Aristotle International Equity Fund on The Magnum Ice Cream Company N.V.
Thesis
Magnum Ice Cream is the world's largest dedicated ice-cream manufacturer and owns brands including Magnum, Ben & Jerry's, Cornetto, Wall's, Breyers and Yasso. Aristotle sees durable competitive advantages in its roughly 21% global market share, premium brand portfolio, pricing power and difficult-to-replicate global cold-chain and freezer network. At roughly 11 times the fund's estimate of normalized earnings, shares are viewed as undervaluing the company's market position and return potential. Catalysts include freezer-fleet expansion, premiumization, new product formats, supply-chain optimization, dedicated management following the Unilever separation and potential market-share recovery in India.
“At approximately 11x our estimate of normalized earnings, we believe shares do not fully reflect Magnum’s leading global market position.”
Key risks
- One-time separation costs
- Transitional service agreement costs
- Execution risk in supply-chain optimization and market-share recovery