kab60 Posted September 17, 2020 Share Posted September 17, 2020 Why not buy Jackson Hewitt? It went into bankruptcy in 2011 with less than $500mm debt so it would be a reasonable price and it's owned by a PE firm. It's a declining asset but that's what you use NOLs for and they could eliminate all the IT expense. As for the debt management lives to do deals. No way they sit on $165mm imo. Both the CEO and CFO bought shares recently. Don't know the firm well but probably because leverage is high, and their past acquisitions have been expensive? They just wrote off 270m or almost half the price of HD Vest, which they bought four years ago. It doesn't make sense to overpay to utilize NOL's. Blucora trades at 5,8x2021 ebitda, I doubt they'll be able to buy anything that'll create more value than their own stock, no? Why do you think current management lives to do deals? They haven't done any themselves yet - the most recent was announced by the former CEO. I'd hope they'd live to please their customers, employees and shareholders instead of ganging up with investment bankers. Link to comment Share on other sites More sharing options...
ratiman Posted September 17, 2020 Share Posted September 17, 2020 Borrowing $75mm when they already had $90mm on the balance sheet and then announcing no more stock buybacks indicates they want to do deals. The question is whether they do smart deals. The wealth management deals are iffy, deals in taxes make more sense. They need more scale in taxes, that's where the best returns are, imo of course. The best way to develop brand recognition on the internet is to have brand recognition in the real world, that's why Jackson Hewitt would work. You might not be in the US but JH is the second largest storefront tax advisor in the US, behind HRB. Link to comment Share on other sites More sharing options...
kab60 Posted September 18, 2020 Share Posted September 18, 2020 They still haven't paid for their last acquisition, which is 100m plus 60m earnouts over a couple of years. Should close this year so that's what the money is for I'd venture. Really don't get why you think they'll do more deals. Where did they indicate that? Seems the plan is to delever and focus more on organic growth by investing into TaxAct and getting those synergies from HD Vest which they touted back when they did that horribly expensive deal. Anyway, I really appreciate the back and forth. What is your explanation for the hard selloff? I feel like I'm missing a major piece. Link to comment Share on other sites More sharing options...
valuedontlie Posted September 19, 2020 Share Posted September 19, 2020 i've followed the stock for a while and like the tax space for the FY21 tax season... was a decent trade back in early 2016 after the HD Vest deal... say what you will about the wealth management deals but they still generate cash. Levered up and paid it down... Looks like something similar happening today (although leverage shouldn't be quite as high as the HD Vest deal?). 2020 looks atrocious in part from the tax deadline changes but i agree it's sold off much more than HRB has lately... hmm... Link to comment Share on other sites More sharing options...
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