Sep 2020: XPO Logistics – Picks, shovels and roll-ups

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XPO Logistics – Picks, shovels and roll-ups

Sep 2020 ($89)

 

In investing, as in life, pragmatists rule. Stocks that we might have dismissed a decade ago, we today find ourselves offering more benefit of the doubt to especially where an owner-manager is heavily involved. We dismissed many acquisition-orientated businesses earlier in our careers – some for good reason. But when they go right aka in the right hands, roll-ups can deliver huge investor IRRs (Liberty Group, AB Inbev, Teledyne et al).

Eyes wide open

So, with our eyes wide open, we offer a new roll-up to consider, US-based XPO logistics. XPO first came to our attention thanks to our work on United Rental (Ashtead’s US competitor) – itself a very successful roll-up. XPO was founded by serial entrepreneur/career CEO Bradley Jacobs in 2012. Jacobs (an oil arbitrager early in life) has a phenomenal track record as Founder, CEO (and ultimately seller) of both United Waste and United Rentals. XPO Logistics has a short corporate track record but the brains of the operation, Jacobs, has an exceptional and long pedigree.

Fig.1: More than a one hit wonder

  Source: Money Inc

XPO is a global logistics and freight transport roll-up of considerable success (shares up 26% cagr since 2012). We elaborate on and outline the merits of XPO in this note. Crucially Jacobs was very deliberate in targeting a fragmented market with growth opportunities at the outset. He also picked a sector – logistics – that will definitely still exist in 10 years’ time. Jeff Bezos would approve.

“I frequently get the question, ‘What’s going to change in the next 10 years?’ And that is a very interesting question.” “I almost never get the question: ‘What’s not going to change in the next 10 years? And I submit to you that this second question is the more important of the two, because you can build a business strategy around the things which are stable over time” – Jeff Bezos

We have read interviews and presentations showing Jacobs was thoughtful in targeting the logistics industry, highlighting the potential for scale to sustain higher margins. More recently, Jacobs has also shown that he is that rare thing, an excellent operator and a good capital allocator – He has done no acquisitions since 2015 and bought back 27% of his stock in 2018 shows an attractive trait.

XPO has multiple logistics businesses but its core ‘LTL’ business is the jewel. LTL has a pure-play peer of similar scale (Old Dominion) whose EV is twice that of the entire XPO group. We smell value here, with XPO possibly trading on at little as 8x earnings a few years out.

Internal friction – grist to the mill

Longstanding clients might have heard anecdotes of the internal ‘friction’ that lies within the research process at Holland. One of us is a glass half empty guy, the other is glass half full. The evolution of our thinking on XPO is therefore instructive. We initially thought “this guy Jacobs is right up our street, the stock could triple” to becoming disappointed at the ‘Stock Promoter’ aspect of him along with what seemed a less than ideal quality of earnings. We now find ourselves meeting somewhere in between. We still really respect Jacobs’ track record and his clarity of purpose. We also see the value in XPO’s best business (LTL) and the rationale in his roll-up plan. On the assumption that he is a man of integrity, we find our early enthusiasm returning. In short, XPO could be a great investment, for those who invest with their eyes wide open. Let’s also remember the purists who cautioned against Henry Singleton’s unorthodox approach to capital allocation back in the 1970s and missed out on his phenomenal returns.

A pragmatic look at a fascinating business (and its owner)

We have read extensively on Bradley Jacobs and XPO and have run the numbers on the company’s potential earnings power and it peer valuations. We have tried to keep this piece brief and offer this note as a gathering point on our readings/starting block for clients to dig deeper.

Bradley Jacobs, a roll-up maestro?

In [Appendix 1 (hyperlinked[1])], we offer some newspaper profiles and transcript excerpts that give excellent background into Jacobs’. His track record as an arbitrager and his many reincarnations as an Owner Manager are instructive.

Of note:

  • The subtle but important similarities with all his previous forays from oil trading to building the United Waste and United Rentals businesses from scratch (as he says himself “its all just moving stuff”)
  • We are impressed with the clarity in terms of what he set out to do with XPO in 2011 vs. what he has achieved. Early on, Jacobs saw the need for consolidation and how as a capital provider he could create value by consolidating select parts of the logistics supply chain, by greasing it with capital and investing in technology
  • Additionally whilst having to accept the need for some ownership of assets in this industry Jacobs’ instinct is (pleasingly) capital light
  • A dynamic, opportunistic operator and allocator.

    The evolution of XPO suggests Jacobs is a dynamic operator with many of the attributes of ‘Outsider’ CEOs (see Appendix 1). Whilst XPO started out seeking the capital light freight brokerage businesses, when the opportunity arose it quickly moved to buy more asset-based Con-Way (inside which the LTL business resided). Importantly the targeted margin expansions have been realised (LTL +$200m or +c.300pp of margin since purchase). The result is an XPO division with excellent operating metrics and the potential for further profit improvement

  • Close observers will see that Jacobs is something of a stock promoter, not a trait we are normally attracted to. A pragmatist would counter that having the capital markets on your side is a required trait of a roll-up when it is in acquisition mode. We remind you he has ceased all acquisitions since 2015 and reduced the share count by 27%. At one stage when the shares were depressed even offering to put many divisions up for sale.
Yes, roll-ups can be dangerous in the wrong hands

We simply would not be writing this note and deeming the shares interesting to our clients if the CEO was not also the Founder and 17% owner (with the vast majority of his wealth in this stake). In all investments, but especially in roll-ups, Owner Managers matter – period. Even great investors can get sucked in by the growth on offer from roll-ups. In [Appendix 2], we offer some third party reflections on the disastrous roll-up that was Valeant and remind investors that the benchmark for success are Singleton and Malone. To state that XPO is different is of course dangerous. What is key we think is to look for why some roll-ups have strong business rationale and some do not. Malone’s empires built scale in utility type income streams. Valeant was a price gouger. XPO consolidation logic we think is sound. The lasting strength of premium margins that his consolidation has helped establish in United Waste and Rental is notable.

XPO – What’s to like in this disruptor in third party logistics, and LTL freight?

We mentioned stock promotion above and true to form; XPO likes to spoon feed investors as per the 108 page (!) Q2 2020 corporate presentation. Actually, the document is an excellent summary of the bull case on the company and is very informative (see excerpts and link to entire presentation in [Appendix 3]).

Of note:

  • Global logistics is indeed an industry ripe for disruption and innovation. This is an industry whose costs are largely labour and fuel. XPO is a disruptor with a clean slate and like its highest return peers, is non-unionised. Less than full Load (LTL) freight, the core business, is an attractive business with c.25% returns on capital
  • XPO is #1 or #2 in US LTL and European logistics. Importantly, XPO mainly avoids the FL (Full load) trucking business sticking with the more lucrative LTL (Less than full Load), logistics and freight brokerage businesses
  • XPO is notably not in the parcel delivery business either. Again it has sought a niche in the last mile delivery of bulk items (it is US market leader)
  • It may surprise readers that XPO spends a huge $550m (3.5% of sales) annually on technology. This is not a private equity levered roll up but we wonder if rather more analogous to our friends at Melrose (Buy, Improve, Keep)
  • North American LTL is 55% of group profits and is the backbone of the business. Pure-play peer Old Dominion (with margins 26%, a 7pp premium over XPO) suggests that XPO margins are credible and thus allays some of our quality of earnings worries. Dominion and XPO’s LTL divisions are of similar scale, yet Dominion’s shares carry 3x the XPO multiple
Caveats/Glass half empty, or a worrier’s list of concerns

XPO has not escaped the short sellers, and a significant ‘sell’ report published in late 2018 proved influential. Some of the points raised were pertinent but the report struck us as overly sensational. The shares collapsed and Jacobs reacted with a sizable share buyback + commencing a strategic review of its non-LTL business. We highlight some of our early thoughts on earnings quality and link to the sensational short-seller’s report in [Appendix 4].

Of note:

  • Jacobs is a stock promoter. But maybe that’s a key requirement as you have to keep the capital markets ‘on side’ for a business of this nature that uses the capital markets during its expansion
  • We have unearthed several quality of earnings red flags that cannot be ignored:
    1. Property sales are included and overstate last year’s LTL divisional profit by c.$110m. Without those gains, LTL margins would have stayed flat YoY at 20%
    2. XPO has very material Accounts Receivable factoring. In 2019 it sold $2.2bn in receivables as shown in Appendix 4. This would usually cause us much pause. But, if you have read Jacobs’ original investor pitch transcript (Appendix 1), he stated he thought factoring safe in this sector when bad debts run at less than 1%. Indeed he saw finance provision as something needed to build scale when trucking sub-contractors need to be paid before client bills may be settled
    3. Pension gains were also brought through the P&L as core profits!
  • Competition: Especially in asset-light areas has increased a lot – see Uber Freight. We include a useful trade article for context on this
Pictures and words that help tell the story

Before we delve into XPO’s core division in the next section, we offer a little context on the markets in which the company operates and its culture. The following extract from the company presentation and quotes from its CEO, we think, are telling to those investors that know what they seek. In brief, in XPO we have:

  • A resilient sector
  • Organic profit growth potential
  • An asset allocator who knows exactly what he is doing
  • A stated desire to look for asset light and high return niches in a sector dominated by asset intensity and low returns

Fig.2: Pictures that tell a story

US E-COMMERCE LOGISTICS MARKET S in blllions $81 2017 . 9910 $94 2018 $143 2023E Machine generated alternative text: REVENUE BY MIXI Asset-Based 31% Asset-Light 69%
—$700 million to $1 billion pool of company- specific profit growth opportunities • Four revenue levers: pricing analytics, XPO ConnectTM XPO DirectTM and European cross-selling • Six cost levers include XPO SmartTM, LTL optimization and logistics automation, among others
Machine generated alternative text: US TRUCK BROKERAGE INDUSTRY PENETRATION OF TOTAL FREIGHT INDUSTRY (0/0) 19%

Machine generated alternative text: TOP LTL PROVIDERS BY REVENUE 20191 $ in millions FedEx Freight Old Dominion Freight Line YRC Freight Estes Express Lines UPS Freight ABF Freight System SAIA LTL Freight R + L Carriers Southeastern Freight Lines $7,454 $4,055 $3,841 $3,049 $2,818 $2,094 $1 ,787 $1,718 $1 ,242  Source: XPO Q2 20 investor presentation

Fig.3: Words that help tell the story

In my first 50 to 100 deals, I made a lot of mistakes. Some of those mistakes were not attaching high enough priority to the quality of the people. Because you can take a company that’s sleepy and turn it isn’t an energetic company by infusing energy and motivation and compensation plans and getting people pumped, understanding they’re part of a bigger thing or a bigger mission. You can’t buy a company that’s got a dishonest culture and turn it into an honest culture.

After I stepped down as chairman of United Rentals in 2007, I started looking for my next big thing. I studied a lot of different industries, and I ended up concentrating on transportation and logistics. It’s larger and more fragmented than the industries I’ve been involved with in the past. It’s more than $3 trillion worldwide. Once I settled on transportation, I first looked at an asset-heavy trucking company roll-up, but I couldn’t figure out a way to create the kind of shareholder value I was looking for. I wanted a higher return on capital. Then I discovered C.H. Robinson and Expeditors International of Washington. C.H. Robinson is the leader in truck brokerage, and Expeditors is the largest U.S.-based freight forwarder. I love these two companies. They’re both non-asset based, which is a business model I understand because of my oil brokerage days” – Brad Jacobs, 2011

“I actually like cold-starts better than acquisitions because the return on capital is generally higher.

One big issue is the time lag between accounts receivable and accounts payable. A trucker needs to get paid quickly. They’d like to get their money in a week, which is faster than the shipper will pay. The shipper might pay six to eight weeks down the road. That’s not good enough for the trucker. The key is to fund that gap. A lot of brokers hit a ceiling where they can’t finance growth.

We were highly leveraged in the last two companies I ran. This time it’s a non-asset business, so I don’t see the justification for the same level of leverage right now. I’m happy to borrow against the receivables, though, because the write-offs in this industry are typically less than 1%.

Working capital and growth capital are pretty close to a magic bullet.

It was kind of shocking to me, when I started studying the industry, to see some companies turn down as many as one out of five customer calls. If you can’t fill a load you lose the sale, and you’re not at the top of the customer’s call list anymore. The turn-down rate should decrease as the universe of accessible carriers increases. With more volume, we should also be able to negotiate better discounts with the carriers, which should improve margin from another direction.” Source: XPO

‘Less Than Load’ (LTL): The jewel

Our time spent understanding the LTL division inside this company was a key factor in helping us assess the potential undervaluation of XPO group. XPO’s market position in LTL and the quality of its operating metrics we think more than underpins the valuation of the whole company.

Fig.4 shows a summary of how the company presents its profit by division. Later we show that these profit figures are flattered by one-offs and our more prudent ‘owner earnings’ makes relevant adjustments.

Also shown at the bottom of Fig.4 is XPO’s closest pure-play peer, Old Dominion (with very similar revenue base to XPO’s LTL business but with slightly higher margins). It enjoys an enterprise value double that of the entire XPO group.

Fig.4: A simplified P&L and valuation comparison with other LTL players

 Source: Holland Advisors

LTL EBIT margins vary hugely across the industry as shown above in Fig.4. With labour, c.40% of XPO’s LTL cost base, it is thus notable that the lowest margin businesses such as YRC are unionised whilst the best in class (Old Dominion and XPO) are not. Keeping labour costs under control and building network scale is crucial to operating leverage. This was a theme in Jacobs’ first listed roll-up Waste Management too. As a new entrant starting from scratch, there too, he was much better positioned to fend-off the ‘Teamsters’ attempts to organise collective bargaining for its drivers. The ability to further reduce labour costs (through technology efficiencies etc.) is central to the group’s targeted margin expansion. Labour costs efficiencies could be up to $300m of the touted $700m-$1bn EBITDA growth XPO is targeting in coming years.

Fig.5: LTL labour costs are key

“in LTL, we have about $1.7 billion in labor costs. Really, we have a vision to be able to run the set of business we have right now at $100 million to $300 million less labor costs over time.” – Bradley Jacobs Q1 2019 (emphasis ours)

Top 25 LTL Carriers: 2002 ($19.4 Billion) CAGR - 4.4% ODFL Non-Union 52.1% Source. Transport Topics, American Trucking Associations and ODFL estimates North America LTL only Top 25 LTL Carriers: 2019 ($40.5 Billion) ODFL Union 25.9%  Source: Old Dominion investor presentation

Upside potential to profits

Swallowing company guidance for future profit targets is also something we do not do very often. We do however like to ask the question of ‘what if?’ and ‘why?’ i.e. what if such targets were achieved and why are such targets being given and by whom? Indeed it was this very thought process that lead us to our recent piece on Melrose (Nanny McPhee). The Melrose team have strong credibility on achieving turnaround targets that they have just chosen to reinstate. That fact, we saw as significant. That Mr Jacobs is a promoter we are happy to accept, but as 17% shareholder he need not target an increase in EBITDA from XPO’s current operations of $700-$1bn (i.e. a 50-75% uplift). Our valuation work below merely observes ‘what if’ i.e. what if such an uplift were achieved? The answer is that XPO would be valued at c.8x earnings. In fact, this estimate is too low as we have re-levered the group to the current 3.5x EBITDA level but not used that extra $3bn of debt for any purpose. Clearly these funds either used for buy backs or new roll-up deals would add further value.

Valuation

We have cited Will Thorndike, author of Outsiders, many times in prior work. Thorndike’s work has helped us to frame the common characteristics of the great owner managers[2].

Thorndike astutely lists many common traits of Outsider CEOs such as pragmatism, rationality, flexibility, frugality, patience and humility (that narrows the field down just a bit). On the other side of the ledger, Thorndike also points that that his chosen Outsiders were generally not ‘promotional’ in how they went about their business. Jacobs fails this latter criteria. However we might be willing to give him a pass on this as by design roll-ups require a level of capital market support – especially in the early years.

So, what’s XPO equity worth?

XPO’s share price is today -25% below its Q4 2018 peak when a short-seller report and worries about the US economy and competition gained prominence. A close look at Fig.4 earlier shows that the non-LTL divisions (i.e. logistics and brokerage) have seen some margin erosion last year and even in LTL, clean profit growth was actually quite minimal. That all said, the group’s enterprise valuation divergence still looks significant. Additionally Jacobs’ suggestion of $700-1bn profit upside is seemingly dismissed by markets.

We have taken two approaches to assessing XPO’s intrinsic value. On an ‘owner earnings’ basis (the company helpfully discloses its maintenance capex) we think the stock is trading on perhaps c.14.6x clean 2019 owner earnings. That is after prudently adjusting headline profits downwards for ‘sale and leaseback’ and working capital outflows. But such a base case is on a 2019 run-rate of earnings, i.e. before the $700-$1bn EBITDA uplift that is outlined by company in coming years. By the way, only 20% or about $150m of that growth is suggested to come from the North American LTL division. Seeing greater profit margins in the logistics operations we think might get Mr Market’s attention. For completeness, were that guided growth to materialise, the earnings multiple falls to an interesting 7.6x.

We start with our ‘clean’ EBITDA (i.e. without the flattering sales/leaseback and factoring of receivables) and layout a simplified summary of what a future earnings for XPO might look like. (NB: As stated above we have not utilised the extra $3bn of leveraged assumed).

Fig.6: Owner Earnings

  Source: Holland Advisors

The other simpler way to look at XPO is again in comparison to its peer Old Dominion (ODFL). ODFL is a pure play LTL trucking business that, based on our reading, looks to be a very high quality business indeed. ODFL enjoys best in class margins (26% vs. XPO at 19%) but even so, its EV is almost double that of the entire XPO group (which remember includes LTL plus logistics plus freight brokerage).

Conclusion

We try to have a decent investment process that helps up find businesses that excel in the operate, generate and allocate functions. Sometimes explaining the opportunity in front of us is easy, sometimes it is a little more messy – the latter often being the case when more maverick Owner Managers are being considered. Our attraction to XPO mostly comes from Jacobs’ past success and the fact that Mr Market is less impressed with him today than once was the case. That the logistics industry is the pick and shovel of the digital world is not lost on us either. In 2025 an Amazon drone might deliver your paracetamol, but not your new fridge. Logistics is a resilient sector and we are interested in what an aligned Owner Manager can do cherry-picking assets within it.

Buy XPO

Andrew Hollingworth & Mark Power

The Directors and employees of Holland Advisors may have a beneficial interest in some of the companies mentioned in this report via holdings in a fund that they also act as advisors to.

Appendix 1 – Understanding Bradley Jacobs

WSJ profile in full – https://www.wsj.com/articles/bradley-jacobs-has-acquired-more-than-500-companies-heres-what-he-has-learned-11572228061

Forbes profile – https://www.forbesindia.com/article/cross-border/bradley-jacobs-the-maestro-of-mergers/50127/1

Trade Press profile – https://www.dcvelocity.com/articles/29993-accomplishing-the-impossible-interview-with-brad-jacobs

What he set out to do – a fascinating transcript from the IPO roadshow in 2011 – https://www.sec.gov/Archives/edgar/data/1166003/000095012311069724/k50546dadefa14a.htm

Appendix 2 – The dark side of Roll-ups

There is a dark side to roll-ups. In the wrong hands, serial acquisitions bring opportunities to mask underling company weakness and opaque acquisition accounting offer opportunities to under-state growth and profitability.

Warren Buffett’s 2014 Annual Letter also touched on the subject.

“In the late 1960s, I attended a meeting at which an acquisitive CEO bragged of his “bold, imaginative accounting.” Most of the analysts listening responded with approving nods, seeing themselves as having found a manager whose forecasts were certain to be met, whatever the business results might be.

Eventually, however, the clock struck twelve, and everything turned to pumpkins and mice. Once again, it became evident that business models based on the serial issuances of overpriced shares – just like chain-letter models – most assuredly redistribute wealth, but in no way create it. Both phenomena, nevertheless, periodically blossom in our country – they are every promoter’s dream – though often they appear in a carefully-crafted disguise. The ending is always the same: Money flows from the gullible to the fraudster. And with stocks, unlike chain letters, the sums hijacked can be staggering.

At both BPL and Berkshire, we have never invested in companies that are hell-bent on issuing shares. That behaviour is one of the surest indicators of a promotion-minded management, weak accounting, a stock that is overpriced and – all too often – outright dishonesty.” 

http://mastersinvest.com/newblog/2016/3/21/xtbc1eylyoj4gjik5hbuuv5minzq5z

The Economist from 2015 – Serial thrillers, December 19, 2015 – https://www.economist.com/business/2015/12/19/serial-thrillers

Appendix 3 – An overview of the XPO business

XPO corporate presentation – https://investors.xpo.com/static-files/672f8b6d-382d-4e08-a43a-0298821fb1d8

Appendix 4 – What goes wrong?

Broker wars – Trade press article on increased competition in Freight Brokerage

https://www.freightwaves.com/news/the-broker-wars-big-bets-pit-new-entrants-against-incumbents

That short sellers report – https://www.sprucepointcap.com/xpo-logistics-inc/

2019 10k red footnotes

Direct operating expense in 2019 was $5,679 million, or 34.1% of revenue, compared with $5,725 million, or 33.1% of revenue, in 2018. The year-over-year increase as a percentage of revenue primarily was driven by higher personnel costs to support growth in our North American contract logistics, panially offset by lower temporary labor, and higher depreciation expense in our logistics segment. Additionally, 2019 and 2018 included SIIO million and $6 million, respectively, from gains on the sale of property and equipment.

Under the new program, sales of receivables transfer control to the Purchaser and therefore are accounted for as a reduction in accounts receivable. We service the receivables we sell on behalf of the Purchasers, which gives us visibility into the timing of customer payments. The benefit to our cash flow and includes the difference between the cash consideration in the table below and the amount we collected as a servicer on behalf of the Purchasers. In 2019 2018, we collected cash as servicer of $2.168 billion and $119 million, respectively. Information related to the trade receivables sold was as follows: (In millions) Securitization programs (l) Receivables sold in period Cash consideration Deferred purchase price Factoring programs Receivables sold in period Cash consideration 2,231 2,095 135 858 Years Ended December 31, 2018 231 179 52 663 2017 119 119 (I) Receivable transfers under the securitization programs are accounted for as either sales or secured borrowings. In the prior program, a portion of the transfers were accounted for as secured borrowings while under the new program, all transfers are accounted for as sales. This change had fre effect of increasing fre amount of trade receivables we reported as sold in

Some of our customers may experience financial distress, file for bankruptcy protection: go out of business, or suffer disruptions in their business and may be unable to pay us. In addition, some customers may not pay us as quickly as they have in the past. causing our working capital needs to increase; Source: XPO 2019 10-k

Disclaimer

This document does not consist of investment research as it has not been prepared in accordance with UK legal requirements designed to promote the independence of investment research. Therefore even if it contains a research recommendation it should be treated as a marketing communication and as such will be fair, clear and not misleading in line with Financial Conduct Authority rules. Holland Advisors is authorised and regulated by the Financial Conduct Authority. This presentation is intended for institutional investors and high net worth experienced investors who understand the risks involved with the investment being promoted within this document. This communication should not be distributed to anyone other than the intended recipients and should not be relied upon by retail clients (as defined by Financial Conduct Authority). This communication is being supplied to you solely for your information and may not be reproduced, re-distributed or passed to any other person or published in whole or in part for any purpose. This communication is provided for information purposes only and should not be regarded as an offer or solicitation to buy or sell any security or other financial instrument. Any opinions cited in this communication are subject to change without notice. This communication is not a personal recommendation to you. Holland Advisors takes all reasonable care to ensure that the information is accurate and complete; however no warranty, representation, or undertaking is given that it is free from inaccuracies or omissions. This communication is based on and contains current public information, data, opinions, estimates and projections obtained from sources we believe to be reliable. Past performance is not necessarily a guide to future performance. The content of this communication may have been disclosed to the issuer(s) prior to dissemination in order to verify its factual accuracy. Investments in general involve some degree of risk therefore Prospective Investors should be aware that the value of any investment may rise and fall and you may get back less than you invested. Value and income may be adversely affected by exchange rates, interest rates and other factors. The investment discussed in this communication may not be eligible for sale in some states or countries and may not be suitable for all investors. If you are unsure about the suitability of this investment given your financial objectives, resources and risk appetite, please contact your financial advisor before taking any further action. This document is for informational purposes only and should not be regarded as an offer or solicitation to buy the securities or other instruments mentioned in it. Holland Advisors and/or its officers, directors and employees may have or take positions in securities or derivatives mentioned in this document (or in any related investment) and may from time to time dispose of any such securities (or instrument). Holland Advisors manage conflicts of interest in regard to this communication internally via their compliance procedures.

  1. Our Appendices in this note are long but we try to ease their navigation by including hyperlinks to jump forward and back from the main Exec Summary to the Appendices
  2. Though he is not infallible – he once touted Valeant’s Mike Pearson as potential next generation Outsider. Perhaps this is another reminder of the caution needed when assessing roll-ups

 

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The Information displayed on this Website contains material that may be interpreted by the relevant authorities in the country where you are viewing this Website as a financial promotion or an offer to purchase securities. Accordingly, if you reside in any such country or fall within the scope of any law that seeks to regulate financial promotions in the country of your residence or in the country in which you are viewing this Website, please cease accessing or using this Website immediately.

If you are uncertain about your position under the laws of the country in which you are viewing this Website, then you should seek clarification by obtaining legal advice from a lawyer practicing in the country of your residence or in the country in which you are viewing this Website before accessing this Website.

You may not use any part of the material or Information on this Website to establish, maintain or provide or assist in establishing, maintaining or providing a stock market for trading in securities.

6. Investment Performance and Accuracy of Information
The Site contains material about the past performance of our Funds. The value of an investment in a Fund may go up as well down so that an investor’s investment in a Fund, when redeemed, may be more or less than the original investment amount. By its nature, investment in a Fund managed by Holland Advisors (London) Ltd is only suitable for sophisticated investors who do not require immediate liquidity for their investment, for whom an investment in a Fund does not constitute a complete investment programme and who fully understand and are willing to assume the high risk involved in the investment programme of a Fund. THE PAST PERFORMANCE OF ANY INVESTMENT, INVESTMENT STRATEGY OR INVESTMENT STYLE IS NOT INDICATIVE OF FUTURE PERFORMANCE.

Whilst the information contained on the Website has been given in good faith and every effort has been made to ensure its accuracy, the Information may not be complete or accurate for your purposes. This Website and the Information is provided on an “as is” basis and Holland Advisors (London) Ltd may not, and has no obligation to, update the Information or correct any inaccuracy which subsequently becomes apparent. The Information and/or opinions and estimates comprised in the Information may be changed or withdrawn without notice and may become outdated. You, therefore, should verify any information or other material obtained from this Website before you use it.

HOLLAND ADVISORS (LONDON) LTD, ITS DIRECTORS OR OFFICERS DISCLAIM ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BY WAY OF EXAMPLE BUT NOT LIMITATION AS TO RELIABILITY, COMPLETENESS, FITNESS FOR PURPOSE OR ACCURACY OF THE INFORMATION ON THIS WEBSITE OR ON ANY THIRD PARTY WEBSITE LINKED TO THIS WEBSITE.

IN ADDITION, WE DO NOT REPRESENT OR WARRANT THAT THIS WEBSITE OR THE SERVERS THAT MAKE THE WEBSITE AVAILABLE WILL BE UNINTERRUPTED, ERROR FREE, OR FREE FROM INFECTION, VIRUSES, WORMS OR ANY OTHER HARMFUL CODE WHICH MAY HAVE CONTAMINATING OR DESTRUCTIVE PROPERTIES. YOU ARE FULLY RESPONSIBLE FOR ENSURING PROTECTIVE STEPS TO BE TAKEN SUCH AS VIRUS CHECKING.

The Information is assembled from material prepared by Holland Advisors (London Ltd) or its agents but may not include Information made known to Holland Advisors (London) Ltd officers (or agents) subsequent to the date of publication of the Information indicated on the Website. If you use the Information, you do so at your own risk. Please recognise that the previous performance of securities or other instruments does not guarantee or predict future performance.

7. Exclusion of liability

TO THE FULLEST EXTENT PERMITTED BY LAW, HOLLAND ADVISORS (LONDON) LTD ACCEPT NO LIABILITY TO YOU OR ANY THIRD PARTY FOR ANY LOSSES OR DAMAGES, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT DAMAGES, CONSEQUENTIAL OR SPECIAL DAMAGES, LOSS OF USE, DATA OR PROFITS, COSTS OR EXPENSES INCURRED OR SUFFERED BY YOU OR THIRD PARTY, WHETHER IN CONTRACT OR DUE TO NEGLIGENCE OR OTHER TORTIOUS ACTION, ARISING OUT OF OR IN CONNECTION WITH THE ACCESS TO, USE OF, RELIANCE ON, OR PERFORMANCE OF THIS WEBSITE OR ANY INFORMATION CONTAINED ON THIS WEBSITE, WHETHER DUE TO INACCURACY, ERROR, OMISSION OR ANY OTHER CAUSE AND WHETHER ON THE PART OF US, OUR SERVANTS, AGENTS OR ANY OTHER PERSON.

NOTHING IN THE TERMS OF USE EXCLUDES, RESTRICTS OR MODIFIES ANY CONDITION, WARRANTY OR LIABILITY WHICH MAY AT ANY TIME BE IMPLIED BY STATUTE OR ANY OTHER APPLICABLE LAW WHERE TO DO SO IS ILLEGAL OR WOULD RENDER ANY PROVISION OF AN AGREEMENT VOID.

8. Third Party Websites
We may provide, on our Website, links to websites operated by third parties as a convenience to you. If you use these other sites, you will leave this Website. If you decide to visit any linked site, you do so at your own risk and it is your responsibility to take all protective measures to guard against viruses or other destructive elements.

Holland Advisors (London) Ltd makes no representations, warranties or guarantees of any kind about any of the content of any other website which you may access by hypertext link through this Website. When you access any other website by means of a link from this Website, you should understand that your access to that other website is independent of Holland Advisors (London) Ltd and Holland Advisors (London) Ltd has no control over the content of the website, nor does Holland Advisors (London) Ltd in any way endorse or approve the content of that website. In no event will Holland Advisors (London) Ltd in any way be liable to you or any other person(s) or organisation(s) for loss or damage (whether direct, indirect, consequential, special or other) for any use of any site linked to it by means of hypertext or otherwise.

9. Indemnity
You agree to indemnify Holland Advisors (London) Ltd and its officers from and against any claim brought by third parties against Holland Advisors (London) Ltd and its officers as a consequence of your breach of the Terms of Use. Furthermore, if your use of this Website results in the need for servicing, repair or correction of equipment, software or data, you assume all costs thereof.

10. Intellectual Property Rights and Licence
The copyright, trade mark or any other intellectual property rights in the Website and the Information are owned by or licensed to Holland Advisors (London) Ltd. You may download or print out a hard copy of individual pages and/or sections of this Website provided you do not remove any copyright or other proprietary notices. Any downloading or other copying from this Website will not transfer title to any software or material to you. You may not reproduce (in whole or in part), transmit (by electronic means or otherwise), modify, link to or use for any public or commercial purpose this Website without the prior written permission of Holland Advisors (London) Ltd. Any rights not expressly granted in the Terms of Use are reserved.

11. Operation of the Website
You should be aware that the internet, being an open network, is not secure. If you choose to send any electronic communications by means of this Website, you do so at your own risk. Holland Advisors (London) Ltd cannot guarantee that such communications will not be intercepted or changed or that they will reach the intended recipient safely.

12. Privacy
Any personal data relating to you will be collected, used and recorded by us in accordance with current data protection legislation, the Terms of Use and our Privacy Policy. You must read our Privacy Policy as it forms part of the Terms of Use.

13. Governing law
The Terms of Use are governed by the laws of England and Wales and the courts of England and Wales will have exclusive jurisdiction over any disputes arising under them.

14. Waiver
If you breach the Terms of Use and we take no action, we will still be entitled to use our rights and remedies in any other situation where you breach the Terms of Use.

15. Our details
This website is owned and operated by Holland Advisors London Ltd. You can contact us at: Holland Advisors London Ltd, The Granary, 1 Waverley Lane, Farnham, Surrey, GU9 8BB.

Updated and effective as of  31st March 2021

Disclaimer

Please read the following conditions of use of this website.
This website is directed at high net worth experienced investors and institutional investors who understand the risks involved with the investments being promoted and it should not be relied upon by retail clients (as defined by Financial Conduct Authority).

The information on this website is issued by Holland Advisors (London) Limited (hereafter referred to as “Holland Advisors”), a limited liability company (7431314) incorporated in England and Wales, which is authorised and regulated by the Financial Conduct Authority (FRN: 538932).

This website is for information purposes only and does not constitute an offer or solicitation to buy or sell securities, funds or any other financial instrument. The information is directed inside the United Kingdom and is not directed at any persons in jurisdictions where it would be against local law or regulation.  In particular, information on this site is not directed at any person, partnership or corporation being resident in the United States of America. Holland Advisors disclaims all responsibility if you access or download any information in breach of any law or regulation of the country in which you reside.

Information on this site
The information provided does not constitute advice. Holland Advisors believes that the sources of the information in this website are reliable. However it cannot and does not guarantee, either expressly or implicitly, and accepts no liability for, the accuracy, validity, timeliness or completeness of any information or data (whether prepared by it or by any third party) for any particular purpose or use or that the information or data will be free from error. Holland Advisors does not undertake any responsibility for any reliance which is placed by any person on any statements or opinions which are expressed herein. Neither Holland Advisors nor any of its directors, officers or employees will be liable or have any responsibility of any kind for any loss or damage that any person may incur resulting from the use of this information. This does not exclude or restrict any duty of liability that Holland Advisors has to its customers under the regulatory system in the United Kingdom. All Information may be changed or amended without prior notice although Holland Advisors does not undertake to update this site regularly.

Marketing Communications
Documents on this site do not constitute investment research as they have not been prepared in accordance with UK legal requirements designed to promote the independence of investment research. Therefore, even if they contain research recommendations they should be treated as marketing communications and as such will be fair, clear and not misleading in line with Financial Conduct Authority rules. These communications are not personal recommendations to you and any opinions cited are subject to change without notice. Holland Advisors takes all reasonable care to ensure that the information on this site is accurate and complete; however no warranty, representation, or undertaking is given that it is free from inaccuracies or omissions. Documents on this site are based on, and contain, current public information, data, opinions, estimates and projections obtained from sources we believe to be reliable. Past performance is not necessarily a guide to future performance. The content of these documents may have been disclosed to the issuer(s) prior to dissemination in order to verify their factual accuracy.

Investments in general involve some degree of risk, therefore Prospective Investors should be aware that the value of any investment may rise and fall and you may get back less than you invested. Value and income may be adversely affected by exchange rates, interest rates and other factors. The investments discussed on this website may not be eligible for sale in some states or countries and may not be suitable for all investors. If you are unsure about the suitability of an investment given your financial objectives, resources and risk appetite, please contact your financial advisor before taking any further action.

Holland Advisors and/or its officers, directors and employees may have or take positions in securities, funds or derivatives mentioned on this site (or in any related investment) and may from time to time dispose of any such securities (or instrument). Holland Advisors manages these potential conflicts of interest internally via its compliance procedures.

Fund Information
Parts of this site may refer to Funds managed or advised by Holland Advisors. These are not solicitations to invest and any potential investors should refer to the “Our Funds” section of the website in order to learn more about these Funds and find out how and where to obtain the relevant full legal documentation.

Linked Websites
This site may be linked to third party websites or contain information provided by third parties. Holland Advisors does not make any representation as to the accuracy or completeness of such websites or information, has not and will not review or update such websites or information, and cautions browsers that any use made of such websites or information is at their own risk. Holland Advisors does not accept any liability arising out of the information contained on any linked website or Information provided by a third party and the use of such sites and information is at your own risk. This does not exclude or restrict any duty or liability that Holland Advisors has to its customers under the regulatory system in the United Kingdom.

Indemnity
You agree to indemnify and defend Holland Advisors, its affiliates and licensors, and the officers, directors, employees, and agents of Holland Advisors and its affiliates and licensors, from and against any and all claims, liabilities, damages, losses, or expenses, including legal fees and costs, arising out of or in any way connected with your access to or use of this website and the Information.

Use of Cookies
If you agree to these terms and conditions a “cookie” might be placed on your computer. A cookie is a packet of information that does not identify individual users of a website, but allows the collection of website activity (such as the number of users who visit our website, the date and time of visits, the number of pages viewed, navigation patterns, what country and what systems users have used to access the site). We can use this information for statistical purposes, which allows us to analyse and improve our website. The cookie will expire automatically after 6 months or you can manually remove cookies in your browser settings.

Copyright, Trademarks and Other Rights
Copyright, trademarks, database rights, patents and all similar rights in this site and the information contained in it are owned by Holland Advisors or relevant third party providers. You may use the Information and reproduce it in hard copy for your personal reference only. The information contained herein and any supplemental documentation provided is confidential and should not be copied, reproduced or redistributed without the prior consent of Holland Advisors.

Governing Law
You agree that your use of this site and any dispute arising from this use is subject to English law and you submit to the jurisdiction of the Courts of England & Wales.

Privacy Notice

This is the privacy notice of Holland Advisors London Ltd our company number is 07431314. Our registered office is at 7 York Road, Woking, Surrey, GU22 7XH.

 

Introduction

This notice describes how we collect, store, transfer and use personal data. It tells you about your privacy rights and how the law protects you.

In the context of the law and this notice, ‘personal data’ is information that clearly identifies you as an individual or which could be used to identify you if combined with other information. Acting in any way on personal data is referred to as ‘processing’.

This notice applies to personal data collected through our website www.hollandadvisors.co.uk.

Except as set out below, we do not share, or sell, or disclose to a third party, any information collected through our website.

 

Data Protection Officer

We have appointed a data protection officer (‘DPO’) who is responsible for ensuring that our privacy policy is followed. If you have any questions about how we process your personal data, including any requests to exercise your legal rights, please contact our DPO, Claire Brunt at  claire@hollandadvisors.co.uk.

 

Personal data we process

1. How we obtain personal data

The information we process about you includes information:

  • you have directly provided to us
  • that we gather from third party databases and service providers
  • as a result of monitoring how you use our website or our services

2. Types of personal data we collect directly

When you use our website, you may provide personal data by submission of data by our Sign Up or Contact Us forms. This can be categorised into the following groups:

  • personal identifiers, such as your first and last names
  • contact information, such as your email address and your telephone number for communication
  • records of communication between us including messages sent through our website, email messages and telephone conversations
  • marketing preferences that tell us what types of marketing you would like to receive

3. Types of personal data we collect from your use of our services

By using our website and our services, we process:

  • technical information about the hardware and the software you use to access our website and use our services, including your Internet Protocol (IP) address, your browser type and version and your device’s operating system
  • usage information, including the frequency you use our services, the pages of our website that you visit, whether you receive messages from us and whether you reply to those messages
  • your preferences to receive marketing from us; how you wish to communicate with us; and responses and actions in relation to your use of our services.

4. Our use of aggregated information

We may aggregate anonymous information such as statistical or demographic data for any purpose. Anonymous information is that which does not identify you as an individual. Aggregated information may be derived from your personal data but is not considered as such in law because it does not reveal your identity.

For example, we may aggregate usage information to assess whether a feature of our website is useful.

However, if we combine or connect aggregated information with your personal data so that it can identify you in any way, we treat the combined information as personal data, and it will be used in accordance with this privacy notice.

5. The bases on which we process information about you

The law requires us to determine under which of six defined bases we process different categories of your personal data, and to notify you of the basis for each category.

If a basis on which we process your personal data is no longer relevant then we shall immediately stop processing your data.

If the basis changes then if required by law we shall notify you of the change and of any new basis under which we have determined that we can continue to process your information.

6. Information we process with your consent

Through certain actions when there is no contractual relationship between us, such as when you browse our website or ask us to provide you more information about our business, you provide your consent to us to process information that may be personal data.

Wherever possible, we aim to obtain your explicit consent to process this information, for example, we ask you to agree to our use of non-essential cookies when you access our website.

We continue to process your information on this basis until you withdraw your consent or it can be reasonably assumed that your consent no longer exists.

You may withdraw your consent at any time by instructing us  claire@hollandadvisors.co.uk.

7. Information we process for the purposes of legitimate interests

We may process information on the basis there is a legitimate interest, either to you or to us, of doing so.

Where we process your information on this basis, we do after having given careful consideration to:

  • whether the same objective could be achieved through other means
  • whether processing (or not processing) might cause you harm
  • whether you would expect us to process your data, and whether you would, in the round, consider it reasonable to do so

For example, we may process your data on this basis for the purposes of:

  • improving our services
  • record-keeping for the proper and necessary administration of our business
  • responding to unsolicited communication from you to which we believe you would expect a response
  • preventing fraudulent use of our services
  • exercising our legal rights, including to detect and prevent fraud and to protect our intellectual property
  • insuring against or obtaining professional advice that is required to manage business risk
  • protecting your interests where we believe we have a duty to do so

 

How and when we process your personal data

8. Your personal data is not shared

We do not share or disclose to a third party, any information collected through our website.

 

Use of information we collect through automated systems

9. Cookies

Cookies are small text files that are placed on your computer’s hard drive by your web browser when you visit a website that uses them. They allow information gathered on one web page to be stored until it is needed for use at a later date.

They are commonly used to provide you with a personalised experience while you browse a website, for example, allowing your preferences to be remembered.

They can also provide core functionality such as security, network management, and accessibility; record how you interact with the website so that the owner can understand how to improve the experience of other visitors.

Some cookies may last for a defined period of time, such as one visit (known as a session), one day or until you close your browser. Others last indefinitely until you delete them.

Your web browser should allow you to delete any cookie you choose. It should also allow you to prevent or limit their use. Your web browser may support a plug-in or add-on that helps you manage which cookies you wish to allow to operate.

The law requires you to give explicit consent for use of any cookies that are not strictly necessary for the operation of a website.

10. Personal identifiers from your browsing activity

Requests by your web browser to our servers for web pages and other content on our website are recorded.

We record information such as your geographical location, your Internet service provider and your IP address. We also record information about the software you are using to browse our website, such as the type of computer or device and the screen resolution.

We use this information in aggregate to assess the popularity of the webpages on our website and how we perform in providing content to you.

 

Other matters

11. Your rights

The law requires us to tell you about your rights and our obligations to you in regard to the processing and control of your personal data.

We do this now, by requesting that you read the information provided at  http://www.knowyourprivacyrights.org

12. Communicating with us

When you contact us, whether by telephone, through our website or by email, we collect the data you have given to us in order to reply with the information you need.

We record your request and our reply in order to increase the efficiency of our business. We may keep personally identifiable information associated with your message, such as your name and email address so as to be able to track our communications with you to provide a high quality service.

13. Complaining

If you are not happy with our privacy policy, or if you have any complaint, then you should tell us.

When we receive a complaint, we record the information you have given to us on the basis of consent. We use that information to resolve your complaint.

14. Retention period

Except as otherwise mentioned in this privacy notice, we keep your personal data only for as long as required by us to provide you with the services you have requested.

15. Compliance with the law

Our privacy policy complies with the law in the United Kingdom, specifically with the Data Protection Act 2018 (the ‘Act’) accordingly incorporating the EU General Data Protection Regulation (‘GDPR’) and the Privacy and Electronic Communications Regulations (‘PECR’).

16. Review of this privacy policy

We shall update this privacy notice from time to time as necessary.