AgroFresh Solutions Inc (AGFS): What Dane Capital Thinks About It

Dane Capital Management sees a value in AgroFresh Solutions Inc (NASDAQ:AGFS), a $374-million market cap agricultural technology company that provides produce freshness solutions. The company delivered a solid performance on the stock market during the last year, with the value of the share price increasing nearly 180%. In its Q4 investor letter, Dane Capital discussed its short thesis on AgroFresh. Let’s take a look at what the fund said.

AgroFresh remains a small position, but seemed extremely oversold at the start of the year, with significant year-end tax selling in 2016. With new management installed in late 2016, new products, a share repurchase announced by Dow, and capital commitments from Avenue Capital and Dow, the stock was up 179% on the year.

The company continues to hold a sizable debt-load, but it is not due until 2021 and we believe they will be able to refinance and push maturities out further. In addition, the company continues to generate significant free cash flow with 80% gross margins and low capital intensity.

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AgroFresh Solutions, Inc. (NASDAQ: AGFS) provides data-driven specialty solutions to growers and packers to preserve the freshness and value of fresh produce. Its flagship product is the SmartFresh Quality System, a freshness protection technology available in more than 40 countries to maintain firmness, texture and appearance of fruits during storage and transport.

For the three months ending September 30, AgroFresh reported a total revenue of $60.8 million, versus $61.2 million for the same period of 2016. The company had a profit of $9.6 for the third quarter, up compared to $7.3 million in the 2016’s same quarter.

AGFS is up 0.41% since the beginning of this year. However, the stock has jumped 176.21% over the past 12 months and 45% over the last three months.

Meanwhile, some hedge funds in Insider Monkey’s database also see a value in AgroFresh Solutions Inc (NASDAQ:AGFS). As of the end of September 30, nine funds were holding this small-cap stock in their portfolios, including Archer Capital Management, Ionic Capital Management, and Millennium Management.

Disclosure: none