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LAS VEGAS - Cannae Holdings, Inc. (NYSE: CNNE), currently trading at $17.49 with a market capitalization of $1.1 billion, has detailed its strategic actions taken since February 2024 to enhance shareholder value and address its share price discount to net asset value (NAV). According to InvestingPro analysis, the stock appears undervalued based on its Fair Value estimate, with analysts maintaining a strong buy consensus and setting price targets between $22 and $29. The company has focused on improving and monetizing investment holdings, returning capital to shareholders, and reducing operational expenses.
Cannae’s strategy consists of three primary objectives: returning capital to shareholders, rebalancing its portfolio towards private company investments with cash flows, and improving operational performance of portfolio companies. Since March 31, 2021, the company has returned $738 million to shareholders by repurchasing approximately 35% of its common stock. Notably, in April 2024, Cannae repurchased 9,672,540 shares at $22.95 each, totaling about $222 million. InvestingPro highlights this as a key strength, with management’s aggressive share buybacks and high shareholder yield being two of several bullish indicators available to Pro subscribers.
In May 2024, the company initiated a quarterly cash dividend of $0.12 per common share. Cannae has approximately 12.3 million shares remaining in its buyback authorization, which it plans to use for additional capital return.
Cannae’s portfolio rebalancing has included raising approximately $470 million through sales of public portfolio company shares over the last year. This includes the sale of 10 million Dun & Bradstreet shares and the exit from Dayforce, yielding a greater than 5x return on invested capital. Cannae also sold Paysafe and Alight shares, realizing significant tax savings.
In partnership moves, Cannae acquired a 20% stake in JANA Partners for $56 million in February 2024 and a 53% stake in the Watkins Company for $80 million in October 2024. These investments are expected to provide new opportunities and cash flows.
Cannae’s operational improvements include working with Dun & Bradstreet to accelerate organic revenue growth and cash flows, with EBITDA growing significantly since 2018. The company also aided Alight in selling segments for $1.2 billion and reducing debt, while Cannae’s investment in Black Knight Football has led to improved team performance and revenue growth.
William P. Foley, II, CEO of Cannae, emphasized the board and management’s dedication to driving long-term value and their optimism about the portfolio companies’ embedded value. The company plans to use proceeds from public portfolio company investments to continue stock buybacks and reduce the NAV discount. While the company faces current challenges with a -$79M EBITDA in the last twelve months, InvestingPro subscribers can access a comprehensive analysis of Cannae’s financial health, valuation metrics, and growth potential through the exclusive Pro Research Report, available for over 1,400 US stocks.
Cannae’s board and management, owning 11% of outstanding common stock, are aligned with shareholder value. Shareholders are advised that no action is required at this time and recommendations for the election of directors will be presented in the definitive proxy statement to be filed with the SEC.
This article is based on a press release statement.
In other recent news, Cannae Holdings Inc. reported a significant miss in its fourth-quarter 2024 earnings, with earnings per share (EPS) at -$0.74, falling short of the forecasted -$0.23. Despite the EPS miss, the company’s revenue slightly exceeded expectations, coming in at $110 million compared to the forecast of $103.07 million. The company has also initiated a quarterly dividend and continued its share buyback program. Cannae Holdings has invested in Jana Partners and acquired a majority stake in Watkins Company, indicating strategic moves to bolster future performance. The company is focusing on rebalancing its portfolio and prioritizing share buybacks as a capital allocation strategy. Analysts have not made any recent upgrades or downgrades, but discussions with firms like Stephens and Oppenheimer indicate ongoing interest in the company’s strategic direction. Additionally, Cannae Holdings is exploring potential developments for AFC Bournemouth’s stadium and continues to engage in discussions with Jana Partners for investment opportunities.
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