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  "docSlug": "778e2cbfbfaa",
  "documentTitle": "Amdocs Limited (DOX)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-01-23 00:00:00",
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  "notes": "Uses a 'CEO quote contradiction' framework to highlight the shift in management's tone.",
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      "kind": "callout",
      "text": "Management says that \"we have the capacity to return the majority of free cash flow to shareholders...,\" NOT \"we will return\" or \"we plan to return...,\" as it has said in the past. It also openly says that any M&A draw away from buybacks / dividends.",
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      "kind": "callout",
      "text": "Management does not commit to conducting M&A, but instead says that it has \"optionality to execute M&A,\" and says that it may have to assume debt to do so.",
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      "kind": "callout",
      "text": "Management does not commit to conducting M&A, but instead says that it has “optionality to execute M&A,” and says that it may have to assume debt to do so.",
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      "kind": "framework",
      "text": "Amdocs investment thesis table vs Q4 FY 2018 Earnings Call quote",
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      "kind": "paragraph",
      "text": "Again, as recently as FY 2015, management was extremely explicit about its long-term capital allocation plans: half of FCF would be put towards M&A and other growth initiatives, and the other half would be returned to shareholders. Now, not only does management no longer believe that it can consistently fund M&A from FCF on top of buybacks and dividends, but it has also loosened its language regarding buybacks and dividends, suggesting that its commitment to returning cash to shareholders may be wavering unless it is prepared to employ its balance sheet.",
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      "text": "“...we remain committed to the proactive and disciplined allocation of capital. We have the capacity to return the majority of normalized free cash flow to shareholders in fiscal 2019, subject to factors such as M&A, financial markets and prevailing industry conditions. I am pleased to say this includes a proposed increase in the quarterly cash dividend for the sixth consecutive year, subject to shareholder approval in the annual general meeting in January 2019. Additionally, we retain the optionality to execute on M&A strategically for long-term goals, possibly utilizing debt where appropriate.” — Shuky Sheffer, CEO, Amdocs",
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      "text": "Source: Amdocs 2018 Investor Day – Financial Outlook & Investment Thesis Slides",
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      "kind": "title",
      "text": "Management Becoming Increasingly Less Committal Regarding Both M&A And Dividends / Buybacks",
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