Borrowing this from Maran Capitals Q419 letter:
Atento (ATTO)
Atento was another frustrating holding last year. I think intrinsic value is in the teens per share, yet over the last few months, the stock fell from ~$8 to ~$4 on no major change in the company’s fundamentals.
I never have a single “price target” for any of my investments. While I do estimate intrinsic value of companies I study and own, I try to think probabilistically, and in ranges. I can come up with what I think are reasonable scenarios that put Atento anywhere from ~$8/sh to ~$25/sh over the next few years. It is very hard for me to come up with a scenario that justifies the current ~$4 price. ATTO is trading at around 3x EBITDA on estimates of trough EBITDA, and at under 5x FCF (after maintenance capex). I think this is very far below private market value for the business. Of course, it could trade lower in the near term, but I am confident that the business is less volatile than the market seems to think it is, and that the business is worth considerably more than where shares are currently exchanging hands.
The company, controlled by a 66%+ owner who I believe to be rational and committed to a successful outcome, instituted a share buyback in the second half of last year. At current prices, share buybacks are the single best use of the company’s copious FCF generation, above M&A or growth capex.