CoreLogic up for sale?
We reported last week that a committee had been formed and a financial adviser hired to investigate CoreLogic’s options from a potential sale just a year after being spun off from First American Financial Corp. to cost saving methods, capital structure alterations, combining or selling businesses acquired, or repurchasing debt and common stock.
BusinessWeek reported that calls to buy CoreLogic stocks surged prior to their announcement they had hired a financial firm to explore their options including a potential sale of the company. “It’s very suspicious,” Ophir Gottlieb, managing director of client services at Livevol Inc. told Business Week. “It seems like someone caught wind of the news before the close and just went for it.”
Today, SeekingAlpha columnist “P. Marlowe Analytics” blasted CoreLogic, claiming the company overstated their financials and insinuates that they knowingly understated legal risks, noting that “CoreLogic is a rollup of a number of acquisitions and was recently spun out as an independent company. As a result, its financial transparency is very limited” and points out that for most of the last year, the company has not had a CFO and the prior CFO left under questionable circumstances involving a letter from the SEC regarding disclosures at his former employer.
The columnist focuses most of his criticism on how CoreLogic has calculated their EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and claims investors are “regurgitating” the company’s EBITDA definition without scrutiny despite its flaws and that this miscalculation on their financial statements has inflated stock prices by over 50%. P.Marlow said, “After analyzing the situation, I believe a sale is highly unlikely at current prices and as a result, the shares could face significant pressure.”
The columnist also points out his belief that the legal risks of the company have been understated, especially given that the company has been sued by the FDIC for their role in allegedly inflated appraisals of properties never physically reviewed, and “significant legal liability will make it unattractive to a potential buyer and in a worst case scenario, could further cripple the company.”
CoreLogic is known in the real estate industry as a major MLS provider, and for their REO asset management, BPOs, and is known by lenders for appraisal services, tax services, and other predictive data analytics. P Marlowe predicts that CoreLogic will not sell as a whole but will sell off non-core businesses that had been acquired by First American and cobbled together to form CoreLogic’s massive offering.