Q: Hello 5i team,
I am curious about your thoughts on Premium brand holdings (PBH). I entered a position around $86 and the stock has gone down in the past 2 years from a high of $110. I was wondering if you are still confident in the company? The BE portfolio entered at ~$56.
I think this is a slow growth company organically, do you stay with a holding as long as it is well above the entry point or is there a point were you may say that a company has run out of room and is time to exit?
Thank You,
Andrew
I am curious about your thoughts on Premium brand holdings (PBH). I entered a position around $86 and the stock has gone down in the past 2 years from a high of $110. I was wondering if you are still confident in the company? The BE portfolio entered at ~$56.
I think this is a slow growth company organically, do you stay with a holding as long as it is well above the entry point or is there a point were you may say that a company has run out of room and is time to exit?
Thank You,
Andrew
5i Research Answer:
We continue to like PBH for its mix of income (3.7% yield) and some room for growth and upside potential. While its price has remained flat over the past several years, it has had to navigate a tough macro environment with higher rates, higher input costs, and less potential for acquisitions due to its high debt loads and high rates. Growth is expected to pick back up in the next few years, and its valuation is decent at 18X forward earnings.
We feel that as long as nothing has materially broken in its thesis or fundamentals, we prefer to continue holding as it navigates through the current economic landscape.