Notes to Myself...Maxar Technologies Inc...Turnaround Opportunity

Notes to Myself...Maxar Technologies Inc...Turnaround Opportunity

Maxar Technologies Inc...11.66 on the TSX...8.95 on the NYSE

I bought MAXR (Maxar Technologies Inc) back in early 2018. It was a play on space technology (satellites, so you could say it was hard tech), they had just acquired Digital Globe (soft tech). It seemed like a good fit as they now had both the hardware and software side of things in their industry…but they took on a ton of debt to make the acquisition.

Then, a short report came out and yada, yada, yada…the stock cratered...More bad news followed in the form of disappointing earnings and I cried uncle in December of last year and sold out my position at a deep loss. The CEO has since resigned and interesting enough the CEO of the acquired software company (Daniel L. Jablonski) has been handed the top job of running the company.

Something seems to be afoot here…heavy institutional money came into the stock earlier this year. Two value orientated fund managers I follow…Taylor Asset Management Inc and Penderfund Capital Management Inc…who both run narrow concentrated portfolios (that means they do their due diligence) took on big positions in the stock. Another institution that I don’t know well but that added to their position was Shapiro Capital Management LLC.

I visited the companies website and they seem to have become more transparent in the way communicate with their shareholders...that's usually a good sign...www.maxar.com

There is a lot of corporate news coming out about the company…new orders, possible sale of their space robotics unit to pay down their debt...The following is one investor’s take on what is going on…

I thought they were smart enough to do this in the first place and I said that they would as part of my investment thesis. They should finish WorldView construction and then sell off MDA, using the money mostly to reduce debt but also to provide additional working capital with which to continue to grow & expand the satellite imagery business. If possible, I think they should hold onto select small satellite manufacture capabilities and get rid of the larger ones but if it's not possible then I would understand and still think they should sell. A sale of the capital intensive MDA would reduce debt significantly and the result would be a growing business with much higher margins and a lean operating model. I would even like to see them (if this is even possible, I don't know) negotiate a deal with whoever buys MDA, either sign a contract or some kind of future letter of intent to provide a build out of the next generation of satellites in the future (for the generation following the soon to be finished worldview constellation,) and to provide support for the current generation of satellites. Either way, I think it would create a strong business with big margins.

Kagami426, Seeking Alpha contributer

That would make sense in that the current CEO (Jablonski) was the guy who use to run the software company that was acquired…an interesting restructuring and turnaround story with all of the bad news of last year already priced into the company's stock...

I don't have any money to buy in right now but I am going to follow this story.

Postscript

I put this blogpost together on the weekend, but already stuff appears to be happening...Check out the latest news item below...

01:50 PM EDT, 07/02/2019 (MT Newswires) -- Italy's Leonardo and France's Thales are considering the joint acquisition of a space business from Maxar Technologies (MAXR), Reuters reported on Tuesday, citing Leonardo's CEO Alessandro Profumo as saying.

"We are considering that with our partner Thales," Profumo told Reuters, referring to the MacDonald, Dettwiler and Associates business (MDA). "For us, they have a very good technology in the antennas for satellites, so it is an option we are considering."

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)