Mittleman Brothers Investment Management Sells Revlon (REV) After Bankruptcy Filing

Investment management company Mittleman Brothers Investment Management released its “Global Value Equity Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. The fund declined 17.6% in the second quarter compared to a 7.9% decline in the MSCI ACW Net Total Return Index. Only Heritage-Crystal Clean, the fund’s new addition, contributed positively to the fund’s performance. For more information on the fund’s top picks in 2022, please check its top five holdings.

In the letter, Mittleman Brothers discussed the stocks like Revlon, Inc. (NYSE:REV). It is a beauty and personal care company headquartered in New York, New York. The stock of Revlon, Inc. (NYSE:REV) closed at $6.73 per share on August 11, 2022. One-month return of Revlon, Inc. (NYSE:REV) rose to 17.04% and its shares lost 41.43% of their value over the last 52 weeks. Revlon, Inc. (NYSE:REV) has a market capitalization of $365.316 million.

Here is what Mittleman Brothers specifically said about Revlon, Inc. (NYSE:REV):

“Lastly, MIM has already communicated regarding the Revlon, Inc. (NYSE:REV) bankruptcy filing on June 15th, see this link if you missed it, as MIM’s opinion here is unchanged: Revlon Bankruptcy

Revlon has since traded up from the pre-bankruptcy filing low of $1.08 on 13 June to above $9.00 on a couple of occasions, on 22 June and again on 1 August, and during those two trading sessions, MIM sold a good portion of its position at just over $9.00/share, given Chris’ reduced estimate of fair value is $10 (down from the mid-20s). If the bankruptcy process results in an auction of the assets the realisation could be far in excess of $10 per share by simply applying the range of current market multiples. But, bankruptcy introduces significant costs, uncertainties, and risks that could confound fairness, so reducing the weighting into these periodic price spikes makes sense.

MIM continues to think there are plenty of buyers for these assets who could easily pay the 2x sales and 14x EBITDA needed (by Chris’ math) for the equity to recover about $10 per share in value. 15x EBITDA would be nearly $16 per share. 16x would be $22. And there are some new unexpected potential buyers, too…” (Click here to read more)

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Revlon, Inc. (NYSE:REV) is not on the list of  30 Most Popular Stocks Among Hedge Funds. As per our database, Revlon, Inc. (NYSE:REV) was held by 20 hedge fund portfolios at the end of the first quarter, which was 23 in the previous quarter.

We discussed Revlon, Inc. (NYSE:REV) in another article and shared the list of small-cap value stocks that hedge funds love. You can check our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other prominent investors.

Disclosure: None. This article is originally published at Insider Monkey.

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