Third Point Took A Position In Planet Fitness, But There Is A Better Alternative To Test This Story

24 November, 2020

Russian writer Ivan Bunin said that a man is made happy by three things: love, interesting work, and the opportunity to travel.

Some hedge fund managers apparently think that one has to add a fourth ingredient to this mix: sport.

Activist hedge fund Third Point recently disclosed a new holding in shares of Planet Fitness.

The story they “bought”, or as a minimum, attempt to test, is understandable: after prolonged periods of covid-19 lockdowns the human need for recreational activities, sport and travel will return.

Despite growth potential, Planet Fitness’ high price tag (the stock is trading at a x26 EV/EBITDA FY 2019 multiple) makes one question if there are better alternatives available.

Without venturing too far away from the gym theme, one can take a look at Glanbia plc – a manufacturer and marketer of sport and lifestyle nutrition products.

At current market price, Glanbia is valued at a much more conservative EV/EBITDA valuation multple of x10.8 (FY 2019).

We think that Glanbia shares provide investors with the opportunity to profit from “return to gyms” story while at the same time they offer a more conservative risk profile.