Nah, this was several months ago when the rise to $30 made PRSC over 40% of my portfolio, and I wanted to go after some other opportunities.

I am certainly going to hold my remaining shares. From today's jump, PRSC is almost 30% of my portfolio lol.

oh ok. You really can't kick yourself too much there. It's my largest position as well and im glad I haven't sold a share since ahnuld's original recommendation.

Ahnuld do you think the removal of the poison pill last week was in preparation for this announcement or do you think it could be setting up for something else?

Was very nice waking up to this...

Wow. Nice pick Jordan. Any thoughts on it at this price?

I think its still cheap and a fair price is in the 50's. I ddint sell any yesterday. I didnt sell for any of my clients either. Oly reason I would consider selling some now would be concentration issues, since my cost basis is $13, but even then I wouldnt want to right now.

Im still doing some work on the acquired company. It was an extremely good price, but the conference call gave us some useful information.

It was a competitive bidding process. That doesnt necessarily mean PRSC paid the highest amount, because this is Therese Reins baby and she is sticking around long term. She would want to agree on the vision for the company with the acquirer and also look to grow the company, things a PE shop couldnt offer. Still, it means no one bid much more than 4x ebitda, which is ridiculously low.

The majority of the business is in the UK. Its based on a new program run by their equivalent of the welfare office. The gov has outsourced the job of placing unemployed workers in appropriate jobs to private cos. The private cos get some up front but much more cash based on successfully placing people long term.

All the contracts run for 5 years and it started in 2011. My guess is bidders were afraid that in 2 years the government wouldnt renew the program or change the terms to make it less profitable. Hence a low multiple.

PRSC protected themselves by only paying 1.5x upfront. Even if the program dies after 2 years it would probably be a break even proposition for the. If it becomes the new model in the UK, PRSC is happy to pay out the full amount.

I started looking up how the population feels about the program, and how successful its been. Thats the best way to predict renewal or not, even if the current conservative government loses the next election. Im sure PRSC did the same work as me and is comfortable with the answers they got. And like I said before Shackelton did a really good job structuring the deal.

Theyve been working on this since Jan so my guess is theres nothing else cooking.They may have wanted to kill it early in case the stock didnt move on this deal and someone came in with a lowball. Not an issue now.

Thinking about buying the selloff today. Anything new over the last three months since the acquisition I should look for when I research today?

They released an investors presentation today. Thing that stood out to me was they call out 8-10% EBITDA margins for ingeus long term. I want to say TTM they have done something like 20% EBITDA so that's a dramatic change. I'll look later tonight here. I thought that the acquisition price seemed too good to be true so that would explain a lot.

The exact wording is long term ebitda margin target threshold of 8-10%. Its also on the same slide as where they talk about structuring the earnout, so my understanding is that the earnout needs 8-10% margins at least to payout, not that thats what the business will do long term. But it is confusing and could be causing the selloff today.

Definitely see that point of view. When I read the 8-10% I related that to the 6.5% target they set for the Logisicare and NET segments. This stock doesn't trade down 7% in a day on no news. There was something in that presentation that people didn't like and I suspect they interpreted the 8-10% the way I did. If that is a mistake, seems like a good entry point.

ya I agree thats probably why its way down. Also they presented at a conference today, dont know what they said. I read some analyst piece that come out last week, he took down his numbers alot. I get the feeling that mgmt has been guiding expectations lower. I dont agree with the report (overly negative on decline in ingeous 2013/14 decline, and assumes NET margins decrease from 2013) but thats what the street is reacting to.

Pretty sick ER numbers

Up 16% so far today on earnings. Nearing $50. Didn't listen to call yet myself...

and here I am on the sidelines still. What a run this company has had, very impressive

Figured it was good news when I saw the thread bumped .

How is this not a good time to sell at $45? Even OP says:
It's close to fairly priced. Original thesis is nearly met. 300% gained in two years from thread posting. Does anyone think PRSC will now greatly outperform the index? That risk/reward favors holding? If the market corrects hard now, lots of profit taking in this bad boy. No news until next earnings. Seems like a no brainer dump, no?

Just asking, have no position.

That thesis was before the purchase of Ingeus, which is spewing out almost unbelievable numbers in its first month.

On top of which the ER is surreal and probably beyond even OP's expectations. Convertable debt paid off, increase of EBITDA by 35%, increase of net income by 13%, and this is before Ingeus has really kicked off.

Wonder how OP will adjust his thesis based on the ER.

Who was this directed at? I don't think anyone mentioned anything about buying/holding after it hit $45? Curious if something was deleted, because I'm probably nearing the point where I can get long-term cap gains on this and was considering selling.

The question is directed at the OP.

ive been in europe for 2 weeks. I saw the numbers but havent had time to go over them or listen to the conference call. My 50 something ish price target was based off roughly 10x my 2015 fcf estimate. Obviously a lot of moving parts and that has to be revised so I cant comment until I go over stuff. But yes, enjoying the ride.

to keep it short, im calling for 45mm free cash from the historical business in 2015, and who knows for Igneous. They really didnt give people enough info to go on. Using historical is too high. Ingeous did 10mm in NI in the past 3 months and they said there is some rev drop off in the way the original contracts are structured after july 1st but that there is a decent chance for large performance payments on march 1st next year and ingeous has won 3 contracts since the acquisitions closed. So hard to put a number on that, im just gonna guess 30mm in fcf in 2015 with a big +-.

so that gets you just north of $5 in free cash next year. with organic growth you can put a 12x multiple on that and get to $60 for fair value. so id be selling in the mid 50s but not here at $43.

Sweet. Thx for follow up.

Some hints about additional deals in the pipeline were discussed on the call as well. When you have a smart capital allocator like Shackleton running the show, I think this becomes an easy hold for us, especially when you factor in the tax consequences from selling (we all have pretty sizable gains built up). Its great peace of mind to know he is looking out for shareholders in these M&A deals. The Igneus deal certainly shows that.

And one of those additional deals was announced this morning. Another big one, $400m acquisition. Matrix has done $187m in revenue and around $40m in EBITDA in TTM. Doesn't strike me as an amazing price but the company has sick margins and is also based in AZ so the likelihood of cost saving synergies is probably much higher than with the Igneus acquisition.