Moving Kaman (KAMN) to SELL on Buyout
Today, we are moving shares of Kaman Corp (KAMN) from BUY to SELL.
The company announced that it will be taken private for $1.8 billion, or $46/share, a huge 100%-plus premium over the prior day’s closing price. The market has had little confidence in Kaman’s turnaround, despite what we saw as evidence that impressive changes are underway, led by its capable new CEO. The huge premium is at a discount to our $57 price target, but we’re fine with the deal as it produces a reasonable return, in cash, today, compared to a slog for a year or more while the turnaround plays out.
The buyer, private equity firm Arcline Investment Management, is credible and offering cash. While it is always possible, we see little chance of an overbid by another buyer. As such, we are moving shares of Kaman from BUY to SELL.
All-in, the recommendation generated a 25% total return compared to an approximately 9.7% total return for the S&P 500 over the same time period.
Disclosure: The chief analyst personally owns shares of all Cabot Turnaround Letter recommended names, including those mentioned in this note.