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MIAMI BEACH - Windward Management LP, which owns approximately 7% of Cineplex Inc. (TSE:CGX), has called on the Canadian cinema chain to accelerate share repurchases and divest non-core assets in an open letter released Monday. According to InvestingPro data, the company’s stock has gained nearly 26% year-to-date, with a current market capitalization of $77.13 million.
The Miami Beach-based investment firm believes Cineplex shares could rise by 200% by the end of 2026 if the company implements its proposed capital allocation strategy. Windward cited recent box office momentum, with Cineplex delivering over $50 million in monthly box office revenues for four consecutive months from April to July 2025 for the first time since 2019.
In its letter, Windward urged Cineplex to aggressively use its recently renewed Normal Course Issuer Bid to repurchase shares and explore sales of its Digital Media segment and Scene+ Loyalty Program, which it estimates could generate proceeds exceeding $220 million.
"With shares trading at a high-teens unlevered free cash flow yield – a significant discount to peers – the industry being at the point of inflection, and the Company uniquely positioned as the dominant market leader in Canada, time is of the essence," wrote Marc Chalfin, Chief Investment Officer at Windward Management. InvestingPro analysis shows the company maintains an excellent financial health score of 3.81, with comprehensive insights available in the Pro Research Report.
The investment firm projects that Cineplex’s attendance will recover to 80% of 2019 levels in 2026, potentially generating over $260 million in earnings before interest, taxes, depreciation, amortization, and lease costs (EBITDAaL), which is more than 20% higher than current analyst estimates. InvestingPro data indicates analysts have set a consensus target price of $17.06, with the stock currently trading at a P/E ratio of 100. Subscribers can access detailed valuation metrics and growth projections through InvestingPro’s comprehensive analysis tools.
Windward also noted that Cineplex has significantly reduced its leverage ratio and could repurchase approximately 55% of its current market capitalization while maintaining leverage at the lower end of its target range.
The letter acknowledged Cineplex’s management for navigating challenges including the pandemic and industry strikes, but expressed frustration at what it described as a lack of urgency in implementing shareholder-friendly capital allocation strategies.
The activist investor’s comments were included in a press release statement issued by Windward Management.
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