Buckley Capital Partners a Florida-based hedge fund manager focussed on value and special situation long-short equity investments, has written to the Board and management team of Euronext-listed Basic-Fit NV, recommending a strategic review of the business.
Buckley, a top 20 shareholder of the low-cost gym chain, believes that Basic-Fit should explore a sale to a private equity buyer, as the business continues to be significantly undervalued by the public markets.
In the open letter, Buckley writes that despite "high-quality historical growth and its great potential for future growth, Basic-Fit’s stock has significantly underperformed indices and peers in the consumer discretionary vertical".
Since January 2020, Basic-Fit’s market price has declined 34%, underperforming the broader comparable market, according to data compiled by Bloomberg.
Due to this underperformance, Basic-Fit now trades at just 6.5 times its next-twelve-month EBITDA estimates, a nearly 60% discount to comparable consumer discretionary companies serving a lower income consumer operating in North America and Europe, according to Buckley.
"Following our past conversations, we believe that now is the time for Basic-Fit’s Board of Directors and management to take action to maximise long-term value for all of its stakeholders, including shareholders," writes Bickley. "We strongly encourage the Board to launch an immediate strategic review to seriously consider a sales process for the Company."
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