Alan Fournier (Trades, Portfolio) of Pennant Capital Management on July 19 purchased a stake in the company over the recently bankrupt Twinkies maker Hostess Brands from bankruptcy.
Fournier took 2.2 million shares of Gores Holdings (GRSH, Financial), a “blank check” company that is sponsored by private equity firm The Gores Group. His shares, priced at $10.25 the day of the purchase, equaled a 5.87% stake in the company, according to GuruFocus Real Time Picks. Gores had been hunting for acquisitions since its founding that “have reached a transition point in their lifecycle presentation an opportunity for transformation,” it said in a filing.
Gores Holdings acquired Hostess Brands LLC several weeks earlier on July 5 and plan to take it public. Prior to the firm’s interest, Hostess had filed for bankruptcy protection and spent 3½ years as a private company. According to Gores, the company will have an enterprise value of $2.3 billion, or 10.4 times its estimated 2016 adjusted EBITDA of roughly $220 million.
“Hostess possesses exciting continued organic top-line growth potential and is one of the highest EBITDA margin and cash generative food platforms in the U.S.,” said Andy Jhawar, senior partner and head of the consumer and retail group at Apollo Global Management (APO, Financial), the firm that helped fish Hostess out of bankruptcy and renovate the business.
The deal is slated to close in the third quarter of 2016, when Gores Holdings will change its name to Hostess Brands Inc.
Fournier is the founder of New Jersey-based hedge fund Pennant Capital, which employs both fundamental and technical analysis to evaluate investments, and allows both value and growth stocks. He had as first-quarter largest portfolio positions Signet Jewelers (SIG, Financial), TransDigm Group (TDG, Financial) and Molson Coors Brewing Co. (TAP, Financial).
One other investor followed by GuruFocus, Louis Moore Bacon (Trades, Portfolio), held shares of Gores Holdings at first-quarter end. Bacon purchased 1.7 million shares in the fourth quarter at an average price of $10.
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