Mittleman Brothers Still Not Impressed By AMC’s Carmike (CKEC) Offer, Scores Big With Revlon (REV), IGT

Revlon Inc. (NYSE:REV) is one of the world’s largest sellers of beauty and personal care products and recently announced that it would buy Elizabeth Arden (NASDAQ:RDEN) for $870 million to strengthen its skincare and fragrance business. Mittleman thinks that Revlon is undervalued, with a fair value of $78.50, well over twice as much as the current share price of $28.95. Revlon also trades at a much lower EV/EBITDA level than its peers. The fund thinks that while the company’s profits may dip in the short-term due to the merger with Elizabeth Arden, its EBITDA will increase over the long-term as the cost synergies from the merger are realized. Mittleman is bullish on Revlon Inc. (NYSE:REV) partly because of its ravenous growth, with it having grown faster than other cosmetic companies over the last 5 years and gaining market share. However, just 9 hedge funds in our system held shares of Revlon worth $15.66 million as of September 30.

International Game Technology (NYSE:IGT) is a global gaming company which specializes in the design, manufacture and marketing of casino-style gaming equipment, technology and game content across multiple platforms. The world’s largest lottery systems management and slot machine company is currently trading near its 52-week high, with a market capitalisation of more than $5.7 billion. It was a big contributor to the fund’s Q3 performance, as investors started realizing the potential of the high-quality company. Mittleman thinks that IGT should trade at no less than 8x EBITDA and 14x FCF, which would imply a fair value of $34.24 per share. The fund thinks that the recession-proof company could trade at 10x EBITDA and 21x FCF in a best case scenario, which would imply a much greater $52 share price. The number of hedge funds in our database with a position in International Game Technology (NYSE:IGT) increased by 7 to 30 during the third quarter, with those 30 funds holding $673.8 million worth of its shares.

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Correction: an earlier version of this article incorrectly presented the value of the fund’s 13F portfolio as the value of its assets under management.