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Overlooked Industrial Conglomerate, Jason Industries

- By Shadowstock

Jason Industries (JASN) is an industrial global manufacturing conglomerate. The company operates in the following four segments; finishing, seating, acoustics and components. For the year ending December 2016, revenue was $7.06 million.

Potential catalysts/investment rationale

  • Strong Insider activity (see details below).
  • Mispriced undervalued stock with a 54% decline in 52-week stock price performance. Management is forecasting 64 months to 67 months adjusted EBITDA or around EV/EBITDA around 6 for fiscal year 2017.
  • Value based institutional shareholders with ownership at significantly higher prices.
  • Management projected fiscal year 2017 cost cutting with improving operational efficiency offering multiple levers to improve future results. A positive U.S. manufacturing regulatory environment could provide future benefits.
  • Proven and extremely talented management and board with turn-around success and material skin in the game.
  • A unique moat created by a collection of dominant companies in diversified business segments serving multiple sectors with repeat long-term customers.

Insider activity details

CEO Kobylinski Brian purchased 30,000 shares in March 2017 and Interim CEO J. Quinn added 100,700 shares to his existing 19.2% ownership in September 2016 . These two recent purchases in combination totaled 130,700 shares for $261,119 at an average price of $1.99. In addition, 10% Owner Wynnefield Partners Small Cap Value purchased 1,026,334 shares for $2.54 million at an average price of $2.45 per share during 2016 (see table below).

Board member and former Interim CEO Jeffry N. Quinn owns 4,382,809 shares, or 19.20% of those outstanding per the April 2013, 2016 proxy. Quinn is founder, chairman and CEO of The Quinn Group and Quinpario Partners. Additionally, Quinn was named interim CEO of Jason on Nove. 9, 2015 and continues to serve as chairman of the board. Before Jason Industries, Jeffry Quinn was the former CEO of Solutia, a global specialty chemicals and performance materials company. He led Solutia through Chapter 11 reorganization. Then, after eight years, he transformed this bankrupt small local player into a global leading specialty company. Solutia was sold in 2012 to Eastman Chemical Company (EMN) for $4.8 billion.

After the sale of Solutia, Quinn founded Quinpario Partners, a privately owned investment and operating firm. Quinpario Partners formed Quinpario Acquisition Corp., which completed its first business combination in 2014 when it acquired Jason Industries. Jason directors and executive officers as a group own 23.1% of Jason. Note again, that on the insider table above Quinn (interim CEO) purchased an additional 100,700 shares in September 2016.

Current valuation per Yahoo:

The company's primary risk is high debt and potential negative economic trends.

Long: JASN


This article first appeared on GuruFocus.