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  "documentTitle": "Canadian Tire Corporation (CTC.A)",
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  "authorName": "Spruce Point Capital Management",
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  "presentationDate": "2019-12-05 00:00:00",
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  "notes": "Uses a combination of historical ownership tables, financial performance charts, and quotes to build a case for overvaluation.",
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      "kind": "callout",
      "text": "EBITDA growth significantly outpaced revenue growth leading up to the acquisition. We believe this is a clear sign of increased efficiencies by Ontario Teachers' to make Helly Hansen more attractive for a sale.",
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      "text": "In our opinion, the implied EBITDA multiple of ~20x (based on the purchase price of C$985m and LTM EBITDA ~C$50m) is evidence Canadian Tire over paid for a lousy asset",
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      "text": "Historical Operational EBITDA chart (2014-2017)",
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      "text": "EBITDA multiple: ~20x",
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      "text": "Canadian Tire announced its acquisition of Helly Hansen (HH) in May 2018. HH had a history of private equity ownership. We believe CTC significantly overpaid for the business.",
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      "kind": "quote",
      "text": "We focused on the basics of getting cash in as quickly as we could... Quite frankly the first three to four months weren't particularly pleasant...",
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      "text": "Under the turnaround Helly Hansen overhauled its management and cut its product lines by a quarter. Working capital fell to a third from more than a half of its sales as it reduced inventories and cut capital spending.",
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      "text": "\"Under the turnaround Helly Hansen overhauled its management and cut its product lines by a quarter. Working capital fell to a third from more than a half of its sales as it reduced inventories and cut capital spending.\" — Financial Times (FT); \"We focused on the basics of getting cash in as quickly as we could... Quite frankly the first three to four months weren't particularly pleasant... We've taken the business from being a sales-driven company in the last 10 years to a more consumer-focused one\" — Paul Stoneham, CEO Helly Hansen",
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      "text": "Source: Company filings, News articles",
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      "text": "History of PE ownership table showing sponsors from 1997 to 2018",
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      "text": "Acquisition of Helly Hansen",
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