Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

BWS provides independent stock specific research focused on companies with distinct value that are going through a special situation where there is a tangible catalyst not priced in. The catalyst can be anything from new product, restructuring, M&A, management change, change in business strategy, etc. BWS’s focus is to understand the change and evaluate the potential return for investors.

BWS utilizes a self formed proprietary approach in discovering stocks by putting great emphasis on deep research. BWS does generate short recommendations following a similar criteria.

Equity Bottom-Up

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Verso Corp. (VRS) reported second quarter results benefiting from a series of price increases implemented at the beginning of the year. Demand has not dissipated putting operating rates at well over 100 percent in the second quarter.</li></ul> <ul type="disc"><li>The current demand environment has enabled VRS to raise prices regularly this year that should provide a lift to earnings in subsequent quarters.</li></ul> <ul type="disc"><li>VRS reported second quarter revenue of $329 million and adjusted EBITDA of $52 million compared to our estimates of $282.5 million and $32.3 million, respectively.</li></ul> <ul type="disc"><li>Continued expectations of demand for coated paper should provide VRS a runway to generate a high level of free cash flow well into 2022, affirming our reasoning for the $20 bid being too low.</li></ul> <ul type="disc"><li>We are maintaining our price target of $30. VRS’s earnings power in the current climate should result in the shares trading higher once management addresses the $20 bid currently suppressing the stock price.</li></ul>


Verso Corp. (VRS) reported second quarter results benefiting from a series of price increases implemented at the beginning of the year. Demand has not dissipated putting operating rates at well over 100 percent in the second quarter. The current demand environment has enabled VRS to raise prices regularly this year that should provide a lift to earnings in subsequent quarters. VRS reported second quarter revenue of $329 million and adjusted EBITDA of $52 million compared to our estimates of $282.5 million and $32.3 million, respectively. Continued expectations of demand for coated paper should provide VRS a runway to generate a high level of free cash flow well into 2022, affirming our reasoning for the $20 bid being too low. We are maintaining our price target of $30. VRS’s earnings power in the current climate should result in the shares trading higher once management addresses the $20 bid currently suppressing the stock price.

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Verso Corp. (VRS) received a non-binding takeover offer of $20 a share in cash from current shareholder Atlas Holdings LLC. The acquisition price materially undervalues VRS and the current state of its business.</li></ul> <ul type="disc"><li>This is not the first time Atlas has tried to purchase VRS. Atlas had previously failed resulting in a proxy battle that eventually led VRS changing its Board of Directors. This time, the offer from Atlas could be taken seriously, but at $20 it gives shareholders no value to the current business environment VRS is benefiting from.</li></ul> <ul type="disc"><li>Our investment thesis in owning VRS, and why we value the shares at $30, has been based upon the prognostication of the price appreciation for coated paper resulting in adjusted EBITDA and free cash flow materially higher than 2020 and 2019 levels. The price increase taking effect on July 15, 2021, puts coated freesheet close to 2018 peak levels.</li></ul> <ul type="disc"><li>Current market conditions could lead to VRS generating, in aggregate, approximately $190 million in free cash flow, or $6.42 per share, in 2021 and 2022.</li></ul>


Verso Corp. (VRS) received a non-binding takeover offer of $20 a share in cash from current shareholder Atlas Holdings LLC. The acquisition price materially undervalues VRS and the current state of its business. This is not the first time Atlas has tried to purchase VRS. Atlas had previously failed resulting in a proxy battle that eventually led VRS changing its Board of Directors. This time, the offer from Atlas could be taken seriously, but at $20 it gives shareholders no value to the current business environment VRS is benefiting from. Our investment thesis in owning VRS, and why we value the shares at $30, has been based upon the prognostication of the price appreciation for coated paper resulting in adjusted EBITDA and free cash flow materially higher than 2020 and 2019 levels. The price increase taking effect on July 15, 2021, puts coated freesheet close to 2018 peak levels. Current market conditions could lead to VRS generating, in aggregate, approximately $190 million in free cash flow, or $6.42 per share, in 2021 and 2022.

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Verso Corp. (VRS) reported first quarter results highlighting the industry demand, which is running at over 100 percent to keep pace with and potential benefits from price increases not expected until the second quarter. The reopening of the economy has led to a rebound in demand for coated paper ahead of the usual seasonal timeframes of the year.</li></ul> <ul type="disc"><li>The mill closures of last year setup a scenario where there is not enough supply to meet demand aspirated by global shipping challenges making imports costly. The first quarter is a good gauge for the direction of demand for the rest of the year.</li></ul> <ul type="disc"><li>The series of price increased announced year to date are expected to materially benefit VRS’s financial results starting in the second quarter.</li></ul> <ul type="disc"><li>The market acceptance of the announced price increases puts VRS on path for materially higher adjusted EBITDA this year. We are raising our adjusted EBITDA estimate to $164.5 million and in doing so our price target is now $30 from $25.50.</li></ul>


Verso Corp. (VRS) reported first quarter results highlighting the industry demand, which is running at over 100 percent to keep pace with and potential benefits from price increases not expected until the second quarter. The reopening of the economy has led to a rebound in demand for coated paper ahead of the usual seasonal timeframes of the year. The mill closures of last year setup a scenario where there is not enough supply to meet demand aspirated by global shipping challenges making imports costly. The first quarter is a good gauge for the direction of demand for the rest of the year. The series of price increased announced year to date are expected to materially benefit VRS’s financial results starting in the second quarter. The market acceptance of the announced price increases puts VRS on path for materially higher adjusted EBITDA this year. We are raising our adjusted EBITDA estimate to $164.5 million and in doing so our price target is now $30 from $25.50.

United States

Verso Corporation operates in the paper industry. The Company produces coated freesheet, coated ground wood, and uncoated super calendered papers and pulp. Verso offers its products to magazine and catalog publishers, commercial printers, specialty retail merchandisers, and paper merchants.

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Verso Corp (VRS US)

VRS: Paper Gold

Continued demand for coated paper has resulted in a series of price increases VRS is likely to benefit from throughout the year. VRS is now on an...

BWS Financial Inc

VRS: Stealing Paper

Takeover offer of $20 a share significantly undervalues VRS and does not take into consideration the ongoing turnaround in VRS's business.

BWS Financial Inc

VRS: Producer Cycle Has Begun

Mill closures last year have created a supply deficit for coated paper where VRS is the largest US producer, and has already raised prices three...

BWS Financial Inc

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