Waddell is an asset manager with 70 bn in AUM and they also do brokerage / RIA work for their
clients; about a 50 50 split between asset management and brokerage / RIA work. Everyone
knows this business is under a lot of stress consequently the stock has been getting hammered.
If you look at the short recommendation on VIC, the person that wrote it estimated revenues
declining by something like 30 pct a year when he wrote is a couple years back. Nothing of the
sort has materialized (see below), the performance has been much better operationally but the
stock has been a disaster; that being said that statement excludes the economic effects of this wu-
vir thing.
Back to the positives:
The company generated 168 mln in Free cash flow last year (2019) it has a TEV of 36 mln
dollars because it has 94 mln in debt 840 in cash and investments and a market cap of
782 mln dollars. So you are buying the company at 0.21x free cash flow. That’s right, zero point
two one times free cash flow.
Now lets get to the adjustments:
Whack free cash flow by 50 % for 2020 gives you 80 mln
Whack short term investments like this:
Cash: stays at 151 mln
Investment securities becomes (see below):
Total available for sale securities becomes: 245 mln (Talked to Co and these are all IG bonds)
Total trading securities becomes: 150 mln
Equity securities becomes: 105 mln
Sponsored funds becomes: 20 mln
Total: 520 mln
