The largest holding in our Core Value strategy now happens to be Jarden Corp. In terms of sizing, the position hasn’t been added to since July 2011, 2 ½ years ago. It then traded at an irrationally low, single‐digit earnings multiple. As of this past year‐end, the share price had tripled versus our average cost, and is more than 75% higher than at year‐end 2012. The P/E ratio, based on Wall Street consensus earnings estimates for this year is 15.4x. The P/E ratio of the S&P 500 Index, based on Standard & Poor’s own earnings estimates, is 15.4x. So Jarden is more expensive than it was, but by this measure no more expensive than the overall stock market, and we believe that it is a much superior company than most of those individual companies that make up the market.
…As the behemoth agent‐operators streamline and discard assets, there seem to be, on the other side of the scrimmage line, the more nimble owner operators ready to pick up these assets at a suitable price. Jarden, for instance, acquired Yankee Candle from a private equity firm this past September. The $1.75 billion price, equal to over one‐quarter of Jarden’s own market value, was its largest acquisition to date. Yet, Moody’s actually wrote that the acquisition was a positive for Jarden’s credit standing. There is a new position we hope to establish soon in an owner‐operator company that was established with the express purpose of acquiring such divestment candidates from larger firms; but not having purchased it yet, the description will have to wait for another time. Based on our study to date, it has the potential to be a very successful investment, on par with Jarden.