Third Point’s Daniel Loeb (Trades, Portfolio) disclosed last week he upped his firm’s stake in Global Blue Group Holding AG (GB, Financial) by 15.62% following its quarterly earnings report.
Taking an event-driven, value-oriented approach to picking stocks, the guru's New York-based hedge fund is known for entering activist positions in underperforming companies with a catalyst that will help unlock value for shareholders. Some recent targets include Walt Disney Co. (DIS, Financial) and Cano Health Inc. (CANO, Financial).
Global Blue investment
While the activist investor did not make any changes to the position during the third quarter, GuruFocus Real-Time Picks, a Premium feature based on 13D, 13G and Form 4 filings, showed Loeb picked up 1.33 million shares of the Switzerland-based tech company on Dec. 1, impacting the equity portfolio by 0.10%. The stock traded for an average price of $4.23 per share on the day of the transaction.
He now holds a total of 9.87 million shares, which occupy 0.76% of the equity portfolio. GuruFocus estimates Loeb has lost 21.49% on the investment since establishing it in the third quarter of 2020.
Stock performance and GF Score
The software company, which offers tax-free shopping and payment solutions for retailers and tourists, has a $772.21 million market cap; its shares were trading around $4.07 on Monday with a price-book ratio of 101.75 and a price-sales ratio of 4.
Global Blue was one of the many entities to go public via special purpose acquisition company in 2020. Its combination with Far Point Acquisition Corp. closed on Aug. 28, 2020.
Since its public debut on Aug. 31 of that year, the stock has tumbled nearly 50%.
Year to date, however, the stock, which has fallen 36.67%, is outperforming versus two of its competitors. VNET Group Inc. (VNET, Financial) has declined nearly 45%, while Charge Enterprises Inc. (CRGE, Financial) has retreated 42.05%.
The GF Score of 18 out of 100 indicates the company has poor performance potential. However, it did not receive ratings for growth, momentum or GF Value, so the score may not accurately reflect Global Blue’s full potential.
Earnings update
Before the opening bell on Dec. 1, the company revealed its financial results for the second-quarter and half-year 2022-23 periods, which ended Sept. 30.
It posted 81.9 million euros ($86.07 million) in revenue for the quarter, which improved from 31.2 million euros in the prior-year period. Global Blue’s results had not yet recovered to pre-pandemic levels of 127.2 million euros, however.
Further, the quarterly adjusted Ebitda of 25.8 million euros significantly increased from a loss of 0.4 million euros last year.
For the first half of the year, Global Blue’s revenue of 138 million euros was up from 47.9 million euros in the year-ago quarter, but still below the 227.7 million euros it reached before the pandemic.
Adjusted Ebitda came in at 32.6 million euros, which again was up from the loss of 11.1 million euros recorded in the same period last year.
The company ended the period with approximately 221 million euros in cash and cash equivalents, which was attributed to a strategic equity investment from Certares and Knighthead as well as a strong focus on working capital.
Financial strength and profitability
GuruFocus rated Global Blue’s financial strength 2 out of 10. In addition to weak debt-related ratios and lack of interest coverage, the Altman Z-Score of -0.46 warns the company could be at risk of bankruptcy if it does not improve its liquidity position.
The company’s profitability did not fare much better, scoring a 3 out of 10 rating on the back of negative operating and net margins and returns on assets and capital that are underperforming a majority of competitors.
Guru ownership
With a 5.20% stake, Loeb is currently the only guru invested in Global Blue.
Among the stock’s institutional investors are Silver Lake Group LLC, Certares Opportunities LLC, Knighthead Capital Management LLC, the Special Small Cap Value Fund, Partners Group Holding AG, WCM Investment Management LLC, Alyeska Investment Group LP and The Manufacturers Life Insurance Co.
Portfolio composition and performance
The guru's $5.51 billion equity portfolio, which the 13F filing showed was composed of 59 stocks as of the end of the third quarter, is most heavily invested in the health care, utilities and consumer defensive sectors.
Other tech stocks he held as of Sept. 30 included Aurora Innovation Inc. (AUR, Financial) (AUROW, Financial), warrants in Global Blue (GB.WS, Financial) and SentinelOne Inc. (S, Financial).
Third Point posted a return of 22.9% for 2021, underperforming the S&P 500’s 28.7% return.
Investors should be aware that 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
