Author Topic: COTY - Coty Inc  (Read 13782 times)

LowIQinvestor

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Re: COTY - Coty Inc
« Reply #10 on: February 10, 2017, 01:02:27 PM »
I'm new to Coty but this transaction with Younique (a makeup MLM) looks insane to me:

https://www.coty.com/news/coty-enter-partnership-younique-leading-online-peer-peer-social-selling-platform-beauty

"Coty will acquire a 60% stake of Younique for approximately $600 million in cash which will be funded through a combination of cash on hand and available debt facilities with marginal impact on Coty’s leverage ratio."



valueinvestor

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Re: COTY - Coty Inc
« Reply #11 on: February 10, 2017, 01:41:27 PM »
Glad I'm not the only one; Herbalife of makeup?

Surprisingly it doesn't seem to be a bother; if they can achieve a high rate of return on their investment over a long-term. Younique already has $400M in revenue, and Coty probably thinks there are considerable synergies involved. However there are inherent limitations to MLMs where they cannot grow for decades on end because soon their distributor/presenter base will saturate. The only way to grow by then is to rely on the promotion of the product.

However there are probably other ways to invest $600M? Maybe taking a position in an undervalue beauty/cosmetics company? Unless the reason why they invested is that they believe an annualized return of >50% on their investment is certain.

Now that I think about it .. isn't Avon an MLM company? Maybe they think that Younique has a competitive advantage over companies such as Avon? Maybe even better economics?

« Last Edit: February 10, 2017, 02:07:59 PM by valueinvestor »

solobz

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Re: COTY - Coty Inc
« Reply #12 on: February 10, 2017, 10:39:27 PM »
I've looked at this a couple times since the P&G deal. I want to be interested in it given the sell off, but seems like a show me story at this point. Management seems to have an appetite for more M&A and it's hard for me to get comfortable with it until they can show some progress on the current product portfolio. That said, I don't hate selling some OTM puts on it.

valueinvestor

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Re: COTY - Coty Inc
« Reply #13 on: February 11, 2017, 11:45:01 AM »
Agreed. More research must be done at this point to see if this business can be killed, and if so, how?

CorpRaider

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Re: COTY - Coty Inc
« Reply #14 on: February 15, 2017, 11:44:33 AM »
Apparently JAB is a buyer @ around $18.50.
« Last Edit: February 15, 2017, 01:50:15 PM by CorpRaider »

tylerdurden

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Re: COTY - Coty Inc
« Reply #15 on: February 15, 2017, 01:28:03 PM »
Is there a particular reason for the price jump in last two days? I don't think Michael Burry filed a 13F for last quarter since the AUM fell under the threshold so we won't know whether he will be sticking with this going forward.

valueinvestor

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Re: COTY - Coty Inc
« Reply #16 on: February 15, 2017, 02:54:17 PM »
At the moment, I've decided to move on and waiting for a better entry point. Not entirely sure why the stock has risen over the last few days, but it would be nice to know.

CorpRaider

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Re: COTY - Coty Inc
« Reply #17 on: February 15, 2017, 04:37:47 PM »
I dunno, JAB filed some forms 4 indicating they took down like $80MM in open market purchases of stock since 02/10/17, but I'm sure you saw that.

valueinvestor

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Re: COTY - Coty Inc
« Reply #18 on: February 15, 2017, 06:51:40 PM »
lol I haven't lmao, not sure why.... thanks again. You've been great helping with Coty Inc.

jouni1

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Re: COTY - Coty Inc
« Reply #19 on: February 16, 2017, 01:33:07 AM »
Apparently JAB is a buyer @ around $18.50.
i continue to hold, bought at the last time we were at 18.5. everything seems to be going as planned.