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  "documentTitle": "Church & Dwight Co., Inc. (CHD)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-09-05 00:00:00",
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  "pageNumber": 25,
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  "notes": "The slide uses a quote from the CFO to contrast with the data presented in the table, highlighting the 'perverse incentive' to overpay for acquisitions.",
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      "kind": "callout",
      "text": "Free cash flow conversion. This is my favorite slide. 124% for Church & Dwight; peer average is 91%. A lot of companies target 100%.",
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      "text": "Goodwill & Intangibles / Deal Value: 96%",
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      "kind": "paragraph",
      "text": "The CEO touts the Company's excellent cash flow. But in reality, it appears driven by CHD's aggressive acquisition strategy, which assigns a significant portion of the deal value to goodwill and intangible assets (\"G&I\"). For recent deals identified as tax deductible for U.S. purposes, 96% of deal value has been ascribed to G&I. CHD's strategy creates perverse incentives to overpay for deals to mark-up G&I to drive greater tax deductions. Deductibility is over 15 years.",
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      "kind": "quote",
      "text": "Free cash flow conversion. This is my favorite slide. 124% for Church & Dwight; peer average is 91%. A lot of companies target 100%. — CFO Q4 2018 Conf Call",
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      "kind": "source-note",
      "text": "1) Accounting value of deal marked by CHD first quarter post acquisition. Source: CHD financials. Note: $ in mm. CHD did not disclose tax deductibility prior to 2014 in 10-K's",
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      "kind": "table",
      "text": "Acq. Target, Deductible For Tax Purposes?, Intangibles, Goodwill, Total Deal Value (1), Goodwil & Intangibles / Deal Value",
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      "kind": "title",
      "text": "Cash Flow Hype Creates Perverse Incentive To Overpay For Deals",
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      "evidence": "The document extensively details the problems with CHD, including rising debt, low-quality EBITDA, worrisome strategy shifts, and concerning CEO history.",
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