ADS - Alliance Data Systems

[vince]

Well, it doesn't really change anything. The most important thing is it fetches a decent price. I'd expect them to divest LoyaltyOne as well later on, but these M&A processes can be quiet disruptive, so I think it's fine to do one deal at a time (and LoyaltyOne probably could use a couple of decent quarters to show it has been turned around). They better move quickly though since it has been very much a sellers market for quiet some time now.

I agree it doesn't change anything except maybe another hit to their credibility.  If you read the call it clearly states they will have detail as to what they were going to do with the assets whereas their release shows that they still have no clue.  The manner in which this executive team communicates with it's investors is embarrassing.  And every quarter they apologize for another miscommunication and then do it all over again.  I sold 25% of my position today......another hit to their credibility

[LowIQinvestor]

Looks like everyone has given up on ADS today & mgmt.
( what have you done for me lately!)

some perspective might be warranted:
This is the same mgmt ( CEO) who helped drive the stock from $50/ share in 2009 to $200 / share in 2018. Not too shabby.

Short term I think traders wanted a sale & stock pop before 2019. So they are all moving on today.

Will be interesting to see if Arlington Value keeps on buying ADS in Q4.

[vince]

Looks like everyone has given up on ADS today & mgmt.
( what have you done for me lately!)

some perspective might be warranted:
This is the same mgmt ( CEO) who helped drive the stock from $50/ share in 2009 to $200 / share in 2018. Not too shabby.

Short term I think traders wanted a sale & stock pop before 2019. So they are all moving on today.

Will be interesting to see if Arlington Value keeps on buying ADS in Q4.

I dont disagree with your premise but measuring their stock price performance from the 2009 crisis might not be the most accurate guage.  And I didnt comment negatively on their performance managing the business, I wouldnt own a large position in it if I didnt think they could realize the potential but they admittedly do a terrible job managing their communications with investors.  Nor do I care for a stock pop, I just want them to take their communications with investors more seriously.  And looks like the market completely agrees....on a day where arguably the stock should have reacted positively, its down pretty significantly

[LowIQinvestor]

Today's price is a gift.
Short term expectations were not met but doesn't change the long term fundamentals of this biz.
30% ROE trading at under 10 PE (e)
We are large buyers of ADS today.

[kab60]

Well, it doesn't really change anything. The most important thing is it fetches a decent price. I'd expect them to divest LoyaltyOne as well later on, but these M&A processes can be quiet disruptive, so I think it's fine to do one deal at a time (and LoyaltyOne probably could use a couple of decent quarters to show it has been turned around). They better move quickly though since it has been very much a sellers market for quiet some time now.

I agree it doesn't change anything except maybe another hit to their credibility.  If you read the call it clearly states they will have detail as to what they were going to do with the assets whereas their release shows that they still have no clue.  The manner in which this executive team communicates with it's investors is embarrassing.  And every quarter they apologize for another miscommunication and then do it all over again.  I sold 25% of my position today......another hit to their credibility

This is the first time they state they're pursuing a sale of the whole of Epsilon. I read a recent Jefferies report (from post Q2 I believe) where they speculated they might only get rid of the agency biz. Pretty clear from the reaction today that most feel the same as you (and boy would a quick sale at a double digit multiple feel good), but I'm not too surprised by the announcement today. With ValueAct involved and management having skin in the game I'm pretty comfortable they're trying to maximize value. That said, I agree their communication could be better, but I think that mainly adds a bit of uncertainty, and I feel we're getting nicely compensated here.

[steph]

I never believed that they would talk about 'big' news in a couple of weeks if they really were already busy selling Epsilon.  Those things you don't preannounce some weeks in advance.
I would certainly have thought that they would give some more information on their thinking about each division and the ambitions they have. 
But coming out and for the first time confirming that they are looking for a buyer for Epsilon is good news. 
If they hadn't talked about big news coming out , this would in fact be big news.

[kab60]

I never believed that they would talk about 'big' news in a couple of weeks if they really were already busy selling Epsilon.  Those things you don't preannounce some weeks in advance.
I would certainly have thought that they would give some more information on their thinking about each division and the ambitions they have. 
But coming out and for the first time confirming that they are looking for a buyer for Epsilon is goo5d news. 
If they hadn't talked about big news coming out , this would in fact be big news.

Agreed it would be very strange if they had preannounced a sale. Which is why I'm also fine they're only adressing Epsilon now. I think it's pretty obvious Loyalty One should be flipped when the metrics look right, but saying these things publicly creates uncertainty internally, and that often leads to some of the best employees leaving.

[flesh]

AFAIK, the specifics of their intentions in the announcement isn't important because I simply can't know what they intended. Many ways to think about it.

Added at 191 today. Huge position, perfectly willing to sell some with a bump to reduce to large position, all at cap gains.

[vince]

AFAIK, the specifics of their intentions in the announcement isn't important because I simply can't know what they intended. Many ways to think about it.

Added at 191 today. Huge position, perfectly willing to sell some with a bump to reduce to large position, all at cap gains.

That is probably the best way to make money in this one even though I would like to strangle him

[Foreign Tuffett]

At first glance selling off the Epsilon division seems like a poor decision. Aren't there significant synergies between Epsilon and Card Services? Don't these synergies provide much of the company's moat?
 

From the last quarterly CC:

"From a technology perspective, regardless of where we wind up on this realignment, we will continue to have the various cousins involved in the card business."

"So for example, providing the technology that drives the loyalty platforms of all of our businesses, whether those assets are within the mothership or sort of outside as a cousin, it’s a pretty straightforward deal, but we will absolutely need to rely on the cousins, for example, the loyalty platform, for example, on the Conversant side, we think that’s going to be a critical new account acquisition tool for us to go out there in the marketplace and source new growth for our customers. So, there will be a number of technology items that will continue to go back and forth between the different divisions, whether some of those assets are within the company or some are out, it’s pretty straightforward in terms of what the services are."