Q: Well announced today that Circle’s growth continues to be excellent and possibly accelerating. The last thing I would think of doing is selling that business if I owned part of it. They talk about unlocking shareholder value. I would prefer they buy more of Circle. Never mind selling there piece.
What are your thoughts on this.
What are your thoughts on this.
5i Research Answer:
Circle now has a $100M revenue run rate and 55% margins. Business is good. We do not generally try and analyze company's capital allocations too much, however. Management knows the business of course more than we do. Executives have sold businesses before, and if they can re-coup capital and redeploy it for better returns (with more acquisitions at good valuations) then that could still be the right move for the company. Selling when things are going well, of course, also gets a better valuation. High debt could be holding back WELL's valuation, and thus a big asset sale could improve the share price. Either way, we would continue to view WELL as attractive overall.