AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

Robert Sassoon has been an equity analyst for more than twenty years focusing primarily on global special situations. Robert has worked in research for several large sell-side institutions, including Credit Suisse, Natwest Capital Markets and Societe Generale. During his career, he has achieved top 5 rankings in various analyst surveys, including the Extel and Greenwich surveys.

In 2017, Robert founded AlphaSituations, an idea-generating investment research service with the goal of delivering a unique portfolio of ideas to drive client growth and returns by uncovering compelling and highly profitable value propositions as well as lucrative shorter-term trading situations arising from select dislocating corporate restructuring events and catalysts. Currently, the main geographical focus of the research is North America. 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.

AlphaSituations-Event/Catalyst Driven Research

Avon Products: This Week’s Earnings 2-Minute Drill

Avon Products: Weaker Than Expected Sales and Segment Profits; Momentum Indicators Remain Soft

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

Brazilian Beauty Products Group Natura &amp; Co's (NATU3 BZ) agreed offer for  the  one time iconic but long-time struggling <a href="https://www.smartkarma.com/entities/avon-products-inc" target="_blank" data-smartkarma-citation="entities:4527:1" rel="noopener">Avon Products (AVP US)</a> has created an interesting opportunity. The prevailing 14% merger spread and the acheivable early 2020 deal close target combine to create a potentially lucrative prospect for arbs.We believe that transaction risks associated with prospective merger are, but there is one  complicating factor, which we think is the main explanation for the magnitude of the spread at this time.  NATU3 is listed on the Brazilian Stock exchange (B3) and denominated in an historically volatile currency, the Brazilian Real, while AVP shares trade on the NYSE in US$.   While NATU3 will offer AVP shareholders the option to receive NATU3 shares in the form of Level-II ADRs to be traded on the NYSE or shares listed on B3 on completion of the transaction, NATU3 does not  have an ADR in issue at this time, meaning the volatile BRL/USD rate becomes an important variable of which to take account in any arb strategy. That said, and ignoring the availability of hedging mechanisms, our assessment indicates that the  current merger spread offers respectable double-digits IRR outcomes in the 11%-25% range for arbs even if the Brazilian Real were to depreciate by up to 5% against the US$ (as indicated by forward rates) over the next 6 to 9 months, the time period  during which the transaction is expected to close.

Brazilian Beauty Products Group Natura &amp; Co's (NATU3 BZ) agreed offer for  the  one time iconic but long-time struggling Avon Products (AVP US) has created an interesting opportunity. The prevailing 14% merger spread and the acheivable early 2020 deal close target combine to create a potentially lucrative prospect for arbs.We believe that transaction risks associated with prospective merger are, but there is one  complicating factor, which we think is the main explanation for the magnitude of the spread at this time.  NATU3 is listed on the Brazilian Stock exchange (B3) and denominated in an historically volatile currency, the Brazilian Real, while AVP shares trade on the NYSE in US$.   While NATU3 will offer AVP shareholders the option to receive NATU3 shares in the form of Level-II ADRs to be traded on the NYSE or shares listed on B3 on completion of the transaction, NATU3 does not  have an ADR in issue at this time, meaning the volatile BRL/USD rate becomes an important variable of which to take account in any arb strategy. That said, and ignoring the availability of hedging mechanisms, our assessment indicates that the  current merger spread offers respectable double-digits IRR outcomes in the 11%-25% range for arbs even if the Brazilian Real were to depreciate by up to 5% against the US$ (as indicated by forward rates) over the next 6 to 9 months, the time period  during which the transaction is expected to close.

MergerTalk: Natura & Co/Avon Products -"Ding Dong, The Avon Spread Calling"