Ariel Mid Cap Value Composite on ADI Global Distribution, Inc.
Thesis
Ariel acquired ADI following its spin-off from Resideo, attracted by an industry-leading distribution network. ADI benefits from scale across security, audio-visual and fire and life-safety products in a fragmented market. Near-term challenges associated with the Snap One acquisition depressed the initial trading price. Ariel expects connected-home demand, cash generation and margin expansion to make the weakness an attractive long-term entry point.
“an attractive entry point to owning a durable company”
Key risks
- Soft near-term performance at acquired Snap One
- Execution risk in integrating the smart-home business
- Connected-home demand and expected margin expansion may lag