Author Topic: COTY - Coty Inc  (Read 13853 times)

CorpRaider

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Re: COTY - Coty Inc
« Reply #20 on: February 16, 2017, 05:42:29 AM »
Sure.  I own zero but am watching it, just like POST.  It will therefore likely take off, while I continue to buy/own garbage like GM.


tylerdurden

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Re: COTY - Coty Inc
« Reply #21 on: February 16, 2017, 07:18:02 AM »
Sure.  I own zero but am watching it, just like POST.  It will therefore likely take off, while I continue to buy/own garbage like GM.

Haha. We are in the same camp in terms of both names I guess. In terms of the story for Coty, is this mostly about talented management, some from RB I believe, using their magic and turning this around? I didn't see any other potential reason to invest in this name so far.

rogermunibond

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Re: COTY - Coty Inc
« Reply #22 on: February 16, 2017, 08:34:37 AM »
That plus JAB Holding and their three headed management group of Goudet, Becht, and Harf.

http://www.jabholco.com/

valueinvestor

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Re: COTY - Coty Inc
« Reply #23 on: February 16, 2017, 09:27:03 AM »
Decided to start a small position today (less than ~2.5% of portfolio), because it seems the Younique acquisition makes sense. Avon is struggling because they do not have the infrastructure that Loreal, Estee, and Coty has which is why Coty made an offer for Avon, I believe. It is a great way to create products with the infrastructure for Younique, and if brand segmentation needs to be done, it can be done.

Though I am not a big fan of MLM, maybe these folks have a better idea than I do (certainly a better track record). It is selling for ~20x Forward OE/EV (earnings discounted to PV at a rate of 10%). If it needs to averaged down when the time comes, I'm sure I would be happy to do it.

kab60

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Re: COTY - Coty Inc
« Reply #24 on: April 22, 2017, 06:08:16 AM »
I spent a little time on this (I own Revlon), but apart from the obvious integration/execution issues (no wonder with such a big acquisition) it bothers me they have a 2020 adjusted EPS target (some 1,51 USD per share). WTF is up with that. They seem determined to reach it if not organically then through other acquisitions. Doesn't exactly sounds value accretitive. And it gives me pause when the CEO keeps repeating that buying Younique was for strategic reasons. In my book that's usually a red flag and means you're willing to pay too much. Sure, you might get growth when you at the same time divests 6-8% of sales (probably the shitty products), but did you create value or not for shareholders? Not really sure what to think of JAB. I think they did some very expensive (at least optically) acquisitions before. Haven't spent a lot of time on this, the CEO obviously rubs me the wrong way, but at least on first glance he has a very impressive resumé, so I might be completely wrong.

Green King

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Re: COTY - Coty Inc
« Reply #25 on: April 22, 2017, 08:54:47 AM »
I spent a little time on this (I own Revlon), but apart from the obvious integration/execution issues (no wonder with such a big acquisition) it bothers me they have a 2020 adjusted EPS target (some 1,51 USD per share). WTF is up with that. They seem determined to reach it if not organically then through other acquisitions. Doesn't exactly sounds value accretitive. And it gives me pause when the CEO keeps repeating that buying Younique was for strategic reasons. In my book that's usually a red flag and means you're willing to pay too much. Sure, you might get growth when you at the same time divests 6-8% of sales (probably the shitty products), but did you create value or not for shareholders? Not really sure what to think of JAB. I think they did some very expensive (at least optically) acquisitions before. Haven't spent a lot of time on this, the CEO obviously rubs me the wrong way, but at least on first glance he has a very impressive resumé, so I might be completely wrong.

I've also looked at this, looks like they are very good at accounting games and deal promotion. I was wondering if you have done a comparative analysis of this vs Avon products.

On the note of integration/execution issues has what they say they are doing been done by people before them or is this a game changing type of thing?

TIA
GK

kab60

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Re: COTY - Coty Inc
« Reply #26 on: April 22, 2017, 10:15:26 AM »
I spent a little time on this (I own Revlon), but apart from the obvious integration/execution issues (no wonder with such a big acquisition) it bothers me they have a 2020 adjusted EPS target (some 1,51 USD per share). WTF is up with that. They seem determined to reach it if not organically then through other acquisitions. Doesn't exactly sounds value accretitive. And it gives me pause when the CEO keeps repeating that buying Younique was for strategic reasons. In my book that's usually a red flag and means you're willing to pay too much. Sure, you might get growth when you at the same time divests 6-8% of sales (probably the shitty products), but did you create value or not for shareholders? Not really sure what to think of JAB. I think they did some very expensive (at least optically) acquisitions before. Haven't spent a lot of time on this, the CEO obviously rubs me the wrong way, but at least on first glance he has a very impressive resumé, so I might be completely wrong.

I've also looked at this, looks like they are very good at accounting games and deal promotion. I was wondering if you have done a comparative analysis of this vs Avon products.

On the note of integration/execution issues has what they say they are doing been done by people before them or is this a game changing type of thing?

TIA
I haven't done a comparative analysis of Avon. I went with Revlon due to valuation, low float, lack of Wall Street interest and some pretty significant management and compensation changes which indicates Perelman wants to change things around. So far I like a lot of the changes the new CEO has done and indicated, but who knows. As for Coty I believe management itself stated the acquisition of P&G's assets were among the biggest of it's kind in this line of business, but I think it's manageable with the right people in charge. I actually like some of their initiatives (at a cursory glance it seems like they wanna decentralize some stuff and give them their own P&L's which I really like). Just think it's totally flawed to commit to an EPS target almost four years out in the middle of a huge integration proces and making it clear you're sure to hit it - eventually by using the balance sheet which isn't exactly pristine.

Green King

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Re: COTY - Coty Inc
« Reply #27 on: April 23, 2017, 02:16:13 PM »
I spent a little time on this (I own Revlon), but apart from the obvious integration/execution issues (no wonder with such a big acquisition) it bothers me they have a 2020 adjusted EPS target (some 1,51 USD per share). WTF is up with that. They seem determined to reach it if not organically then through other acquisitions. Doesn't exactly sounds value accretitive. And it gives me pause when the CEO keeps repeating that buying Younique was for strategic reasons. In my book that's usually a red flag and means you're willing to pay too much. Sure, you might get growth when you at the same time divests 6-8% of sales (probably the shitty products), but did you create value or not for shareholders? Not really sure what to think of JAB. I think they did some very expensive (at least optically) acquisitions before. Haven't spent a lot of time on this, the CEO obviously rubs me the wrong way, but at least on first glance he has a very impressive resumé, so I might be completely wrong.

I've also looked at this, looks like they are very good at accounting games and deal promotion. I was wondering if you have done a comparative analysis of this vs Avon products.

On the note of integration/execution issues has what they say they are doing been done by people before them or is this a game changing type of thing?

TIA
I haven't done a comparative analysis of Avon. I went with Revlon due to valuation, low float, lack of Wall Street interest and some pretty significant management and compensation changes which indicates Perelman wants to change things around. So far I like a lot of the changes the new CEO has done and indicated, but who knows. As for Coty I believe management itself stated the acquisition of P&G's assets were among the biggest of it's kind in this line of business, but I think it's manageable with the right people in charge. I actually like some of their initiatives (at a cursory glance it seems like they wanna decentralize some stuff and give them their own P&L's which I really like). Just think it's totally flawed to commit to an EPS target almost four years out in the middle of a huge integration proces and making it clear you're sure to hit it - eventually by using the balance sheet which isn't exactly pristine.

Thanks for the reply. Fintwit solved it
<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">It&#39;s funny nobody has found a way to really cut OpEx in cosmetics. You sell products with 70%+ GMs - but have an EBITDA mgn in the teens.</p>&mdash; Shortsighted Capital (@ShortSightedCap) April 22, 2017
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>

This is not like the beer business all brands are very weak. What they are doing is highly risky and capital impairment highly likely. you need a good owner operator with deep skin in the game to reduce risk. Revlon might be a good bet. For me, this is too hard since a decline in revenue will result in a decline in A&P and the businesses fundamental as a whole.

Them trying to game earnings at all cost makes this a scary investment.
« Last Edit: April 23, 2017, 02:24:12 PM by Green King »
GK

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Phaceliacapital

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Re: COTY - Coty Inc
« Reply #29 on: June 12, 2017, 08:10:45 AM »
I actually like this writeup but am not too familiar with the name.

Anyone here with background info that can poke holes in the case?
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