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Alternative Market Briefing

Maglan Capital gains 20.84% in February on bets in FairPoint

Monday, March 09, 2015

Komfie Manalo, Opalesque Asia:

Event driven investment fund Maglan Capital exhibited exceptional strength in February after all of its long positions gained along with the broader market. Steven Azarbad, Maglan’s chief investment officer said that the standout performer in the portfolio was the fund’s largest position, FairPoint Communications (FRP), which reached an agreement with its striking unionized workforce on February 19.

Azarbad said that FairPoint is simply the most undervalued traditional telecom service provider and added that larger peers include CenturyLink, Frontier, and Windstream. "Furthermore, its size and existing tax-reducing net-operating-losses make FairPoint a likely acquisition target. Each multiple-turn in valuation is worth nearly $10/share. Because of its soon-to-close REIT transaction, Windstream could afford to pay a higher rather than a lower multiple versus Frontier’s purchase price for the Verizon assets they are expected to acquire," he said.

Azarbad added that FairPoint’s recently agreed-to collective bargaining agreement (CBA) will be a boon for the company’s margins. The agreement follows more than a month of federally mediated negotiations and was quickly and overwhelmingly ratified by the union members, and the union members returned to work on February 25.

The consensual resolution of the strike came in the wake of a late December ruling from the regional Nationa......................

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