will result from the imminent execution of the Bausch &amp; Lomb IPO which is less transformational than expected.
The potential for a more value-creating overhaul remains, but timing is uncertain. Until the relevant catalysts come into play, we expect the BHC share price to tread water at best.


SpinTalk: The Bausch Corporate Overhaul Is More Illusory Than Substantive At Least for Now

<ul>
<li>Splitting GE into 3 independent, unconnected companies makes strategic sense, and barring unforeseen exogenous factors, should unlock meaningful value for its shareholders  </li>
<li>Based on 2023 estimates, our valuation analysis indicates a SOTP value for GE of  $139-$152 for an up to ~50% upside </li>
<li>Despite the extended break-up execution timeline, there is a case to be made for investors to use the current share price lull to jump in and enjoy the catalyst-driven ride.</li>
</ul>


Splitting GE into 3 independent, unconnected companies makes strategic sense, and barring unforeseen exogenous factors, should unlock meaningful value for its shareholders  
Based on 2023 estimates, our valuation analysis indicates a SOTP value for GE of  $139-$152 for an up to ~50% upside 
Despite the extended break-up execution timeline, there is a case to be made for investors to use the current share price lull to jump in and enjoy the catalyst-driven ride.


SpinTalk: Thoughts On GE's Break-Up Strategy And Why We Think The Stock Is Ready To Fly Again

<a href="https://www.smartkarma.com/entities/bausch-health-companies-inc" target="_blank" data-smartkarma-citation="entities:941:1" rel="noopener">Bausch Health Companies (BHC US)</a> recently announced that it intends to split-off via an IPO  its highly profitable and fast growing  medical aesthetics business, Solta Medical, adding to the proposed spin/split-off of its eyecare business, Bausch &amp; Lomb (B&amp;L , which it announced a year ago. At the same time, BHC continues to make progress  in reducing its large debt pile, the legacy of the company's aggressive expansion during the first half of the last decade under the aegis of the management team. Although the share price has climbed ~60% since we published in August 2020 our insight - SpinTalk: Why Bausch Health Companies' Planned Eye Care Spin-Off Promises a Major Value Re-Rating -  the BHC share price appears to have hit a value wall in recent months and has so far struggled to make a sustainable breakthrough the $30 barrier. Indeed since our last update,  ActivistTalk: Why We Think There Is Even More Value In Bausch Health Companies Pending Restructuring, published on March 18, 2021, BHC has lost ~12% of its value  vs a ~9% drop in the <a href="https://www.smartkarma.com/entities/spdr-s-p-pharmaceuticals-etf" target="_blank" data-smartkarma-citation="entities:32128:1" rel="noopener">SPDR S&amp;P Pharmaceuticals ETF (XPH US)</a> while the broader market as represented by the <a href="https://www.smartkarma.com/entities/spdr-s-p-500-etf-trust" target="_blank" data-smartkarma-citation="entities:763:1" rel="noopener">SPDR S&amp;P 500 (SPY US)</a> has risen ~14%.Our insight below discusses why BHC's share price momentum has stalled in recent months and why we believe this represents an opportunity to pick up the considerable value still left on the table.

Bausch Health Companies (BHC US) recently announced that it intends to split-off via an IPO  its highly profitable and fast growing  medical aesthetics business, Solta Medical, adding to the proposed spin/split-off of its eyecare business, Bausch &amp; Lomb (B&amp;L , which it announced a year ago. At the same time, BHC continues to make progress  in reducing its large debt pile, the legacy of the company's aggressive expansion during the first half of the last decade under the aegis of the management team. Although the share price has climbed ~60% since we published in August 2020 our insight - SpinTalk: Why Bausch Health Companies' Planned Eye Care Spin-Off Promises a Major Value Re-Rating -  the BHC share price appears to have hit a value wall in recent months and has so far struggled to make a sustainable breakthrough the $30 barrier. Indeed since our last update,  ActivistTalk: Why We Think There Is Even More Value In Bausch Health Companies Pending Restructuring, published on March 18, 2021, BHC has lost ~12% of its value  vs a ~9% drop in the SPDR S&amp;P Pharmaceuticals ETF (XPH US) while the broader market as represented by the SPDR S&amp;P 500 (SPY US) has risen ~14%.Our insight below discusses why BHC's share price momentum has stalled in recent months and why we believe this represents an opportunity to pick up the considerable value still left on the table.

SpinTalk:Bausch Health Companies- Restructuring Broadens,Considerable Value Still Left On The Table

On August 16, 2020, we published an insight looking into the potential impact of  the decision by <a href="https://www.smartkarma.com/entities/bausch-health-companies-inc" target="_blank" data-smartkarma-citation="entities:941:1" rel="noopener">Bausch Health Companies (BHC US)</a> to spin off its largest revenue generator, the Eye Health business (Bausch &amp; Lomb), into an independent publicly traded entity. Although details behind the proposed transaction at the time were sparse, our initial assessment was that the proposed corporate restructuring event along with the company's debt reduction efforts  promised to be a substantiallly value creating one. For further details,  please refer to the insight - <a href="SpinTalk:%20Why%20Bausch%20Health%20Companies'%20Planned%20Eye%20Care%20Spin-Off%20Promises%20a%20Major%20Value%20Re-Rating.%20Read%20more:%20https://skr.ma/fpJFD" target="_blank" rel="noopener">SpinTalk: Why Bausch Health Companies' Planned Eye Care Spin-Off Promises a Major Value Re-Rating.</a> 
Since then, BHC has indeed enjoyed a major elevation in its share price, up by more than 90% from the published share price (i.e., $17.48)  in our insight,  bringing it to trade in our then assessed target range of $28-$34, at $33.43. However, there have been further developments since the publication of that insight, notably the ramping up of interest from activists. This has encouraged us to revisit the situation and to review our initial valuation thesis.
Our conclusion is that there is likely to be substantially more value in the BHC's restructuring than we had initially assessed.

On August 16, 2020, we published an insight looking into the potential impact of  the decision by Bausch Health Companies (BHC US) to spin off its largest revenue generator, the Eye Health business (Bausch &amp; Lomb), into an independent publicly traded entity. Although details behind the proposed transaction at the time were sparse, our initial assessment was that the proposed corporate restructuring event along with the company's debt reduction efforts  promised to be a substantiallly value creating one. For further details,  please refer to the insight - SpinTalk: Why Bausch Health Companies' Planned Eye Care Spin-Off Promises a Major Value Re-Rating. 
Since then, BHC has indeed enjoyed a major elevation in its share price, up by more than 90% from the published share price (i.e., $17.48)  in our insight,  bringing it to trade in our then assessed target range of $28-$34, at $33.43. However, there have been further developments since the publication of that insight, notably the ramping up of interest from activists. This has encouraged us to revisit the situation and to review our initial valuation thesis.
Our conclusion is that there is likely to be substantially more value in the BHC's restructuring than we had initially assessed.

ActivistTalk: Why We Think There Is Even More Value In Bausch Health Companies Pending Restructuring

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Equity Capital Markets

HBM Holdings Limited / Equity Capital Markets

Pre-revenue biotechnology company Harbour Biomed looks to raise US$230 million in an IPO on the HKEX. Because of the short timetable for the offering, the analysis in this Insight will be shorter than normal. We think that the proposed pre-money valuation of US$950 -1,043MM is fair, and the company has rich newsflow and numerous catalysts ahead in 2021/22. We would take the deal.

Pre-revenue biotechnology company Harbour Biomed looks to raise US$230 million in an IPO on the HKEX. Because of the short timetable for the offering, the analysis in this Insight will be shorter than normal. We think that the proposed pre-money valuation of US$950 -1,043MM is fair, and the company has rich newsflow and numerous catalysts ahead in 2021/22. We would take the deal.

Harbour Biomed IPO: Positive Thoughts in Brief

Canada

Bausch Health Companies Inc. discovers and distributes pharmaceutical. The Company develops drugs for unmet medical needs in central nervous system disorders, eye health, and gastrointestinal diseases, as well as contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetic devices. Bausch Health Companies serves customers worldwide.

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Bausch Health Companies (BHC US)

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Robert Sassoon

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Robert Sassoon

SpinTalk:Bausch Health Companies- Restructuring Broadens,Considerable Value Still Left On The Table

Although the share price has climbed ~60% since we published our first insight on this corporate restructuring event, the BHC share price has lost...

Robert Sassoon

ActivistTalk: Why We Think There Is Even More Value In Bausch Health Companies Pending Restructuring

As BHC continues to prepare for the separation of its businesses, there is substantially more value here than we had intially assessed soonafter...

Robert Sassoon

Harbour Biomed IPO: Positive Thoughts in Brief

This Insight includes a brief analysis of Harbour Biomed and its proposed listing on the HKEX. We like the deal at the price range offered.

Kemp Dolliver, CFA

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