New Special Sits: May 2025

In this newsletter I am sharing intriguing special situation opportunities that have caught my interest over the past month.

Here is what you will find in this post:

  • Comtech Telecommunication (CMTL) – Strategic Review/Asset Sale
  • TrueBlue (TBI) – Turnaround
  • Identiv (INVE) – Net-net Under Activist Pressure
  • Webjet Group (WJL:AX) – Bidding War
  • +8 other opportunities published for SSI subscribers

If you’re a special situations investor seeking actionable insights, be sure to follow me on X/Twitter and consider upgrading your SSI subscription.

Comtech Telecommunication (CMTL) – Strategic Review/Asset Sale

Intriguing segment sale/remainco re-rate play at CMTL with potential multibagger upside.

In November, CMTL settled with two activists who had been pushing for the sale of its public safety business. The company announced a strategic review just weeks earlier and appointed a new CEO specializing in turnarounds and asset divestitures in January 2025. The activists, both former CEOs, now hold two board seats. If the public safety segment is sold, investors would effectively get the the remaining c. $300m in revenue from the defense business for free. A sale might be imminent with a significant debt repayment due in October 2025. There’s a reasonable path to a 2x or greater return on the equity. This is a levered stub play, so the situation is not without risk.

The Public Safety business, a 911 system management platform with related software and hardware, is clearly up for sale. As noted, two former CEOs were pushing for this sale last year and settled with management shortly after the company announced it would explore strategic alternatives. The activists now hold two board seats and will closely oversee the process.

In January 2024, the company appointed a new executive to lead the 911 business segment. His amended employment agreement includes a change-of-control provision specific to the 911 segment, with the following terms: a transaction-based payment tied to the net purchase price, starting at a baseline valuation of $500m. The payout begins at 0.4% of the sale price and increases to 0.6% if the valuation exceeds $900m, capped at $5.1 million.

If the asset sells at $550m (the base case), the remaining business would be valued at approximately 1x norm. EBITDA (based on a four-year average). If the sale price exceeds $600m, which appears achievable, the remaining business, including corporate costs capitalized at 7x, is effectively free. In their initial letter to the board, the two activists noted they had consulted multiple industry-specific investment banks and potential buyers, concluding that the company could be sold for well above $553m.

A few additional factors are pointing to a potential sale above $500m. In 2023, Rave Safety was sold to Motorola Solutions for $530m, reportedly at 10x sales. While not fully comparable, Rave operates in a space very similar to CMTL’s public safety business, and the activists have cited this transaction as a valuation proxy.

CMTL originally acquired the 911 segment in 2016 for $430m and later added several bolt-on acquisitions totaling an estimated $30–50m. Based on historical acquisition costs alone, this is a $500m asset. Since then, the business has only grown, albeit modestly, but with a highly stable margin base.

There are also relevant public and private comps. Motorola Solutions is a direct competitor in the niche government-facing public safety market (MSI’s biz here is smaller than that of CMTL). However, MSI also serves the broader commercial market and has global scale, it trades at 23x LTM EBITDA with higher margins and meaningfully larger size for the entire business.

A more interesting comp is Everbridge (EVBG), which was acquired by Thoma Bravo in 2024 for 22x LTM EBITDA and 4x sales. EVBG provides mass notification and alert services via phone, text, or email, and offers geolocation capabilities to assist with emergency response, functionality similar in intent to CMTL’s offering, which enables accurate location tracking and automatic call routing to the correct emergency team. While the two companies differ in customer base (EVBG is mostly non-government), both offer mission-critical software with similar EBITDA margins of around 20%.

Importantly, CMTL is the second-largest player in its highly regulated niche, with 22% market share. Given the complexity and red tape involved in switching software providers in the emergency communications space, this entrenched position is likely to be defensible, making the business especially attractive to strategic buyers.

Given all of this, I believe a sale in the 13–15x EBITDA range is highly conservative and would result in proceeds of $550–620m. At the upper end of that range, the remaining business is effectively free.

TrueBlue (TBI) – Turnaround

TrueBlue is a U.S.-based temporary staffing firm currently trading at distressed levels amid an industry-wide downcycle. The company trades at less than 3x a conservative estimate of normalized EBITDA (c. $80m vs $110-130m pre-covid). In this light, continued interest from its peer, HireQuest (HQI), over the last two years only highlights the potential turnaround opportunity in TBI.

HireQuest has been pursuing an acquisition of the company, with the most recent public bid at $7.50/share, or 25% above the current stock price.

Another interesting tidbit from HQI’s recently disclosed letter is their interest in the PeopleReady segment, which is TBI’s temporary staffing operation with 500 branches across all U.S. states. HQI floated the idea of acquiring PeopleReady for $150m, or roughly 85% of TBI’s current enterprise value. The remaining two segments, with a combined $700m in revenue, have been notably more resilient and profitable over the past two years, and are certainly worth more than the remaining stub value if PeopleReady were acquired at $150m.

TBI’s board rejected HQI’s latest offer and adopted a poison pill—justifiably so, in my view. Even though PeopleReady (temporary staffing) is the largest and most capital-intensive operation, and is currently being hit hard by operating deleverage in the downcycle, the business is not as capital-intensive as it may initially appear.

Since October 2024, monthly temporary staffing data has stabilized at around 2.5 million and hasn’t moved. This suggests that the end of 2025 could be a good year for the company to regain profitability. My normalised EBITDA is based on revenue that is 16% (in line with monthly hiring pre-COVID) above current levels and EBITDA margins in line with pre-COVID.

Several value-oriented funds are betting on this outcome. Pzena Investment Management, a value investing fund, owns 10% of TBI. Royce & Associates, also a value-focused fund, increased their stake to 6.3% at the end of April.

Identiv (INVE) – Net-net Under Activist Pressure

Identiv was historically an access card and physical security business. In 2024, the company sold its physical security segment for a substantial $145m in proceeds. It now trades at nearly a 50% discount to net cash, with zero debt on the balance sheet. The remaining business is a pure-play Radio Frequency Identification (RFID) operation, which is currently burning about $12m per year.

Activist Bradley Radoff (owns 6.2%) is calling for the removal of Chairman James Ousley (nearly 80 years old and on the board since 2014) and Gary Kremen, a long-tenured director who barely scraped through re-election with just ~34.5% support last year. Radoff criticizes the board for stopping short of a full-company sale, leaving shareholders with a materially EV-negative stub.

There is also another activist who I believe is still very much involved. Bleichroeder LP (owns 19.9%) supported last year’s divestiture but has also voiced opposition to Kremen’s re-election and has advocated for governance change. Combined, activists with a ~26% stake are aligned against the board and will likely push for a sale of the remaining business as soon as they can.

The board and management own no shares and will likely be re-elected at the upcoming AGM, as activists have not proposed an alternative slate. As a result, this whole setup could drag on for a while, especially given the staggered nature of the board, it will take time for Radoff and the rest to gain control.

In the meantime, management has clearly communicated their intention to use the 3rd of the sale proceeds for expansion in the RFID space via M&A. This presents a clear risk that keeps me on the sidelines until there is more clarity from the activists on how they plan to pressure the board and take control.

Webjet Group (WJL:AX) – Bidding War

Online travel booking platform Webjet Group (WJL) recently received a takeover offer from private equity firm BGH Capital at A$0.80/share, which was rejected by the board. Despite this, the stock continues to trade above A$0.80, likely reflecting market expectations of a higher bid. Notably, BGH has accumulated a significant portion of its current 11%+ stake around that price level.

While the BGH situation was unfolding, another ASX-listed travel company, Helloworld Travel (HALO), began building a position in WJL. According to reports, Helloworld informally pitched a merger proposal to WJL’s board, which was also rejected. Undeterred, HALO continued acquiring shares, first reaching a 10% stake at A$0.85 and later increasing it to 15% by purchasing additional shares at A$0.89.

At this stage, HALO holds a larger stake than the combined holdings of BGH and the Weiss consortium. While WJL’s CEO has confirmed there is no formal offer on the table, the recent decision to postpone the company’s share buyback suggests openness to potential negotiations. Given HALO’s latest purchases at A$0.89 per share, any future bid would likely need to be closer to A$1.00 to be taken seriously.

From a valuation perspective, WJL appears inexpensive, trading at just 5.7x EBITDA and 8x EBITDA minus capex, with normalized capex likely to trend lower. While most international peers trade at significantly higher multiples, direct comparisons are somewhat limited due to scale differences between local and global OTA platforms. It’s also worth noting that WJL was spun off and listed on the ASX at the end of last year, debuting at over A$1/share and valued at a 7.5x EBITDA multiple, suggesting clear room for an increased offer.

Much of the stock’s sell-off since can be attributed to spin-off dynamics, with the smaller WJL carved out of a much larger parent. This structural overhang, combined with sector-wide pressure and multiple index exclusions, likely accelerated the decline, exposing the company to an opportunistic takeover risk. The timing of recent bids fits well into this picture.

What makes this situation particularly compelling is the involvement of credible and experienced bidders with deep expertise in the travel sector. BGH Capital is a well-regarded Australian private equity firm with A$6 billion in AUM and a strong track record in the space, including a successful investment in TripADeal, which was acquired by Qantas last year. Alongside BGH is Garry Weiss, a respected Australian investor with a long history of chairing prominent public companies. Now, with an industry peer also acquiring shares in WJL shortly after BGH’s interest became public, the competitive dynamic could intensify.

8 other ideas posted on SSI during May

If you’re a special situations investor seeking actionable insights, be sure to follow me on X/Twitter and consider upgrading your SSI subscription.

I have posted 8 new investment opportunities on SSI during May. These are fully accessible for paying subscribers only, but you can find more details on these setups using the links.