Ariel Focus Fund on ADI Global Distribution, Inc.
Thesis
Ariel acquired ADI Global Distribution after its spin-off from Resideo, treating share-price weakness as an entry point. ADI is a scale leader in security, residential audio-visual and fire and life-safety distribution in a fragmented industry. Near-term problems at the recently acquired Snap One smart-home business have weighed on sentiment. Ariel expects connected-technology demand, growth, margin improvement and cash generation to support long-term value.
“We view this weakness as an attractive entry point to owning a durable company”
Key risks
- Near-term weakness in the acquired Snap One smart-home business
- Execution risk in integrating Snap One and improving margins
- Dependence on demand for connected technologies and smart-home solutions