Yet Another Value Podcast - Alex Roepers on two deep-value special situations: $DCH and $NOMD

Episode Date: June 15, 2026

Alex Roepers of Atlantic Investment Management lays out two deeply cheap special situations: Dauch (DCH) and Nomad Foods (NOMD). In both, management is sending "dark arts" signals (an aggressive CEO payout struck well above the current price, heavy insider buying) that point to an inflection the market hasn't paid for yet. We dig into the $300M merger synergies at Dauch, the auto-cycle and leverage risk, the governance red flags, the private-label threat to Nomad's frozen-food brands, and whether the European discount on both is real or just doldrums.This episode is sponsored by AlphaSense. Join Andrew, Dave Wang of Wall Street Prompts, and Ben Collins of AlphaSense for a webinar breaking down the modern AI stack for investors: where horizontal platforms, agentic workflows, and finance-specific tools each actually fit in a real research process. Recording June 16, live June 25. Register here: https://www.alpha-sense.com/resources/webinars/choosing-your-ai-stack-a-framework-for-institutional-investors/?utm_source=pt_YAVP&utm_medium=sponsored&utm_campaign=SWB_DG_06-25-26_IMP-GENAI_CORPFS_YAVP-AI-SolutionsDisclosure: long DCH and NOMDChapters:0:00 Two cheap special situations and the "dark arts" setup1:10 Sponsor: AlphaSense and the AI-stack-for-investors webinar2:29 Alex Roepers, Atlantic Investment Management3:04 Dauch ($DCH): the GKN, Melrose and Dowlais backstory7:05 Why Atlantic made $DCH a core position at ~$69:03 The governance knock: a company named after a sub-1% CEO13:42 Dark arts: the PSU grant that only pays above $1215:11 Underwriting the $300M merger synergies18:13 Leverage, capital allocation and the path to buybacks24:42 The auto cycle and why 5x free cash flow caps the downside29:12 Nomad Foods ($NOMD): the frozen-food bull case33:14 Nomad by the numbers: 5.5x earnings, 7% yield35:39 The bear case: private label, Aldi and a new CEO39:21 Would Martin Franklin ever sell?41:22 Dividend or buyback at these levels?43:00 Is Franklin distracted by APi Group?45:27 The kitchen-sink reset and a fall investor day47:37 "Addback city": cleaning up the earnings number50:02 The European discount: real or imagined?Links:Yet Another Value Blog - https://www.yetanothervalueblog.comSee our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimerProduction and editing by The Podcast Consultant - https://thepodcastconsultant.com/

All right, hello, and welcome to the Another Value Podcast. I'm your host, Andrew Walker. Today, we're going to have an interview with Alex Ropers from Atlantic Investment. We are going to talk about, well, Alex has a great background in investing, activism, suggestivism, all that sort of stuff. And we are going to talk about two of the more interesting stocks that I've been following recently. Disclosure, I've got a position in both of them. I'm always on the verge of doing a write-up on both of them.

They have, we talk about it a little, especially with Dallas, but they've got some of the dark arts angles that I've really, been interested recently in terms of management teams kind of signaling that they think there's an inflection or the stocks undervalued through some dark cards things. So anyway, the stocks are Douch DCH and Nomad and OMD. And we're going to talk all about them for almost an hour and you're going to hear why I think and Alex thinks. And I think you should think too, these stocks are so interesting and undervalued. And they are very, very cheap. And, you know, cheap as value investors have learned for the past 15 years, cheap does not always equal alpha. But I hope, I hope that they're

will be some here, but that's not investing advice. See the disclaimer in the show notes. See the disclaimer at the end of the podcast. We're going to get to the podcast with Alex in a second, but first, a word from our sponsors. This podcast is sponsored by Alpha Sense and more specifically my upcoming AI webinar with AlphaSense. Look, the AI landscape is crazy if you're investor. It's crowded. It's confusing.

Everyone's telling you to adopt AI, but nobody is telling you what tools to use. How do you adopt AI? Should you be focused on using this as a superpower? Google, should you be building your own tools? How do you get used to it? All of this sort of stuff. I personally find it's a lot of experimentation. It's a lot of fun, but it's really confusing and it's really scary.

So anyway, I told AlphaSense about my problems and they organized a webinar to try to help out. I'll be sitting down with Dave Wang of Wall Street prompts and Ben Collins of AlphaSense to break down the modern AI stack for investors. What horizontal platforms like OpenAI and Claude and Agenic workflows and finding specific intelligence tools where each one can actually fit and help in a real research. process. So if you're trying to get better at AI, improve, develop AI-enabled workflows, you're not going to want to miss this webinar. Join us on, we're going to record it next week, middle of June 18th, and it'll be going live June 25th. So there'll be a link to register in the show

notes. And, you know, please, go free, lob in any questions you have on using AI, whether general tools or AI-specific tools like AlphaSense. So thanks, Alphicent, and I'll see you for the webinar soon. All right, hello, and welcome to the Yet Another Value Podcast. I'm your host, Andrew Walker, with me today, I'm happy to have on Alex Roper's from Atlantic Investments. Alex, how's it going? It's going well. Thanks for having me. Excited to chat today. Got some names in common. I'm really excited to talk about. Before we get there, disclaimer to remind everyone that nothing on this podcast is investing advice. There's a disclaimer in the show notes. There's a disclaimer at the end of the podcast. So you can get all those

disclaimers at the end. Alex, excited to have you on. The two stocks I really wanted to talk about were Nomad and Dow, which, you know, looks at you to 13 a half. We've got some overlap there. I think they're both really interesting situation. So we can start by talking more stories or we can dive into whichever one of the two you think is more interesting. You let me know. Well, let's start with Dowd, symbol DCH, trading at $6 and $0.32 on the New York Stock Exchange. This company came about through the merger of American Axel and manufacturing. and an English company called Dowley, previously listed as DWL space LN,

and that basically is the former GKN automotive. It's about a $5 billion company that was spun out from an aerospace division that GKN had. In fact, the combined company was bought in 2018 or 19, I believe, by Melrose Industries in the UK. A little history. Atlantic has been a mid-cap value investing for over 30 years, focused on the U.S., Europe, and Japan, and very concentrated on catalyst-driven situations. GKN, due to its low valuation and many catalysts to unlock the value, particularly by splitting aerospace and automotive, was our largest holding in Europe in 2018, and we actively promoted to the company at the time

to split the company in two pieces to garner the much higher multiple that the aerospace division would get. I mean, it's just a little history. We were glad to see that Melrose, which is a publicly traded private equity type company, took a hostile approach to unlock this value, and we benefited from that,

and that was done in 2019. We sold the stock with the big gain and left it at that and Captain I and Melrose, which then basically through corporate developments, ended up being basically a replication of GKN, after having sold everything else, paid down some debt, having lived through COVID, which was harsh, to say least, on their businesses. And we revisited them dusting off the same playbook,

split these two companies in 2003, after they paid down some debt, as I mentioned. and basically Melrose Industries was GK and automotive and aerospace once again. So they then decided also with our urging, with letters to the board, et cetera, to split the company in two. And that now worked. Melrose became the aerospace business. We handled, we had it in the portfolio for a while until it became too expensive for us. That basically rose to the valuation we had hoped for. And then there was this orphaned $5 billion business called Dowley, which actually is quite attractive.

but was in the doghouse as many other automotive parts companies and component suppliers were. So Dowley sat there, had very little support and following, had tepid results. And meanwhile, in the United States, this company, AXL, American Axel, had similar issues, you know, being in a recessionary environment, suffering from the trend to its electric vehicles, because most of their content was on ice, you know, internal combustion engine type cars. Anyway, so they both had their issues. And I guess they both found each other.

We were out of Dowley when the merger was announced. But once it was announced, it perked our interest right away. And so you suddenly had a company that combined was double the size, more like 10, 11 billion, 11 billion in sales, tons of synergies, between the two of them, critical platforms, a much improved outlook in terms of, you know, kind of a stabilization of the trend towards electrification. ICE was holding itself up much better, hybrid cars, also doing well, and they had good content on all of them.

So we looked at this in February of this year and very quickly decided it should become a core position. And so we've done that in stages, obviously knowing that the initial stage, of this new company, both its unfamiliarity, the name Doub, which was, yeah, not everybody's favorite. What does it mean? It's the name of the CEO, whose father started American Axel many years ago. Great. How much do they own? They don't control the company. But anyway, they decided to put their name on it. Okay, maybe it seems to be a trend these days, but we're not too happy with it. Anyway, nobody knew it. they had to go through the initial presentation, post the closing in February, and then the first

earnings report in May. And particularly with the first presentation, they kind of downplayed the near-term outlook. And the stock got hit, which was even a better opportunity to add to the situation. So that is a little bit of near-term history of DCH, of Dow. It's sitting, as far as we're concerned, on the tarmac. you take an analogy to airspace. It's taxing around. In our view, this company can earn, you know, buck $52 and being very rough with numbers to $6 stock, even at a very low multiple. If they do a good job with the synergies, if things go a little bit their way economically, which I think they will, and they don't have to go heroically, you're looking at, you know, a double or triple on the stock in the next, you know, let's say a year and a half. to two years. That was a great overview. And look, I think value investors, particularly event-focused one, are very familiar with DALA just because of the whole, as you said, the special situation,

the spin, it was in London, it was always very cheap. I know a lot of people who, you know, liked it at 200, like it at $150, like it 100. It was at 50. Then the merger got announced and, you know, it went up to 80 or something. I can't remember the exact numbers, but they're excited. What's happened to the Dowell right now? You know, I think, A, the thing that jumps out to me when I, looked at it for the first time is one of the things you mentioned. It is crazy that they named the company doubt after the CEO's family. Like he owns less than 1% of the stock. He's a, I understand his dad is the founder of American Axel, but it was just crazy. Like when I saw this and was investigating it, I expected him to own 30% of the stock being the family for, you know,

since the Ford family or something. And it's just not. And my worry here is you have a company that, you know, American Axel buys to LA. You have a company that, you know, a company that does that, names the whole combined company after the CEO. No one on the board owns any stock. I think the CEO is hilariously overpaid. And you kind of combine that and I say, hey, my biggest worry here is, we'll talk leverage, we'll talk business all that. But my biggest worry actually is, I'm worried these guys are going to be empire builders. And it's really easy to be an empire builder and buy a lot of suppliers and feel really comfortable, payers, overpay yourself. And, you know, how many auto suppliers really work out well for shareholders? I don't think it's

that many. So that's my biggest worry here. I'll pause there and kind of toss that over to you. I hear you and I have the same reservation about the naming of the company. I must say we're involved in a company called Aptive, which is a former Delphi Automotive. They became a growth stock, a favorite, a $20 billion plus company. Once the EV trend started to sour and become less exciting, this stock kind of came down hard and became a value stock, just a little background. And so we got involved with Aptiv about a year and a half ago, but it became a real value stock dropping down a valuation. They got so mad the management at what happened to the value.

They bought a quarter of their shares back with all the cash-load they had. And then eventually, also at our urging, split the company in two. You know, this is also a trend in Europe. We're involved with Continental, the German Tire Company, and they've been spinning out pieces. And it's very hard to find a good name these days that's not taken by somebody else. So, to Dowx defense, you know, Continental came up with a name for a $20 billion company that's very sexy, actually, called Omovio. I'm not making this up.

Delph, sorry, Aptiv came up with a company. I still have doubled saying it, Fursigent. Fursigent. All these companies are great, by the way, very cheap, much more focused, paying down debt, buying back shares, cheap. We all should own them. We own them. We own all of them. So Virzogent, VGNT, Omovio in Germany, symbol there is at this, AMV-Zero space GY.

Here's a $20 billion company here, $8 billion company there, all very cheap. So when Dao-Lay and American Extra came together, I guess there must have been a few brainstormed sessions. They finally gave up, said, what the heck we put the company name on it. I, you know, I'm with you. I don't like it, but I'm also not going to steer myself away from a. great value stock because of that irritation. I know you've also brought up the Empire Building and the number of shares that they earn when, or particularly Mr. Dowd earns, when the stock actually does what it's supposed to do,

which to go up higher, yeah, it could be deemed a bit aggressive, but coming from 1%, he's not going to own a lot more. And if he achieves that, we're going to be pretty happy. I think he's aligning the interest pretty well. And we also should see this in a world in which, you know, the most talked about thing right now is SpaceX and Elon Musk and talk about corporate governance violations and self-dealing. That's wild. So I don't want to go there. That's massively overvalued.

I suggest all your listeners steer extremely clear of that situation, even though they've engineered kind of a climactic, you know, launch here on Friday because so little is in the float and so many people want to buy it and so many indexes have to buy it. Beware, long-term, the thing is not only very overvalued, but it's a protest governance situation with Mr. Musk getting tons of shares before and after the deal. So that's what I'm putting in context with doubt, which is actually pretty minor in that perspective. So, no, look, you hit on a lot of the pieces there. And SpaceX, you know, Elon's got his issues, and SpaceX, all of them have their issues, but there at least you can point to Tesla and say, like, hey, look at the Tesla stock. Like, this is a guy who, whether it's all through smoke and mirrors or whatever, he's rewarded his shareholders.

With Dow, you're just kind of like, you know, who are you to be paying yourself like this? The two things I want to hit on in what you just said. A, you mentioned, Dow has longtime listeners will know why I love the dark arts components where a CEO is getting really bullish. CEO is taking grants and PSUs and stuff that best if the stock goes a lot higher. And invest, people can go look, this is a February 3rd, 2026, 8K. The CEO here gets a huge PSU package that, you know, as you and I are speaking, the stock is just above six. The stock has to go to $12 per share by the end of 2009 to start investing on the low end. And on the high end, the stock is it has to hit up to $22 per share.

So this is a company, you know, it's trading at six. They give the CEO who named the company after himself. So I think the CEO in the board are pretty in Sympatico there. They give him a PSU target that only starts vesting at 12 in. less than a three-year double, or I guess that it's three and a half years. I think you can kind of see where they might see the puck going. That's not to say there aren't issues there, but that was the thing that kind of got me excited about it.

I'll pause there in the dark arts. I do have a few more questions on doubt for you. Yeah, no, I'm with you basically on your view on it. We think that there's a good alignment of interest in general. I think the opportunity said is really good. I think he's pretty well suited to extract the synergy. and to drive it higher in order to make, hopefully, generational wealth for himself and his family. And along the way, all of shareholders, minority shareholders, if we're astute and we're

early and we're believing in this story, we'll make outsized returns. I completely, so you mentioned the synergies there. And I think the synergies are the other really interesting thing, right? So if you're just looking, this is a company that does in the LTM about $1.5 billion in EBITDA, obviously this is a parts component, so there is a significant cap-back. and you have to adjust for that. But let's just use the 1.5 UDA number 5 billion plus of net debt. So this is, it's pretty leverage.

You know, this is, Dow is a $1.5 billion market at company with $5 billion of EBITDA and $1.5 billion of, with $5 billion debt and $1.5 billion in DBA. It's pretty levered. But they're saying, hey, the American Axel Dala merger that we got is going to deliver $300 million plus an EBITDA. So that's going to drive the growth going forward. How do you think about the synergies? How do you get comfortable underwriting that synergy number?

you know, if it's 270 instead of 300, we'll be okay. But if it's 30 instead of 300, it's probably going to be both. How did you get comfortable with the synergies and kind of think about those? Well, so far from what we've seen in their presentations, they obviously split it into the buckets that we can all either get a hands around or hands around SG&A, which is about 30% of the 300 million, it's about 90 million for that matter. There's public company costs that they can cut out workforce optimization,

streamlining, engineering, research, and development, and elimination duplicate offices. So $90 million on, you know, $11 billion sales base. Obviously, that's the beginning of the S&A. Then there's the purchasing. You know, these companies obviously buy very similar types of raw materials and inputs. Economics of scales bring the purchase costs down with the vendors, vertical integration, and then, you know, global freight costs, etc. So that is the 50% piece that will come over the three years, you know, in a more gradual fashion.

Then operationally, I think they have 170 plans or something, and they can optimize locations. And so cut, you know, inventories, they can cut manufacturing footprint, et cetera. So I think it is reasonable. This is 3% of 11 billion. I think you mentioned that. So in very synergistic manufacturing companies, we've, they've. this is very achievable. Certainly when you give a three-year target, I think they're hoping to be at 100 million run rate by the end of 2026, which is an 11-month year because they closed in February.

I think they're already at 35 million or so after the first couple of months. I think the 100 million is probably something we'll see confirmed. And then from there, the other 200 million, I think there's a high probability. Just on the synergy is one thing that's not loss of me is they say the majority, if I'm remembering correctly, as you said, the deal closes February 3rd, 2006. They say the majority of earnings are going to be done within two years. So that would kind of say, hey, by the end of 2020, you're getting close to fully run rating the synergies. And again, the dark arts, all those things that they kicked in don't expire until the end of 2009.

So it's just another thing that's saying to me, hey, it doesn't guarantee it's going to happen. But I think they believe what they're putting out and how they're thinking about that. Let me ask you about capital allocation. You know, capital allocation is interesting here because, I have a business that after the synergies is going to do quite a bit of cash flow, but it is quite levered for an auto supplier. I think the CFO has come out and said, hey, we're around 3x leverage right now. Once we get under two, we're going to start talking about capital returns.

I'm not as familiar with how the CEO in this company when they were in the American Axel Forum thought about capital returns. So how do you think about capital returns and the go forward path here? Because the other thing is they are douch. maybe they want to go roll up a bunch more auto suppliers. Yeah, and I think the first order of business is to get through 2026, achieving that $100 million run rate targets, and kind of breaking even on cash flow,

because there are expenses related to achieving the synergies and integrating the company and deal transaction costs, all of which are hitting this year. So we have, in our model, zero free cash flow this year, or very little. And so it's going to be 27 and 28, two full years to get all these synergies and then crank this thing out for cash. I mean, we do assume about 500 million for CAPEX for the combined co. It's about 5%, a little bit near 4.5% of the company's sales.

Pretty typical for both. And then the total DNA is running at a much higher number because of historic, you know, depreciation of both companies as well as some purchase price accounting. We got it currently in the $850 million range. So about $300 million spread between depreciation. and amortization and the KEPX. So that would depress earnings per share. We don't care.

The earnings per share number will at some point be relevant. And I think the companies, and we'll push them for that, will at least do an adjusted earnings per share to kind of account for immunization and things like that. But we're not at that stage yet. We're going to get more active as a shareholder once they've announced the next quarter and we have a chance to meet with Mr. Dowke in person, whether it's in Detroit or here,

and we'll give him our unsolicited advice, which we are quite good at. And in a respectful manner. Always we want to stay respectful because I think more things get done that way. But we will be hopefully articulate and forceful and trying to help him get to where he wants to go, which is pretty much the same path we want to be at.

And so we'll help him with messaging. We'll help him with capital allocation priorities. I would say as we look at it now, the messaging is very important that they have a capital markets day by early next year, one year after deal, really lay out the progress, lay out a credible roadmap

for much higher earnings per share, debt repayment, and a capital allocation policy in year two and three or four. So we'll push on that and of course to show the streets that the cash flow is rather high. And so any kind of adjusted number

well-explained, you know, I think it's very helpful here for the sell side and the buy side. So that is our near-term plan, but I would think that they're getting to blow two and a half times net debt to Ibadah. As they stated, it's very important. At that point, depending on where the share price is, I would imagine still very accretive to buyback shares at that point, is to have a more balanced approach. I would like to seem even lower in net debt to Ibadan at this point. I can revise it, depending on how things are, because at the end of the day, they are

operating in cyclical businesses. And I think a little lower debt level is probably healthy. But if the shares are unappreciated, we will probably push on a pretty good allocation towards share buybacks, which I think they'll do. I agree with most everything you say. The only thing is like, I'd be happy to tell them this directly. But the stock is flat to down over the past five years. And I understand there's a lot of cyclicality in this business.

The auto cycle has not been great over the past. five years, but he's making $12 million per year before this thing. He gets the one time that PSU grant over $12 million for your shareholders aren't seeing anything. I'm not seeing anything that suggests this is a $12 million per year CEO, if that makes sense. And then to name the whole company after yourself, I mean, it's just to me, it doesn't mean I think the stock's going to work, but I just look at him like, this is just typical of like, kind of some of the worst of once you get high-level managers who don't have a big stake in a company. It's just got a lot of those signs to me. We have addressed conversation corporate governance issues many times in our 30-plus years

of doing this. And I will not predict anything as to which way we're going to go with this one, but you flagged issues that are front and center. And if the company performs extraordinarily well and things are going in the right direction, these are less of an issue. At the moment, there is underperformance. These become huge issues. that way. Our agitation, our activism goes way up when a stock is not doing what it's supposed to do, mostly as a result of management not doing what they're supposed to do. So that is to be seen. It's something I've noticed myself and I've wondered, like, is this right or wrong? When the stock is kind of working, I will see issues with the company, you're like, eh, whatever, let them go.

And then when the stock isn't working, I'm like, we got to cut these guys heads off, like, put them on the chopping block right now. And I never know, like, technically you should be doing both, right? Like if a company is Benedict fitting from great tailwinds and the stocks going up because they just have some AI. You still really should be holding their feet to the fire. But I don't know. It's, you know, humans don't quite work that way. We're not doing activism of whatever kind for activism's sake. If a stock goes up and it performs well, we eventually leave the company.

We're not going to try to pick a fight. Somebody else can pick it if they think there's more juice left on the table and they can do it from there. So we are very simple people. We like to buy low, sell high, and move on to the next thing. And here is a company that's low, we're ready to be involved for a while. But I think there's so much low-hanging fruit and obvious ways to get the stock to go higher. Yeah, we don't want to see the CEO stand in the way of that. We want the CEO to be a big facilitator of that.

And if he gets, you know, what he wants to a large extent with that, that's fine. But, yeah, if it's egregious and the results are not good, then, yeah, somebody is to say something about it, then most likely if we believe in the story, it will be us as well. How much do you think about the auto cycle here? Just because for those you don't know for the past few years, you know,

since the COVID highs, the new car cycle, which is really what they're playing for, right? They put in parts into new cars, and one of the things you hate about that is, hey, you're really dependent on the cycle. You are a almost captive subsidy, but one of the things you like about that is,

hey, you get installed a new car. Most of these new car cycles are five to seven years on the platform. You're kind of locked into that. you have some visibility. But, you know, swings from 15 million annualized to 14 to 16 million make a big difference when you're dealing with this much operating leverage. How do you think about where we are in the car cycle as it relates to this investment?

Yeah, we're not projecting much of growth. I think we're at a pretty steady level. I mean, it's been obviously much lower than what people predicted five years ago, though we were thinking 120 million cars a year. Now it's like 90 or something in that range, total, for passenger cars. And a lot of it is in China. And look at what China and some of the Koreans are exporting here. So those are issues.

But American Axel and Daoley, so the Combineco, has a lot of exposure to both Chinese OEMs and what's going on manufacturing-wise in Asia. So that's good. So they're a real global player with critical component supply. So I think they're going to participate on a pretty good level across the world. We're not assuming any real increase in total car production. There's obviously big shifts within as to where it's coming from with a big benefit to the Chinese in particular

and the Asian manufacturers who are just low cost. And if they're led into the Canada and Malaysia and in Europe, you can see what they do in terms of market share. So you better have content on those cars as a supplier. But we're, again, not assuming much of an upturn there. It may happen. I mean, at the end of the day, the global economy is growing. There's a lot of narrative within the industry of robotaxies and autonomous driving

and, you know, what the new generation wants to do if they want to own a car. I think at the end of the day, the world economy grows, the world population grows. There will be higher car sales overall, and that will be a benefit for all suppliers in the end of the day. Yeah, and you know, you mentioned robotaxies. And obviously, you look at what Waymo is doing. You look at, like, they're getting better. I would be surprised if at some point in the next 50 years, we weren't talking about a robo-Texam. But the thing I thought about with Daesh, I'd love to hear your thoughts of this.

Like, look, this is not a company. We're not dealing with these SaaS companies that we're trading at 100 times free cash flow. And you have AI disruption come on and you say, oh, my God, there's no tangible assets here. The terminal value might be zero. We need to sell these off 90%. Like, Dowsh is trading at, I've got it at five times their adjusted free cash flow number. and that should be going up as we talked about, as these synergies come in, as they normalize everything.

And their just a free cash number adds back some of the acquisition costs and synergies you talked about, but the synergies should come back everything. So, you know, I have debated, like, I'm really concerned. If America lowered all the tariffs right now, I think 100% of new car sales would be Chinese EVs that we were importing over from China. But, you know, we're talking about five times free cash flow. Like, so much of the value is coming back in the very near term. So how do you kind of think about that dynamic here?

Well, we're playing it for the next two or three years. It may well be that if you take a 10-year view, things are a lot different. But I think in the next two or three years, this company is focused on integrating, getting the synergies, blocking and tackling. And as far as shifts within the U.S., either like removing all the tariffs, letting the Chinese in, I think that is a longer-term proposition, if at all. And meanwhile, they're selling all over the world, including in China. So the impact will be muted.

The tariff situation, you know, between Canada and Mexico, it's all kind of exempt because of the agreements, USMCA. And so I think we're okay with this company for the coming years in terms of the end market environment. And I think it's going to be blocking and tackling and integrating the company as the main focus. And the end markets are big, large, and they're very critical as a supplier.

And so I think you don't have to worry too much. about the top line in my view. And look, I mean, again, the nice thing about buying something this cheap is they might generate their entire market cap and free cash flow over the next four to five years, right? So it's not like you need much terminal value there. Unless you have anything else on Dutch, I want to turn to Nomad because that's actually one. Yeah.

People might have heard I was excited for judgment. Nomad is actually one I'm more excited for. And I'm happy to talk about why. But I'll just turn it over to you. What is Nomad and why do you find them so interesting? Okay. So Nomads is listed in the U.S. under the symbol N-O-M-D.

And just to give your listeners a little idea, it's currently a $10.20.21-cent stock. Looking at the chart of the last five years, it was at $30 in 2021. It flopped around $15 to $20 a share between 2022 and 2025. And it recently got cut in half because of some weakness, some under management, so nothing major, but it's now at a very low valuation of, say, 10 bucks.

And what this company does, it is all European, even though it's listed in the US, it's all European frozen food. Frozen food has its own peculiar end market situations. It is considered favorable in the sense that it is easier and quicker to be. prepare the non-frozen food. It is two to three dollars less per meal. So it's an economic way of feeding the family. Think of fish sticks like iglo. It's one brand they have. They have other brands that people might know. They have a lot of branded first in class like birds, eye, iglo, finders. And these are mostly brands that are in Europe. So maybe not all your listeners who will know them. But suffice it to say that the majority of their brands are

market leading or very well known. The frozen food category, again, is consistently growing, but it has been ups and downs. I mean, COVID in particular, led to a huge up. Here because people didn't want to go out and shop and they put stuff in the freezer and they want to save money, et cetera, and then overstocking and then a huge down. That also played part of what came to the share price and the earnings. So the earnings are not really that much affected. They're down a little bit. Mostly cost inflation, some these stocking, some under management, some competitive threats here and there, but nothing major. They continue to be very profitable. And then finally, the other advantage of frozen foods, at least as it's seen in

Europe, it helps with sustainability. Forty-three percent of shoppers think that buying frozen food is reducing waste, which is probably true in some case. So at least those are the reasons people like it. So here you have a branded frozen food company. Two gentlemen are behind piecing the thing together. and they're still large shareholders. One is Martin Frankel. He has done repeated business combinations and created value along the way. And then Noam, Goddustman, also very involved in the company.

And so they have, for a while, they had an arrangement where they actually got almost from a hedge fund perspective. Goddessman came from a JLG, I believe, JLG, no, sorry, a JLG that is a hedge fund. And they had a performance fee structure even on their shares, within the company. That is now gone. That's a good thing. But they remained the shareholders. And in fact, very recently, Mr. Goddustman decided to buy a very large number of shares at around $10 a share. So it's a good sign that somebody who's very involved with the company, very bullish long term on the company, very involved in getting the new management in, makes a statement, you know, from his position to buy more of the stock. So we already were in it. We've been averaging down. And we're now getting close to our cost basis in the start.

So that's why, you know, I don't like to talk on a podcast or on conferences about a stock that's already worked. I like to talk about another stock like this that's on the tarmac, taxing around, and people can still jump on board if they like what they see. So here's Nomad. They have started the year pretty well, from our perspective, kind of hitting the expected levels of earnings. And let me give you a couple of numbers for the everybody who's listening. So this is a company that does about $3 billion, three and a half billion in sales, you know, in US dollars.

They have earnings per share this year forecasted at about a buck 50 or so. Stock is at 10, huh? But mind you. So here we are. Net debt to EBITDA is not bad. They're bringing it down just like Dow. But it's not an issue.

It trades well. interest expenses are very well covered. And you're basically looking at an EBITDA of less than seven on current earnings. You're getting it paid while you're waiting for good things to happen. Over 7% dividend yields. I mean, okay, 7% dividend yields, 5.5 times earnings per share, seven times EBDA operating income multiple of about 9, 8.5, 9. So that is a value stock.

And it's a non-cyclical area with some growth to us. It is a takeover candidates. You have insiders buying. And you've got all these metrics. So we like it from every angle. No, look, I really agree. I think there's a lot to like here. I mean, you mentioned the Martin Franklin.

I think one of the things that happens here is people have so many value investors have followed Nomad over the years. And I think there were a lot who were longer at 20, longer at 25 on this, hey, you've got this non-cyclical frozen food business. And I think Frozen Foods is a great area to play in because, you know, anyone can go spin a Pop-Tart competitor or a dry goods competitor. But Frozen Foods, like, it takes a lot of logistics and a lot of operating leverage. And that's not to say, we'll talk about private label in a second, that's not to say you can't. But I just think it is a much more advantaged area than a lot of the rest of the grocery store.

And as you mentioned, they've got brands. And when I've done expert calls, you know, the first thing a lot of experts will say is, oh, birds. You know, the, has birds I, the one with the fish fingers? I think it's purgeye. The first thing they'll say is, I, you know, my history with them dates back to when I was six and I was getting microwave meals from my mom, you know, like there's just a long history of these things. So I think there's a lot like here.

But my question would be, look, the stock has gotten hit because the old CEO who put this all together, he left at the end of last year. Now, I think it was a nice leaving. He kind of slowly gets replaced, but he left. And there's a lot of operational issues here. And the company, you know, it's funny when you read their 2025 analyst days, they'll go nine years in a row of EBITDA growth. And they're kind of just like ignore the last year because the last year, like everything was kind of falling off the cliff. And I think a lot of bears would point to, hey, private label is making big inroads.

Aldi and the UK and Europe making big inroads. And they're selling their frozen label. And it's a, you know, it's a private label brand. And they're selling it for way cheaper. And it's taking chair. And you're seeing nomad kind of seed volume. And you're seeing the new CEO say, hey, we need to do a lot of reinvestment. We need to start innovating.

So I've thrown a lot of the bare pieces to you. I just kind of ask, what do you think about that? Yeah. No, I'm aware of these pressures that they have and the issues that they're dealing with. I think the comfort level that we have is that between the new CEO coming on board, the inside of buying, the fact that they are spending more money on marketing and R&D to drive kind of differentiation. and to be fully aware of where they are lacking and losing market share and that they're driving at these issues.

It is a show me story for sure. But I think you're getting paid to wait, paid to see it work out, and the odds are very much stacked in favor of the persistent and patient one on the shareholder base here. Because as you said, the basic category is good. It's so good that other people like to poke holes in it and go after them. them and go after their market share. So I think at the end of day, they're going to be able to fight off in all the areas

that really matter, hold market share, and get growth basically to stabilize and turn the other way. Then, of course, you're spending more in marketing, you've got a new CEO, some more in R&D that goes counter to, you know, try and get margins to go higher near term. So there's some pressure that way as well. And so we've seen that in 2026 that the profits are, you know, lower than there's a percentage decline than the sales decline that you're having. But I think that will turn. And of course, at the same time, they need to bring cash as good cash flow. Honestly, 7% dividend deals. You would say

that's way too much. Why don't you just pay your debt down a little quicker? But again, the debt is well under control. They need to bring it well below three times. And they'll get there in 2027, even with the dividend that they have. Meanwhile, if I were a private equity firm, I'm looking at this. You see how much money they give away to dividends. And what can be done here, that you have the corporate costs that can be taken out, et cetera. You can refy the whole thing.

It would make a lot of sense, from my perspective, as a private equity deal, because there's a lot of cash flow here that can be used differently, partially to pay down more debt that's required to buy the company, although you can write a nice equity check for the enterprise value, I mean, for the equity value that's out there.

So I think there's many ways to win here. And yes, we're at the very early stages of trying to find out if the new CEO can bring to the bottom line, better margins and renewed growth, or at least stabilizing sales levels. So, yeah, I cannot give you or the listeners any high optimism that they can do this. But I think there's a lot of telltales that suggest that we have the odds stacked in our favor, even under pretty conservative and tepid assumptions going forward. You mentioned that Nomad could be a takeover candidate, and you mentioned private equity in your last thing.

Do you think – I really like the story. I'm a little skeptical of the takeover just because I've looked at Martin Franklin a lot in history. I believe the only time he's ever sold a business is Jordan. And I think he actually regretted it because, if I remember correctly, he sells Jordan to Newell. Am I remembering that correctly? And then he goes activists on them like 13 months later saying they're ruining the business. And I don't think he's ever sold anything else.

I think Platform Specialty may have sold one of their divisions. But do you think he would actually let go of the rope and sell this company? Well, at the end of the day, you know, he's got 7% according to what I see, 10 million shares, 11 million shares. Scholarsman has more now because he bought some recently. I don't know. I don't know. I don't really know of him. Just like you mentioned, the Jarden deal with Newell and some others.

But I think it's really not that relevant. They don't control the company. I mean, they are obviously key shareholders, but I would imagine they don't like the price here at $10 much either. And so I think they would be very open to either activists coming in. Maybe not open to activists coming in, but certainly outside interest, let's put it that way, that would help bring attention to this company.

Of course, they need to bring attention to it by virtue of executing well and bringing the thing, riding the ship and getting the cash flow to drop to the bottom line, bring the debt down. So that is their task. Then there's the messaging task, which falls with the new CEO and with them. I think they're doing better on that recently. And I think there's more to come. And we're going to roll up our sleeves because we just recently made this a big position

and we'll be more involved with them. Let's put it that way. And again, our constructive engagement includes messaging. including helping them present, you know, the company in the best way and drive to priorities in terms of operational performance and capital allocation as much as we think is the right approach. No, you know, and you mentioned the dividend a few times. I mean, one thing you just wonder is, hey, you've got a company trading for, I don't know, six times, PE, a decent bit of debt on it too.

Is the company really best served by paying the dividend at this point? Or would it be better served by cutting that dividend and saying, hey, we're going to buy back more of our stock at these levels, or we're going to pay down their debt at these levels? Or possibly some combination of the two, you know, you just kind of look at that dividend and wonder if it even makes sense at these levels. Do you think that's an area for improvement? But I think they don't need to cut the dividend at all. I think the 17 cents per quarter they're paying, which adds up to whatever that is, is about 6.5%, 7% on the current share price. I think they do their job right and they keep the dividend just where it is and they have access cash besides that to pay down the debt to the desired net debt divadal level of three and then lower after that.

I think the stock will go to 50 to 20 and you'll see the yields dropping that way to 4%. to four, four and a half. I don't think the amount of money they spent on the dividend, which is about 90 million a year, it still leads to substantial positive cash flow despite that. So it's not like they're borrowing money to pay the dividends. So that would be a key test, of course. No, I certainly hear you.

Maybe it's because I'm too red-filled by share of iBACs, but it does strike me as paying this big a dividend when you've got to stock this cheap. Like, in my dream of dreams, you slash the dividend, you buy back a ton of shares. And two years later, we all celebrate that you retired an extra 12% of the shares at 10, but maybe a little too difficult. You know, one thing I have consistently heard when I've been looking at this from friends

who are involved or not a bucket involved is they say, look, Martin Franklin has a really good track record. But he's in charge of a few businesses. An API group at this point, his shareholding an API group is worth more than a billion dollars. And his stock in Nomad is probably worth $100 million. And I think they would say, hey, API is where all its focus is, right? And they would follow that up by saying, look, Nomad, they bring the new CEO in.

And when you hear the new CEO talk and he says, hey, some of our plants in Europe are 20, 30, 40 percent utilize, all this sort of stuff. We lost them all on pricing. We weren't kind of innovating on value and stuff. I think they say, hey, maybe he's not as involved here. He's focused on API and you kind of let this thing start falling apart. Does he care? Does this matter? Is he just kind of serving as a caretaker and the company is just kind of,

there's a difference between a package of good company that's getting run really creatively and well versus a package of a company with a shareholder kind of overall controller who's just letting the management team do what they want? Well, I can't speak for Mr. Frankl again or nor Mr. Goddustman. I think both have a successful career, some overlapping some separately, and I think both are substantially wealthy and have a lot of other interests. However, this is currently a $100 million piece of their total pie. And I'm sure they like it to be $250 million, you know, $25 where it was or higher.

And so I think to spend some time during the day a couple of times a month to make sure that this thing is going in the right direction is probably the reason why they became so successful in the first place. So I don't take that as a risk, if you will. I think this is important to them, both in terms of recouping value that they feel was lost, I mean, for all proper reasons, perhaps, but also for ego as well. I mean, their names are attached to this name, to this company. So I think not knowing, again, directly from the gentleman, I would imagine this matters a lot to them, and they'll do what's necessary to steer it in the right direction. So I think it's actually a net positive that they're there.

it would concern me if they were selling a year. In fact, the opposite happened, at least with Mr. Gullesman, he's buying it here. Yeah, the other interesting thing I think is, so the new CEO, this is just classic new CEO inherits a company, right? He comes in, I think he took over in October, if I remember correctly, or maybe he's named in October and takes over to Dan 1. But the stock really gets hit on his first earnings report, right, where he basically resets everything.

And to me, that's classic CEO. I take over, I clean the deck, get everything out there. I'm talking about, hey, our plants are underutilized. we need to reinvest in marketing. And then I've got, I'm just looking at my notes, I've got four different times. He's been at conferences or earnings calls where he said, hey, we're going to have a great investor day in October. Hey, we're going to have a great, I don't know if it's October at this point, but he says in the fall, we're going to have this great analyst day. We're going to show you guys everything. We can't wait to show you our plan. And like, to me, you've got the value here.

You've got a business and a category that I personally very much like. You've got hopefully really good controlling shareholders. And you've got a CEO who's coming out here and saying, I'm going to blow everyone away with this plan. And it's like, this is like classic CEO taking over kitchen sinking everything and then getting ready to get the story really sexy. I just think it sets up really well and you're getting it cheap and you're very, you know, this is not a flash in the pan business. Like, I do have concerns about the cyclicality and that look like I'm pretty sure British kids are going to be eating frozen fish fingers, you know, 30 years from now and everything. So I just love that combination of sustainability, cheapness.

and kind of the incentives aligning there. I'll pause there. I kind of just rambled about. I agree, including Dutch and Croatian and German kids as well. And so I think you're right. I think this is a very sustainable business in terms of consumer demand, interest. Yes, are competitive pressures. The answer's operational issues here and there.

But I think this new CEO, again, we need to get under the hood a little bit more now that we made it a big position. And so we're waiting to get. past earnings, then to get in front of the CEO, and perhaps even get through to one of the gentleman that we just mentioned earlier, to get a better read on it and to see if we can all be aligned and how to steer the thing towards greater appreciation and more important, greater results and then appreciation in the market. So it's a good risk reward here. I completely agree. Last second. Last question I'll ask on nomad. We wrap this up or talk about anything else around. You know, my one other concern here is I'm just looking at,

through my notes and I said, this is ad back city. I mean, they do have pretty aggressive ad backs of some of it is financing costs and DNA, but continually you'll see the business transformation costs, organizational streamlining program. Like, they do do a lot of adbacks. I think it comes out to about 20% of their earnings number that they present per year are ad backs. Do you feel comfortable with the ad backs here? And look, this is a business that was formed through M&A, but it is one of the risks. I've heard people where they say, you're giving me a six-axee earnings number. But once you take out those adbacks, it's actually, it's not a real range. It's much higher.

I totally agree with you. I mean, this is one of the main things we push on because in order to get to appreciation, i.e. a higher multiple, you need to show progress on all fronts. And one of the fronts is to have as clean a number as possible and as fewer addbacks as possible. And this we will go through in quite detail to say, okay, this number has to come down. Or if it is, you know, 1%, you know, it is a more, limited amount of restructuring, you know, you can report it separately and people can do with it what they want, but it should definitely be lower than 20% of reported earnings. So if that's been the trend, and then we've seen it as well,

that's not good. It needs to change. The guys in there at less than a year. It needs to have an improving trend very quickly, as is the net debt to EBITDA, as is the market share situation, as the sales, all the things need to improve. So this is one more metric that I totally agree with you on. that needs to get better. Cool. Anything else on Nomad, do you want to talk about or do you think we should be looking at, thinking at? No, I think we've covered a pretty good detail.

I think it's a very solid risk reward. Just like Doubt, it has, all these things have issues. And we flagged a lot of them, I believe. So now the listener can make up his own mind, do his own work from here. But I think both line up as very good risk rewards with a strong margin of safety in solid businesses that are profitable, with good balance,

sheets or manageable balance sheets and not real debt issues with improving balance sheets and improving outlook. So I think that sets up, you know, from this very low valuation in both of them, to potential doubles over the next 18 to 24 months. One last question to that I'll let you go. You know, Dowell was formed through the merger of Dalai, and Dalai was London listed. There was a share component to what they took over Dalai. And about half the business, let's just use rough numbers, is European Auto. Nomad, 100% U.S. European business. It obviously trades in the U.S., but 100% European business. You know, I just, I feel like there is, let's just use the word taint. There is some taint to just anything that touches Europe

versus America. And you can see this with, you know, I'm not the first one to point out, European listed multinationals trade for big discounts to American list of multinationals. Some of that is growth, but some of that I think is just doldrums? Do you think there's just like a through line with the two of these that the European exposure is just an X factor? Or am I just making that up? And no, these guys have kind of stub their toe and we're just trying to cure the the subtoe before these guys can work. No, it is true that, you know, American companies of similar ilk or background typically trade at somewhat higher multiples. I wouldn't make too much of it. I was saying in the case of Dow, not, yeah, Dow Lay was already quite international.

Yes, a lot of European, but already a lot in China, a lot of in the U.S. American Axel is very much American with China as well. some European. So I think the pie chart of NUCO is, you know, not half European for sure. It's less than that. And so there's that. So I think you can look at doubt as an American company with very strong international presence. I'm not sure that the European component is going to be a net negative for them. In the case of nomad, yes, it's all European. It's in a non-cyclical part of the European economy, frozen food and consumer goods. I think, you know, it just represents an opportunity. And if people are not comfortable with that, then they shouldn't do it.

But Europe is a massive economic block altogether. You could imagine that a nomad, in my view, and a doubt, but the no one in particular would benefit from any resolution of the Ukraine-Russia situation with further expansion and the ability to gain market share in some of these eastern markets. So again, I think there's upside to European stocks. in general for a resolution of the two major geopolitical conflicts. As far as economically or geopolitically, who's running these countries, how socialists, are they, how much regulation do they have?

That's always been an issue. It flops back and forth. We have the same issue in the U.S. where we flop from Democrat to a Republican, and let's not get into that too much. But I would say... Flopping back and forth is a nice way to put it. European market is full of interesting mid-cap value. So is the U.S., by the way.

And that's what we focus on as a business. And we've done that for 30-plus years. And we've got 10 great picks in Europe, 10 great in the U.S. And believe me, Japan has been fabulous and it's becoming something we can focus on another time. But from my side, that probably covers it on these two names. That's perfect. Well, Alex, from Atlantic Investment, this has been great.

We'll have to have you on. I love Japan, too. So we can talk Japan. We can talk European midcaps anytime. But this has been great, and we will chat soon. Andrew, it was a pleasure. Thank you. A quick disclaimer. Nothing on this podcast should be considered an investment advice.

Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.