SafetyinNumbers

ELF.TO is a better choice for exposure to a mostly quality stock portfolio vs FFH. Plus it trades at over a 50% discount to intrinsic value so very high margin of safety vs buying the S&P 500 (although ELF does own a bunch of VOO too). I own both but I only bought FFH recently (February 2021) because I like the pro-cyclical portfolio.

I added more ATTO on the post earnings sell off. I think intrinsic value ($80+) is higher post these results off of the strong sales but the market is selling ATTO off based on a perceived disappointment in margins in Q1. Full year EBITDA margin guidance is unchanged and with stronger sales, should end up higher than previously anticipated.

I unfortunately switched from GXE to ATU because I thought it would be safer as it has little debt and a management team that doesn't like to dilute shareholders. That means less growth but now that prices are back up they are drilling again. It's only costing me a few hundred percent so far ?

I think you have to look at how big Accenture and Cognizant is in the CRM/BPO and which parts of the business they compete in. Accenture and Cogizant do a lot more traditional systems integration and consulting work, I believe but I haven't checked either. I agree though that there could be competition for ATTO. I could see it being attractive to global players as well as the NA listed companies. For the Asian and European players, they would cement #1 in LATAM and have a base for a near shore attack on the US market. With more services offered digitally, accents are less of an issue as English literacy. ATTO definitely has problems with lower margins than the peers and a 30% customer in Telefonica. Margins are improving and TEF is getting smaller but it does garner a lower exit multiple. That's why I use an 8x 2022E EBITDA multiple as the low end of intrinsic value which equates to about $80 vs the recent price of $23. It's still a meaningful discount to CNXC's multiple around 11x and is accretive without any operational synergies but there will be plenty. Where do you project net debt to be at CNXC in late 2022? I ask because they might be able to fund the deal with mostly debt and use the opportunity to become an investment grade issuer which would make the potential deal even more accretive.

From traditional call centre where an agent is interacting 1-1 with a customer to email/text/AI helps an agent deal with on average 2.4 customers at once was the example from ATTO’s investor day in Nov 19, for example. I’m sure that continues to improve. As it stands now, human intervention is still necessary and specialists are needed to implement new technologies/strategies. I don’t think most companies want to invest in all of the learning necessary when it can be outsourced for less with better results. The industry analysts generally have forecasts for several years. I don’t see the trends changing on a dime but maybe they will. I haven’t broken out organic vs growth through acquisitions for the comps. TTEC, for example, talks about a 12% CAGR in it’s addressable markets. TIXT and CNXC are also growing fast. ATTO is guiding to mid single digit CC growth and that includes low single digit CC decline in revenue from their largest customer, Telefonica.

I have the opposite view on the industry. The technology is improving productivity meaningfully through the use of AI and digital native support. It lends to consolidation because application of technology is getting more complicated. The same changes also necessitate the need for customers to outsource as their service scores fall behind peers if they don't innovate. I think that sets up a very nice backdrop for an industry leader with a low cost of capital like CNXC. The industry analysts are mainly calling for mid to high single digit revenue growth and margins across the space have been rising as well.

I have picked up some industry knowledge as I'm invested in Atento (ATTO). To add to your speculation on the timing of the spin, I think it's possible CNXC management could see that ATTO would be available in May 2022 when its major shareholders (GIC, HPS and Farallon) have a lock up agreement come off. They also needed time to rerate which I think is still happening. It's a strange industry because there haven't been many North American listed companies of size until CNXC spun in November and TIXT IPOed earlier this year. There also aren't any financial analysts covering more than one of the names from what I can tell but valuations are healthy except for ATTO. ATTO trades at 4x EV/EBITDA and management is improving EBITDA margins. Guidance mid point for 2022 is 14.5% although it's not apples to apples with CNXC because of IFRS rules. To compensate, I think 8x 2022E is a good starting point for the low end of intrinsic value. The difference is going from ~$25 (4x) today to ~$80 (8x). A purchase of ATTO by CNXC at that price would still be accretive (on FCF) even before any operational synergies of which there would be plenty. Greenlight (Einhorn) also recently picked up a position in CNXC and mentioned it very briefly in their Q1 letter after filing a 13F for Q420. If anyone has a call into Greenlight, please pitch ATTO along side CNXC as a Texas hedge (double long!). I added some links below for support. There is an ATTO thread here: This twitter link shows how industry analyst, Gartner, sees the space: CNXC makes it pretty clear they want to grow in Emerging Markets and through Acquisitions. Einhorn letter:

Thanks for the comment on the podcast Stevie! No real pattern unfortunately. According to Koyfin, consensus estimates went up on January 12 in line with Goldman's update. If the analyst is consistent, we could get an update next week. This is the first time I have noticed MS didn't update its numbers post quarter. I'm not 100% sure, they will increase estimates. Barrington did update it's estimates post earnings and for some reason decided to ignore guidance and leave EBITDA margins flat from 2021 to 2022 despite the midpoint of guidance being a 100bps improvement.

We could see GS/MS update their numbers ahead of $ATTO's Q1 results (first week of May). Neither of them updated their estimates based on guidance post the Q4 earnings release. Presumably estimates would be going up but I am consistently surprised. Last quarter, Goldman waited until January to update its numbers after results in November and the stock responded strongly. Volume has been light lately so it doesn’t take a lot of volume to move the stock (either direction).

ATP announced FERC approval and didn’t delay any of the votes yet. Last time they delayed the convert meeting, it was after the close two days before (would be tonight). Still could happen but seems less likely which implies to me they have the votes. We will find out soon enough. The spread has been cut in half since March 23 to 4%. The deal could close pretty quickly if they get the votes as everything else seems customary. https://www.newswire.ca/news-releases/atlantic-power-corporation-announces-authorization-of-i-squared-transaction-by-federal-energy-regulatory-commission-804866438.html

Thanks woodstove! Much appreciated.

I added to MKO.V and FISH.V last week. Mako is a gold miner in Nicaragua and Sailfish has a royalty on Mako's mine along with some other assets. I also went on a podcast and talked about them along with ATTO and ELF.TO. Mako stuff starts at 34:30 https://twitter.com/BrownMarubozu/status/1378157840049782784?s=20

I went on a podcast and talked about ATTO a bit near the end (1:06:00). https://twitter.com/BrownMarubozu/status/1378157840049782784?s=20

I went on a podcast and talked about ELF a bit at the end (1:20:00). https://twitter.com/BrownMarubozu/status/1378157840049782784?s=20

I think the odds on a break and especially a break on April 7 are estimated too high by the market. Presumably, if they don’t have the votes on any of the securities on April 7, won’t they just extend the timeline? They don’t have all of the regulatory approvals do they? If they do need to bump, how much would it cost? US$5m for each security would probably do the trick, if necessary, in my view. Is less than 2% more consideration enough to walk?