Trade Update: EBIX Exit

On Wednesday, we exited our positioning in Ebix Inc. (EBIX) and trimmed Consol Energy (CEIX) on behalf of clients in our Opportunities strategy. The proceeds have been added to our strategic cash holdings where we intend to be tactical in the coming weeks.

Let’s dive in.

EBIX Exit

Our Opportunities strategy is centered around pinpointing market anomalies and key events that could yield substantial returns. Our thesis surrounding Ebix was based upon the potential windfall from the EbixCash IPO. The idea was that a successful spin off would allow the company to pay down high interest debt which could bolster its earnings per share and growth potential.

When it comes to special situation investments like Ebix, we follow a very strict investment process and aim to adhere to our playbook consistently. With recent news of the potential IPO being delayed along with continued red tape surrounding the deal, we believe the risk/reward is no longer favorable and we elected to sell Ebix effectively flat from our entry a month ago. 

Considering the increase in risk that the IPO falls through, we were a bit surprised that the share price has not gotten penalized for a meaningful widening of possible outcomes to the downside. Although we would’ve preferred a different outcome, we are fine with the course of action and exited in accordance with our original game plan.

Trimming a winner

Consol Energy (CEIX) is up over 20% year-to-date and we took the opportunity to trim ~1.4% of our positioning as it trades close to its all time highs. The move keeps us in line with our desired energy exposure while locking in gains for clients following a strong move upwards. 

The proceeds of Wednesday's trade have been added to our strategic cash holdings for the time being. As we move through the second half of earnings season, the increased cash position will allow us to continue to be nimble.

As always, let us know if you have any questions about the recent trades; we’re happy to assist.

–Your Titan Team