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Publicis Groupe SA Message Board

  • iwantwhatscomingtome iwantwhatscomingtome Jan 4, 2008 12:38 AM Flag

    PHH $16.85 .6x tangible bv; $31 buyout dead; 13D 2yr p/t $60

    Blackstone/GE's $31 buyout of PHH is dead, stock falls to $16.85, .6x Q3 tangible book.

    From last Fall:

    Pennant Capital's ltr to BoD opposing $31 buyout, $60 two-year price target

    An excerpt from a Barron's article:

    <If the deal dies, the stock could fall to 22. But bulls expect a rebound because PHH has a nice business mix, and its stock trades below tangible book value of $28 a share. Some big investors, including PHH's largest holder, Chatham, N.J.-based Pennant Capital, have opposed the buyout because they think it undervalues the company. Pennant holds a 9% stake.

    "From a valuation standpoint, the stock is attractive," says Ben Silver, a portfolio manager at Pzena Investment Management in New York. He values the leasing business at around $20 per PHH share, or 14 to 15 times estimated 2007 cash earnings, and notes that the mortgage business has a tangible book value around $19 a share. He thinks PHH is worth at least the buyout price.

    Unlike many mortgage companies, PHH doesn't take much risk. It's a mortgage outsourcer, meaning it originates loans on behalf of corporate customers, notably Merrill Lynch (MER) and Realogy. When a Merrill client calls his broker and asks for a loan, he's put in touch with PHH. PHH services $165 billion of loans and originated $40 billion last year. The delinquency rate on the loans it services is just 3%.>

    PHH's IR investor presentation dated Fall 05 but an overview of the two components: outsourced mortgage services and fleet management

18.283+0.033(+0.18%)Aug 22 3:47 PMEDT

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