Capitalizing on Turn-Around Opportunities in Micro-Cap Stocks
NASDAQ: TURN
Micro-Cap
Expertise
Seeking to Unlock Hidden Value to Generate Attractive Risk-Adjusted Returns
A High-Conviction, Concentrated
Portfolio
Constructive
Activist
Approach
Micro-Cap Expertise
We focus on publicly traded micro-cap companies (<$500 million market capitalization) and invest where our research suggests:
- A company is deeply undervalued relative to our estimated worth
- We can identify catalysts/changes that we believe can unlock value
-
We can add value through constructive activism
- We can invest at valuations that provide a margin of safety
- We can generate attractive risk-adjusted returns in 1-3 years
“A portfolio of strong business and franchises, purchased at the right price, outperforms over a market cycle.”
– Kevin Rendino,
Portfolio Manager & CEO
“Few investors are willing/able to spend the time and energy identifying, conducting due diligence on, and actively engaging with microcap companies to unlock intrinsic value.”
– Daniel B. Wolfe
Portfolio Manager & President
Seeking to Unlock Hidden Value to Generate Attractive Risk-Adjusted Returns
The price we pay relative to the business we buy is the most important driver of investment returns.
Out-of-favor companies and industries create opportunities to identify investments that offer asymmetric return-to-risk potential.
Companies with strong franchises, managements, and balance sheets are the best positioned to turnaround, gain market share, and improve profitability.
A High-Conviction, Concentrated Portfolio
180’s focus is on building meaningful positions in a small number of portfolio companies.
We do not have any specific industry focus, but often find value in industries that have cyclical characteristics.
“We want to capitalize by identifying undiscovered investment opportunities in microcap companies which often have little to no analyst coverage.”
– Rob Bigelow,
V.P., Fund Development
“Our constructive activist approach can lead to a reversal in direction for the share prices of these investee companies… i.e., a 180-degree turn.”
– Kevin Rendino,
Portfolio Manager & CEO
Constructive Activist Approach
- Prioritize revenue growth over operating profits
- Favor the status quo rather than change
- Lack an understanding of ”buy side” investors and the public markets in general
- Expend capital resources on perceived long-term opportunities at the expense of near-term results
- Do not appreciate the impact of flawed capital structures on shareholder value
- Entrench themselves to protect their jobs and positions
An Experienced Management Team
PORTFOLIO
MANAGERS AND INVESTMENT TEAM
Kevin M. Rendino
Portfolio Manager & CEO
30+ Years Investment Management Experience
5+ Years Public Company Board and Operating Experience
Joined 180 in 2016 after serving as the Value Fund leader at BlackRock
B.S. Boston College
Daniel B. Wolfe
Portfolio Manager & President
15+ Years Investment Management
15+ Years Public Company Operating Experience
Joined 180 in 2004 and led alternative investments at 180’s predecessor company
B.A. Rice University
A.M. and Ph.D. Harvard University
CLIENT RELATIONS
AND FUNDRAISING
Robert E. Bigelow
V.P., Fund Development
Joined 180 in 2017 after investment management and capital raising at Blue River Asset Management
B.A. Yale University
A Track Record of Constructive Activism
CATALYSTS TO IMPROVE
SHAREHOLDER VALUE
EXAMPLE
INVESTMENTS
Investor Relations / Messaging Improvements
Suggested improvements to presentations and transparency of financials, including segment reporting; facilitated introductions to analysts, potential new investors and investor relations firms; encouraged increase in non-deal roadshows and conference presentations.
Business / Corporate Governance / Financial Performance Improvements
Recommended various potential paths to improving financial performance and shareholder value via engagements with boards and managements.
Capital Structure Solutions
Developed structure and provided financing that resulted in simplified capital structures and expanded flexibility for business operations and exploration of strategic alternatives.
Board Representation
Elected to a board upon request following constructive engagement that began as a large shareholder.
Strategic Alternatives
Actively discussed need to sell entity or portions of the entity with management and board members. For TST, chaired strategic alternatives committee of the board that completed sales of company in multiple transactions.
Buybacks/Distributions
Significant buyback initiated after suggestion to board; large distribution of proceeds to shareholders after sale of business units.
Investing with 180 Degree Capital
