|Shares Out. (in M):||95||P/E||0.0x||0.0x|
|Market Cap (in $M):||1,600||P/FCF||0.0x||0.0x|
|Net Debt (in $M):||600||EBIT||200||270|
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Unfollowed, uncorrelated, catalyst-rich, high-yielding Magic Formula equity with huge hidden prime real estate and brokerage assets ripe for monetization via spin-off or sale. Core business worth the full TEV, while fast-appreciating Douglas Elliman brokerage and NYC, Palm Springs & Miami real estate assets are ignored by the market and therefore free. All this in a stock that trades at the same price it did in 2010 and which I believe has the potential to generate a 90% one-year return once the situation is understood and likely catalysts play out.
Market cap: $1.6bn
TEV: $2.2bn (at face, unconverted)
Average daily volume: 0.4mm
Insider ownership: 29.5%
Short interest: 6.7mm (10% of float)
Dividend: $1.60 (9.6% yield, just raised from $0.38 to $0.40/quarter, raised consistently since 1999)
Vector Group Ltd. (NYSE: VGR), through its subsidiaries, is a leading manufacturer of discount cigarettes in the U.S. The company operates in Tobacco and Real Estate segments. The company provides 117 combinations of cigarettes under the PYRAMID, GRAND PRIX, LIGGETT SELECT, EVE, and USA brand names for the military and large grocery, drug, and convenience store chains, as well as for the candy and tobacco distributors. It also offers residential brokerage services, as well as invests in various real estate properties. The company, formerly known as Brooke Group Ltd., was founded in 1911 and is based in Miami, Florida. VGR’s Chairman is Bennett LeBow, who is a well-known investor, having bid for RJR Nabisco in partnership with Carl Icahn and having owned companies including SkyBox trading cards, Western Union, Information Displays and others.
Sale of Douglas Elliman: Simpler than a spin-off, management may choose to sell their prime brokerage asset. Multiple strategic buyers would be interested, including Berkshire Hathaway, Realogy and CBRE, given the firm’s strong revenue and EBITDA growth and prime footprint.
Disclaimer: The author of this idea presently has a long position in securities of this issuer and may trade in and out of these positions without notice. The data contained herein are prepared by the author from publicly available sources and the author's independent research and estimates. No representation or warranty is made as to the accuracy of the data or opinions contained herein.
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