This week’s major portfolio development involves a partial buyout ofCOMM (CommScope), a holding in the Quant Alpha Weekly Portfolio. Following an offer from Amphenol, CommScope shares surged over 90%. What makes this deal unique is that it’s not a full acquisition—Amphenol is proposing to acquire two-thirds of the company, leaving the remaining third as a smaller, leaner, and significantly deleveraged entity. A sizable special dividend is also planned as part of the transaction. Full details of the offer can be found [here].
Based on a rough valuation, if the deal were to close today, my estimate puts CommScope’s total value at approximately $18.60 per share. This assumes the remaining one-third of the now-deleveraged company is worth 100% more than one-third of the pre-deal, highly leveraged version. If the market places a higher valuation on the streamlined business, the total value could be even greater.
Analysts have taken notice:
Morgan Stanley raised its price target from $4 to $17
Raymond James raised its target to $19
At the current price of $14.99, the stock is trading at a 19.4% discount to my estimated deal value. That’s unusually wide for a newly announced buyout—likely due to the unconventional structure, which may be causing investor uncertainty. Many may simply be locking in their quick gains, and that’s understandable.
As for this portfolio, COMM will remain a holding as long as it maintains a Buy rating from the Quant system. Once it falls out of the buy range, it will be removed in a subsequent update.
It’s important to note: this outcome isn’t luck. Every stock in the three Quant Model Portfolios was selected based on being deeply undervalued with strong fundamentals. When one of them receives a major buyout offer, it’s a validation of the system doing exactly what it was designed to do.
This week’s update includes five new Additions and five Removals from the portfolio. In addition, three stocks have been placed in the Penalty Box. These positions will have one week to rebound with a Quant Score that returns to the buy range. If they fail to improve, they will be removed in next week’s update.
This Portfolio is now beating the benchmark for the first time.
The portfolio now has 23 stocks in it. It is up +190% since it began in 2023.
Remove: None
Outperformers: EAT (Brinker International) and LMB (Limbach Holdings) are up over 100%, AGX (Argan) and WGS (GeneDx Holdings) are up over 200%, POWL (Powell Industries) and PSIX (Power Solutions ) are up over 300%, STRL (Sterling Infrastructure) is up over 400% and CLS (Celestica) is up over 700%
The Quant Alpha Weekly Portfolio continues it’s steady increase in new members. It received a partial buyout on CommScope which caused that stock to soar over 90% and put the Portfolio in the black by over 10% overall
The Quant 30 Portfolio now is starting to see some rotation among the 30 members. It managed to close ahead of the benchmark for the first time.
The Quant Alpha’s – LegacyPortfolio maintained its over 190% return.
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