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The insider purchase we chose to highlight this week came from a familiar name, Richard N. Massey, CEO of Cannae Holdings (CNNE). Cannae Holdings was the company we featured back in our April 2022 mid-month update, and was an interesting sum-of-the-parts (SOTP) opportunity – much like IAC Interactive (IAC) with its numerous spinoffs including the dating websites operator Match Group (MTCH) or the video streaming company Vimeo (VMEO). Cannae Holdings was brought to our attention in April 2022 by a series of insider purchases at the company, and we wrote the following in our April 2022 mid-month update:
Cannae is an interesting holding company with a leadership team led by Bill Foley who successfully grew 3 major public companies including Fidelity National Financial (FNF), Fidelity National Information Services (FIS) and Black Knight (BKI). Bill Foley acquired Fidelity National Financial for $3 million in 1984, acquired Chicago Title Insurance Company in 2000 and made FNF the largest title insurance company in the United States. We wrote about FNF in the February 2021 Special Situations Newsletter and it is currently a position in our model portfolio. This article does an excellent job of articulating how Bill Foley built several multi-billion dollar businesses and generated one of the best long-term investing track records.
Analyzing SOTP opportunities can be time consuming as you have to determine the various components, what they might be worth in public or private markets and ascertain the likelihood of unlocking value through spin-offs or sales. Even if management were to sell a division, are they likely to be good stewards of that capital or send the proceeds to shareholders as a special dividend. Cannae Holdings (CNNE) not only outlined what the sum-of-the-parts of its holdings works out to in an February 2022 investor presentation but also provided an update as of March 31, 2022 that shows that the company was trading at an astounding 42% discount to its net asset value (NAV).