Callouts & quotes from 216+ activist slides

"BR lists its number #1 driver of Non-GAAP operating income margin is from “Scale and Natural OpEx leverage from a SaaS business.” However, Spruce Point does not believe that BR is a high-quality SaaS business, if one at all, given it admits it drives no pricing power and does not report metrics consistent with other SaaS companies such as Net revenue dollar retention or remaining performance obligation, and has just $414m of deferred revenue in relation to $3.7 billion of recurring fee revenue."

"Mr. Prittie’s alleged shortcomings were tied to his perceived failure to come to grips with Tyler and OneMove’s concerns over the Company’s financial status, share price performance, leadership, strategic vision and strategy, corporate governance, CEO compensation, excessive M&A activity, debt leverage to cash flow ratios and the lack of guardrails around senior management decision making."

"Spruce Point believes Broadridge should have ceased capitalization of additional costs with the UBS project last year given delays and cost overruns. As a result, had the latest capitalized conversion and start-up costs been expensed, Broadridge would have been in violation of its “Leverage Ratio” covenant, which limits it to 3.5x Total Debt to EBITDA."

"Current Mettler investors should be aware of the fact that its long-time Audit Chair, John D. Macomber, also served in audit roles at Xerox Corp and Lehman Brothers. The SEC later charged Xerox with accounting fraud, while Lehman Brothers infamously collapsed due in part to creative accounting that concealed its true leverage."

"TIP REIT will be required to fund land capex for the first two years after the spin-off. Thereafter, TIP REIT will be Target Corp’s land developer through its Preferred Vendor Agreement. As such, Target Corp will generate significant free cash flow and will likely deleverage to an A-/A3 ratings profile after two years"

"To summarise, TFS’s mark-to-model approach to biological asset valuations and revenue recognition policies allow it to leverage real capital. Accordingly, we believe that the only factor that would prevent this business from being a Ponzi scheme is whether or not the underlying products are a feasible investment."

"Optically, PGNY would like investors to believe that it is achieving significant operating leverage. In reality, the largest contributor to its operating leverage story has been its aggressive use of stock-based compensation (SBC). Netting out the benefit of SBC uncovers that PGNY’s EBITDA margins are in decline."

"MAXR appears “cheap” on its inflated Non-IFRS metrics. However, Spruce Point’s forensic analysis unravels its aggressive accounting methods used to inflate EBITDA and EPS. Furthermore, when its debt is adjusted for standard credit agency adjustments, we find leverage to be in excess of its 5.8x covenant"

"With the same toxic combination of leverage and cash burn, we believe investors underestimate Nevro’s risk of becoming the next Nuvectra, especially if the FDA takes any action against its product, or if the OIG’s Nov 16th Special Fraud Alert on speakers programs is predictive of what’s coming."

"Land and Buildings sees 70% upside to a base case net asset value of $33 per share, and up to 180% upside in a bull case, that can be realized through a REIT conversion, a tax free spin-off of a lodging C-corp, and a reduction of leverage through asset sales and an MGM China special dividend."

"Arconic originally projected that Firth Rixson would do $2 billion of revenue in 2019. At the same margins as originally projected for 2016 (i.e., conservatively assuming no incremental volume leverage), Firth Rixson will produce approximately 50% less EBITDA than originally targeted for 2019"

"We estimate Casino's LTM leverage ratio is 8.9x. Ideally, a company consolidating results of proportionally-owned companies has the debt spread out among the consolidated companies. That is not the case with Casino - there is a massive gap between what is owned, and what is owed."

"This presents a real strategic risk to Intuit, as the stated rationale for the Credit Karma acquisition and recently announced integrations of the two products was Intuit's ability to “leverage” customer data that was explicitly collected for the sole purpose of tax filings."

"There is massive leverage at EBITDA level. A sole 1% reduction (as % of sales) at Distribution expenses level and 0.5% reduction (as % of sales) at Administrative expenses level would account for USD4.9m of extra EBITDA which accounts for a 61% increase of current EBITDA."

"MSCI's leverage ratio keeps rising and is at a decade high which significantly increases the risk to equity holders. At the current time, we believe it is a recipe for disaster that leverage is rising while client Retention Rate falls and competitive risks increase."

"The chart below shows the performance since 2010 of four of the EM currencies to which AMT has directional exposure, the Brazilian Real, Indian Rupee, Ghana Cedis, and the South African Rand – a hedge fund using leverage for this trade would have been unhappy."

"In this illustration, we assume the JV takes on initial leverage of 5.8x net debt / EBITDA, or $6.9 billion(1), which enables Macy’s to repay debt at the parent-level in order to achieve a target leverage ratio of 3.5x Adjusted Debt / EBITDAR at the OpCo."

"A former Nevro executive shared his dismay at patients being “flipped” and painted a sordid picture of “bad actors” hustling patients into the company’s stimulators and threatening to cut off their opioid refills as leverage to force them into the device."

"Leidos management has emphasized that a cornerstone of its Dynetics acquisition was to leverage itself to hypersonics growth. Yet, in less than a year after the acquisition, there is already evidence to suggest investors could be set for disappointment."

"By factoring in the U.K. pension debt, we estimate Saputo's true Net Debt / EBITDA leverage to be 3.5x. Looked at another way, with over $4.5 billion in net debt, each manufacturing facility is indebted $68m and every employee by almost $240k."

"Overall, we find that closed-end PERE [private equity real estate] funds have underperformed listed REITs, even before adjusting for risk, leverage, illiquidity, and the uncertain investment timing associated with unfunded capital commitments."

"In our opinion, GFL is showing investors an inaccurate measure of its leverage. Per its own IPO Prospectus, its lenders evaluate it on a "Net Funded Debt" measure, and not "Total Gross Debt" as depicted in its recent earnings press release."

"CEO Dominik Richter's private company borrowed massively against his HelloFresh’s shares to fund highly leveraged real estate investments by his brother Benedikt Richter, apparently triggering margin calls amid a steep share price drop."

"It is self-evident that Huue could only “leverage Ginkgo’s platform” if it’s plied with cash that will be recycled back as fictitious revenue, and we question whether it’s even an active startup or a carcass being exploited as a front."

"At or around the current valuation, we believe Match should be using 75% or more of its free cash flow, plus some or all of the approximately $900 million of available capacity under its 3.0x net leverage target, to repurchase shares."

"Beyond the clearly negative value implications, this lack of operating leverage is damaging from a business perspective because it masks inefficiency while impairing the Company’s flexibility to make sound investments in R&D and M&A."

"We do not believe that Saputo deserves a multiple commensurate with the larger branded players in the industry such as Danone or Kraft Heinz given its weaker margin profile, declining transparency, high leverage and fragile dividend."

"We believe companies should generate significant operating leverage on revenue growth, evidenced by incremental margins that are substantially higher than consolidated margins – especially software companies with high gross margins"

"We believe companies should generate significant operating leverage on revenue growth, evidenced by incremental margins that are substantially higher than consolidated margins – especially software companies with high gross margins"

"Management plans to use all free cash flow after dividends to repurchase stock and will increase leverage to 1.8x Lease Adjusted Net Debt / EBITDAR from 1.6x. We estimate share repurchases will be ~$10bn to $13bn from 2012 to 2015"

"While Align has relative scale in manufacturing, it has not been pressured to leverage its scale to match competitors' prices until now, as it was effectively the only major player in the clear aligner space until the mid-2010s."

"Although there are some differences in opinion regarding friction costs, leverage and potential alignment issues, the key disparity between Pershing and the Company’s views was regarding the Valuation of Pro Forma McDonald’s..."

"Pro forma TWC, as shown in Exhibit 3.43, is expected to have total debt of approximately $15.8 billion as of January 1, 2006 or 3.6x net debt/2005E OIBDA (with covenants allowing for maximum leverage of 5.0x total debt/OIBDA)."

"AOL (assuming initial maximum leverage of 2.5x OIBDA or $4.8 billion) is projected to generate approximately $4.1 billion of free cash flow over the next three years and $7.6 billion of cash flow over the 2006 - 2010 period."

"To keep perpetuating its growth story, USCR is growing more and more dependent on larger acquisitions and leverage to fuel its growth. What’s scary is that its current Net Debt / Adj EBITDA of 3.8x exceeds pre-crisis levels."

"The current stock price is so dislocated that the Company should immediately start using a portion of its cash flow to repurchase shares (e.g., 50% with the other 50% for debt paydown) until it reaches its leverage target."

"By primarily using stock options to incentivize management, the Board has created an environment that has favored excessive risk-taking, which can be seen by the excessive pace of M&A and the reluctance to reduce leverage."

"BNY Mellon has a unique opportunity to leverage its size, data, systems, expertise, lack of trading conflicts, and low public profile to support regulatory bodies and official institutions with similar complex assignments"

"PowerSchool is among the most highly levered companies in its industry; a standout where many peer companies are net cash. Only TWOU, a company that has recently been linked to financial challenges, has worse leverage."

"So we believe, based on some experience on conversions or migrations that we've already done, that there is a lot of potential operating leverage, not necessarily in the R&D side, but more on the operating costs side."

"We estimate that, assuming management has tolerance for conservative leverage, Amdocs has sufficient debt capacity to grow sales by 2.9% annually over three years via acquisitions even if it records 0% organic growth."

"Management has stated its investment grade rating is a top priority and above capital return. Yet, CTC has continued to buyback shares while its leverage remains above the level required to prevent a credit downgrade"

"Xerox should leverage its position of power – being a critical revenue stream for Fuji Xerox and Fuji Xerox being a large part of Fuji – to renegotiate or eliminate the one-sided Fuji Xerox joint venture agreements"

"After a reckless and failed acquisition spree from 2008-2012, Kratos teetered on credit default before divesting a key division to deleverage, and pivoting focus to hype its unmanned systems (aka drones) business."

"Assuming Valeant de-levers and maintains 3.5 turns of leverage, allocates free cash flow to acquisitions, and grows at a rate reflective of the strength of its franchises, the stock is tremendously undervalued"

"Assuming Valeant de-levers and maintains 3.5 turns of leverage, allocates free cash flow to acquisitions, and grows at a rate reflective of the strength of its franchises, the stock is tremendously undervalued"

"MSCI's SEC Form ADV 2A references that it has just 84 employees but through its foreign affiliates “leveraged” 600 ESG employees including ~250 analysts and researchers. How are these costs allocated to ESG?"

"We believe PGNY needs the clinics more than they need PGNY and that short, 1-year clinic contracts only increase clinic network negotiating leverage, which we believe may pressure PGNY margins going forward."

"It is prudent for CTC to reduce its leverage to maintain its current rating. A downgrade would result in a rating on the cusp of non-investment grade (junk) status and potentially higher cost of capital."

"HLF took on substantial leverage in 2014 to fuel an aggressive buyback program and bolster a falling share price. With an $1B credit facility maturing in March 2016, Herbalife is running out of options"

"HLF took on substantial leverage in 2014 to fuel an aggressive buyback program and bolster a falling share price. With an $1B credit facility maturing in March 2016, Herbalife is running out of options"

"HLF took on substantial leverage in 2014 to fuel an aggressive buyback program and bolster a falling share price. With an $1B credit facility maturing in March 2016, Herbalife is running out of options"

"Appointing Mr. Orr as COO and purportedly planning to leverage his knowledge of PSR does not change the fact that Norfolk Southern’s results show that “resilience railroading” and PSR are incompatible."

"HLF took on substantial leverage in 2014 to fuel an aggressive buyback program and bolster its falling share price. With a $1B credit facility maturing in March 2016, Herbalife has fewer options today"

"According to JP Morgan's analysis, Hess International Co's leverage would fall within the range of Hess's applicable proxy peers and would receive an investment grade rating from the rating's agencies"

"We are alarmed that the rate of increase in cloud storage costs is in decline. We find no indications that Tempus expected to be able to leverage cloud costs at scale, so why are costs not keeping up?"

"Stable growth combined with an appropriate capital structure, ongoing share repurchases, and clear investor communication of leverage target and buyback strategy has led to significant outperformance."

"AtriCure has been unable to demonstrate any operating leverage, let alone a trivial accounting profit, even as its core products have saturated their addressable market with little direct competition."

"HLF took on substantial leverage in 2014 to fuel an aggressive buyback program and bolster its falling share price. With a $1B credit facility maturing in March 2016, Herbalife has fewer options today"

"Content could maintain an investment grade profile with initial leverage of 3.75x total debt/OIBDA (adjusted leverage of 4.1x) and a target leverage ratio of approximately 3.25x - 3.50x 2005PF OIBDA."