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The Shareholder Forumtm

support for fair value realization

of stock investments in

DBM Global Incorporated

(f/k/a Schuff International Inc.)



Support of Minority Shareholder Interests

The Shareholder Forum had offered to support Appraised Value Rights ("AVR") of DBM (f/k/a Schuff International) minority shareholders in 2014 following a $31.50 per share tender offer by the company's controlling shareholder, HC2 Holdings, Inc., with the stated intent to proceed with a short-form merger "as soon as practicable.”

HC2 acquired DBM shares in the 2014 tender offer and other purchases bringing its total holdings to 92% of outstanding DBM shares, but has not proceeded with a merger. The Forum has continued to support the minority shareholder interests of its AVR participants in this context.



Forum distribution:

Professional value investors' analysis of current DBM value


The analysis below, valuing the DBM Global subsidiary at more than $100 per share, was posted by the Special Situations Research Forum's founder, Vishal Mishra, principal of Mishra Capital Partners LLC. Mr. Mishra served 2014-2018 as Co-Chair of the Value Investing Group of the CFA Society of New York (f/k/a New York Society of Security Analysts) and is a founding board member of the not-for-profit Project Punch Card that supports value investing education for college students.


Source: Special Situations Research Forum, November 27, 2018 meeting notes

Special Situations

Research Forum

Nov 27 2018

HC2 Holdings (HCHC)

HC2 Holdings is a conglomerate of businesses run by Philip Falcone and appears undervalued.

Meeting notes

HCHC started out as a NOL shell with a good capital allocator at the helm.

Its main business segments are

Construction – Schuff International – DB global – design and fabrication steel business. One of the two cash flow generators. ~$50 mill EBITDA.  Greywolf acquisition added ~$20 mill EBITDA. Mult 6-8x EBITDA less debt or ~$400 mill valuation. EBITDA is proforma.

Global Marine –  Subsea cable installation and maintenance, Oil platforms. Trying to sell this business. About $45 mil EBITDA. Mid 6x mult on EBITDA les debt so about ~$200 equity for their ownership. Maybe they were trying to dangle the sale of this business to get the bond deal done.

Insurance – Long-term care. Insurance from sellers where losses exceed the underwritten premium. Insurance books bought at cheap prices. Get float. Long-term care industry priced premiums low in relation to the expected coverage so potential to increase prices. Even if insurance losses substantially exceed equity the loss is limited to equity.

Broadcasting stations – low power stations

Biotech business – promising medical devices or drugs. Invested $8 mill and sold for potentially $1 bill. $130 mill and about 85% are mile stone payments so they are like CVR. Small investment round valuing it at $150 mill.

Recent bond deal and per Moodys – tightest covenant deal. Trading at 94, 11.5% coupon, 3 year. Bond perspective covered 2x asset. If they can get their asset sale done. IRR of low twenties.

Equity reacted downward to the convert deal. Done on reverse inquiry because they were having difficulty getting the bond deal done. Technical of convert issuance, equity gets shorted when a convert is issued.

Debt of $525 at the Holdco level and $200 at the individual company level.

Bloated corporate expenses at $25 to $30 mill.

Down case – Recession – over levered businesses equity could be zero

Base case – businesses stay the same so potentially a double.

Falcone banned from 2013 – 2018. Security industry borrowed funds to pay taxes . Equity maybe fairly priced because of management discount.

Long 2, Short 0, Pass 4 or interested in the bond




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