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Jax Daily Record Monday, Dec. 15, 201412:00 PM EST

Foley says Fidelity was 'really dumb' to let LPS get away

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by: Mark Basch Contributing Writer

Nearly a year after reacquiring Lender Processing Services Inc., Fidelity National Financial Inc. Chairman Bill Foley wonders why the company ever got rid of LPS in the first place.

“Why we did that and how we let LPS get away from FNF, because that’s why we moved here to start with, we still are kind of mystified by that,” Foley said at an “Investor Day” presentation at the company’s Jacksonville headquarters Dec. 4.

Fidelity, which is mainly a title insurance company, bought the company that became LPS from Alltel Corp. in 2003 and then moved its headquarters from California to LPS’ offices in Jacksonville.

The LPS operations provided loan processing services for mortgage lenders. Fidelity spun off LPS and other processing businesses into a separate public company called Fidelity National Information Services Inc. in 2006, and that company spun off LPS in 2008.

“Unbelievable, really dumb,” Foley told the Daily Record last week when asked about the LPS spinoff.

Fidelity reacquired LPS on Jan. 2 and has renamed its operations as Black Knight Financial Services.

“We’re not giving it back,” Foley said.

During the Analyst Day presentation, which is available on Fidelity’s website, President Brent Bickett said Black Knight generates 15 percent of the company’s revenue. He also said Black Knight is generating significant free cash flow for the company that will be used to pay off debt.

Bickett offered an upbeat outlook for FNF as he kicked off the presentation to investors.

“We’re hitting on a lot of cylinders right now and you’re going to hear some of that enthusiasm today,” he said.

Fidelity is still in the spinoff business. Five months ago, it spun off its non-real estate-related businesses into a subsidiary called Fidelity National Financial Ventures, or FNFV, that trades separately from FNF as a tracking stock.

Foley said the creation of FNFV simplifies FNF’s business for investors.

“It’s made the FNF story less confusing,” he said.

Body Central turnaround focused on ‘sexy brand’

As Body Central Corp. tries to rebuild customer loyalty after two years of sharply dropping sales, the struggling fashion retailer is focusing on reinforcing its image as a “sexy brand.”

Jacksonville-based Body Central posted a slide show on its website last week that it plans to use for investor presentations, and it begins by outlining its brand strategy to attract young women into its stores.

“Body Central is a sexy brand with a clearly defined niche in the Girls-Night-Out scene for the customer that loves Fiercely Flirty Fashion at an everyday value price,” it says.

“We are focused on building long-term value by repositioning our operations and focus on our founding core values that featured Nightlife product, trend-right fashion and a flattering fit at affordable prices.”

The company’s plan to attract shoppers includes dedicating the front third of its stores to that “nightlife” product.

While it tries to redefine its brand, Body Central is also working to cut costs after six straight quarters of net losses.

The company expects to have 268 stores in operation by the end of this year after closing 28 stores this year, and has plans to close another 50 next year.

However, it also said it is trying to negotiate rent reductions with its landlords at low-performing stores before closing them down.

Body Central has also cut costs in its headquarters office, reducing its “senior leadership group” of 20 people by eight.

New CEO Ben Rosenfeld, who was appointed in November, is being paid a salary 25 percent less than his predecessor, Brian Woolf.

Body Central is also trying to lessen the impact of its abandoned plan to move from its headquarters on Jacksonville’s Southside to a larger headquarters and distribution facility at One Imeson Center in North Jacksonville.

The company decided in August to cancel the move to One Imeson but still has a lease on the property that runs through 2021.

According to the investor presentation, Body Central has selected a broker to market its vacant space at One Imeson and is negotiating a “recapture agreement” with the landlord to try and reduce its future liability on the lease.

A recent Securities and Exchange Commission filing said Body Central still owes $6.3 million on the lease.

Another new public company

It looks like we will be seeing another new Jacksonville-based public company created by a merger with an existing public company.

Information Systems Associates, based in Coral Springs, last week announced an agreement to merge with Jacksonville-based Duos Technologies Inc.

Publicly traded ISA said after the merger of the two technology companies, Duos shareholders will own 96 percent of the business and Duos will be the surviving company.

“We are confident that the transition of Duos to a publicly traded platform will enhance our ability to secure growth capital and to fund the delivery infrastructure for our innovative technologies,” Duos CEO Gianni Arcaini said in a news release.

ISA is a small company, with revenue of $283,394 in the first nine months of this year, according to SEC filings. The company said in the news release that it has been looking to grow through potential mergers or acquisitions for the last three years.

Financial information for Duos, which is currently privately owned, is not available.

ISA’s stock trades in the over-the-counter market under the ticker symbol “IOSA.”

Hedge fund buying Web.com shares

A New York hedge fund is rivaling Fidelity Investments to be the largest stockholder of Jacksonville-based Web.com Group Inc.

According to an SEC filing last week, Okumus Fund Management Ltd. has accumulated 7.8 million shares of Web.com, or 14.82 percent of the company’s stock. That’s up from 9.6 percent when Okumus made its first filing on Web.com in August.

Web.com’s annual proxy statement last spring showed the largest shareholder was Fidelity Investments (which is not related to Fidelity National Financial), with 14.84 percent of the stock.

Okumus’ filing last week said it bought the shares because it believed the stock was “undervalued and represented an attractive investment opportunity.”

Web.com’s stock has fallen from a high of $37.72 in March to the teens after disappointing earnings reports.

Separately last week, Web.com announced that Jacksonville University President Timothy Cost was appointed to its board of directors. The company noted that Cost has 32 years of executive experience with a number of major companies.

Rayonier hires new CFO

Rayonier Inc. last week announced the hiring of Mark McHugh as senior vice president and chief financial officer.

McHugh has 15 years of experience in finance and capital markets focusing on Rayonier’s two business sectors, timberland and real estate. He most recently was managing director of Raymond James’ real estate investment banking group.

McHugh succeeds H. Edwin Kiker, who was promoted to CFO in May after the retirement of Hans Vanden Noort. Kiker will now become Rayonier’s chief accounting officer.

The announcement of a new CFO follows the news two weeks ago that Rayonier Advanced Materials Inc., which was spun off from Rayonier Inc., also named a new chief financial officer.

Frank Ruperto became CFO of Rayonier AM as part of a consolidation of senior management positions.

Northrop stock rises again

An already good year for stockholders of Northrop Grumman Corp. got even better when Goldman Sachs analysts added the aerospace and defense firm to its “conviction buy” list of industrial companies.

“We see a scenario in which Northrop grows revenue 7-10 percent organically for all of 2017-2020. Free cash will be very strong for several more years and Northrop will keep buying a lot of stock,” Goldman Sachs analysts said in their report.

Northrop’s stock was already up 22 percent for this year when the firm issued its report, and up 69 percent since mid-2013.

“We recognize Northrop has outperformed the last 18 months, and we do not call for a repeat of that move. Rather we see a clear case for mid-teens upside on low volatility while avoiding near-term challenged areas within industrials,” the analysts said.

“Northrop avoids troubled global growth areas, foreign exchange concerns, and the energy complex, that many others in industrials do not,” they said.

Northrop’s stock rose as much as $8.93 to a new high of $148.77 on Dec. 5 after Goldman Sachs issued its report.

Goldman Sachs has a $165 price target for the stock.

Northrop is currently expanding its aerospace facility in St. Augustine, which is expected to increase employment there from about 1,000 to 1,400.

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