A fertile source for undervalued ideas is identifying powerful consumer franchises hidden within a parent company with a boring or unrelated corporate name. The market often overlooks the strength of the underlying brand (e.g., Titleist golf clubs owned by Acushnet) due to this name dissociation.

Public serial acquirers like Constellation Software exploit a valuation arbitrage. They buy private niche businesses at low multiples (e.g., 5x EBITDA) which are then automatically revalued at the parent company's much higher public market multiple (e.g., 28x EBITDA), creating significant shareholder value on day one.

Monish Pabrai's successful Fiat investment reveals a powerful strategy: find hidden assets within a company. The market valued Fiat Chrysler as a single struggling automaker, but Pabrai saw that its Ferrari subsidiary was a gem being overlooked. By valuing Ferrari separately, he realized the core auto business was trading for almost nothing.

To capitalize on its deep discount to NAV, Exor employed a sophisticated reverse Dutch auction for share buybacks. This allowed the company to repurchase €1 billion in shares at the lowest prices offered by shareholders, maximizing value accretion.

A specific arbitrage opportunity exists with serial acquirers. When they announce a deal that will significantly increase future earnings per share, the market often under-reacts. An investor can buy shares at a compressed forward multiple before the full impact of the acquisition is priced in.

Endeavor struggled to get value as a complex public company because the market didn't understand it. By merging UFC and WWE into TKO, they created a "pure play" sports entertainment company. This simpler narrative was easier for investors to value, proving a clear story can be more important than diversified assets.

Acquiring smaller companies at a 5-6x EBITDA multiple and integrating them to reach a larger scale allows you to sell the combined entity at a 10-12x multiple. This multiple expansion is a powerful, often overlooked financial driver of M&A strategies, creating value almost overnight.

Grindr had a stack of issues: a privacy lawsuit, Chinese ownership (CFIUS), a PR problem, and homophobia. While most investors flee "one-problem" deals, this combination scared off nearly everyone, creating a massive opportunity for buyers who weren't deterred by the complexity.

Instead of complaining that its stock trades at a steep discount to its net asset value (NAV), Exor's management pragmatically views this as a chance to invest in themselves. They trimmed their highly appreciated Ferrari stake specifically to fund share buybacks at this significant discount.