Executive Summary / Key Takeaways

• Cannae Holdings is undergoing a significant strategic transformation, shifting from a diversified holding company with substantial public equity stakes to a focused permanent capital vehicle emphasizing proprietary private investments, particularly in the burgeoning sports and active asset management sectors.
• The recent disposition of Dun & Bradstreet for $630 million in proceeds has fueled aggressive capital returns, with $275 million in share repurchases year-to-date 2025 and an increased quarterly dividend, demonstrating a strong commitment to shareholder value.
• A core investment thesis revolves around the Black Knight Football Club (BKFC), which is rapidly expanding its multi-club football platform, driving value through strategic acquisitions, player development, and significant infrastructure investments like the AFC Bournemouth stadium renovation.
• Operational improvements are underway across the portfolio, including a strategic overhaul of the Restaurant Group and a focus on growth at the Watkins Company, alongside the expanded partnership with JANA Partners for proprietary deal flow.
• Despite macroeconomic uncertainties and a current proxy contest, Cannae's strategic rebalancing and active management aim to narrow the persistent discount to Net Asset Value (NAV) and generate long-term, outsized returns for investors.

A Strategic Transformation in Motion

Cannae Holdings, Inc. (NYSE:CNNE), founded in 2014, has evolved into a principal investment firm dedicated to acquiring, actively managing, and supporting a core group of operating companies for the long term. The company's overarching strategy, formally outlined in February 2024, centers on optimizing its investment approach, capital allocation, and portfolio management to unlock and maximize long-term shareholder value. This strategic pivot is characterized by a deliberate rebalancing of its portfolio away from historical public company investments towards proprietary private opportunities, a robust program of capital returns to shareholders, and a relentless focus on enhancing the operational performance of its underlying assets.

The competitive landscape for an investment firm like Cannae is diverse, encompassing large conglomerates such as Berkshire Hathaway , activist investors like Icahn Enterprises (IEP), and alternative asset managers including Apollo Global Management . Cannae differentiates itself through a more targeted and flexible investment approach, often taking meaningful equity ownership stakes to exert control or significant influence, particularly in niche markets like restaurants, technology-enabled healthcare services, and increasingly, professional sports. While this approach offers agility and specialized expertise, it inherently operates at a smaller scale compared to its larger, more diversified counterparts.

A foundational strength for Cannae's portfolio companies lies in their strategic use of technology. For instance, Alight , a key investment, leverages its "Alight Worklife" platform, an intuitive, cloud-based employee engagement system designed to deliver human capital management solutions. This technology aims to define the future of employee benefits by providing an integrated, enterprise-level offering that drives better outcomes for organizations and individuals. While specific quantifiable benefits like energy yield or degradation rates are not detailed, the strategic intent is to enhance service delivery and competitive positioning in the Human Capital Management (HCM) sector. Similarly, Black Knight Football Club (BKFC) is actively investing in "technology, data and processes to integrate and improve the individual teams and create the best pathways for our players to succeed." This technological integration across its multi-club platform is designed to optimize player development, scouting, and commercial opportunities, directly impacting team performance and overall enterprise value. Computer Services, Inc. (CSI) (CSVI), another portfolio company, has demonstrated consistent growth in its annual recurring revenue (ARR) pool, indicating a robust and competitive software solution underpinning its offerings. These technological underpinnings, though varied, contribute significantly to the competitive moats and long-term growth potential of Cannae's investments.

Fueling Growth and Returns: Capital Allocation and Portfolio Rebalancing

A cornerstone of Cannae's strategic transformation has been the aggressive rebalancing of its investment portfolio. Since the strategic plan's inception, Cannae has divested approximately $1.1 billion in public company securities, significantly reducing its exposure from 70% public investments to just 20% today. This shift underscores a clear intent to concentrate on proprietary private assets that offer the potential for outsized returns and direct influence.

The most significant recent monetization event was the closing of the Dun & Bradstreet acquisition by Clearlake Capital on August 26, 2025. This transaction generated $630 million in cash proceeds for Cannae. A substantial portion of these proceeds has been earmarked for shareholder returns and debt reduction. To date, $424 million has been deployed, including $275 million for share repurchases, the full repayment of the $141 million outstanding margin loan, and $8 million distributed as dividends.

Management has committed to repurchasing at least $300 million of common shares in total and retaining $60 million for future quarterly dividends, reinforcing a consistent capital return policy. The quarterly dividend itself was recently increased by 25% to $0.15 per share, payable on December 31, 2025. Since February 2024, Cannae has returned over $500 million to shareholders, representing 35% of its shares outstanding at the plan's announcement.

This aggressive capital return strategy is explicitly aimed at narrowing the persistent discount of Cannae's stock price to its Net Asset Value (NAV). In the third quarter of 2025, Cannae repurchased $163 million of stock at an average discount to NAV of 31%, contributing to a roughly 20% narrowing of the NAV discount since the strategic plan's announcement. The company also plans to sell additional non-core assets, both public and private, to realize unrealized losses and generate up to $55 million in cash tax refunds, further streamlining its portfolio and enhancing liquidity.

Deep Dive into Key Portfolio Segments

Cannae's diverse portfolio is now strategically concentrated in areas where it believes it can exert significant influence and generate superior returns.

Black Knight Football Club (BKFC): A Multi-Club Sports Powerhouse

Cannae's 44.70% ownership in Black Knight Football Club (BKFC) represents a significant strategic focus. BKFC, led by Bill Foley, is rapidly building a global multi-club football operator. This segment is leveraging the growing trend of professional sports evolving into an institutional asset class, characterized by rising valuations and limited team availability. Cannae recently invested an additional $25 million in BKFC, completing its $50 million commitment to the club's $130 million capital raise. This capital is directed towards operating expenses, stadium acquisitions and renovations, and strategic team investments.

AFC Bournemouth, the flagship team, finished ninth in the Premier League in the 2024-2025 season with a club-record 56 points, demonstrating strong on-field performance. The club also achieved double-digit revenue increases in fiscal year 2024 and is projected for further growth in 2025. Notably, AFC Bournemouth was ranked second-highest in net transfer proceeds across all European football in Q3 2025, with record player sales generating nearly $200 million in transfer fees and approximately $130 million in profit from initial purchases. Infrastructure improvements are a key focus, with a new world-class performance center already open. The acquisition of Vitality Stadium in May 2025 paves the way for a two-phase renovation, aiming to nearly double capacity from 11,300 to 17,000 seats by the 2026-2027 season, and eventually to 20,000. This expansion, expected to deliver mid-teen unlevered returns, will significantly enhance matchday and hospitality revenues. Sportico valued AFC Bournemouth at $630 million, representing over 40% equity appreciation compared to BKFC's invested capital.

Beyond Bournemouth, BKFC's multi-club strategy is expanding. FC Lorient earned promotion back to French Ligue 1, enhancing its strategic value. In June 2025, BKFC acquired a 70% controlling interest in Moreirense Futebol Clube, a Portuguese Primeira Liga club, for $18 million ($4 million upfront, $14 million for future investments). This acquisition provides access to a respected league for player development and emerging South American talent. Furthermore, a strategic affiliation with Orlando City SC of Major League Soccer provides BKFC with its first direct connection to North American professional soccer, fostering player development, scouting, and commercial opportunities.

JANA Partners: Expanding Active Asset Management

Cannae's ownership in JANA Partners, an investment manager, has expanded to 50% following an additional $67.5 million investment and a $30 million commitment to JANA funds. This partnership is highly strategic, enhancing Cannae's ability to identify and allocate capital towards proprietary acquisitions and investment opportunities that align with JANA's shareholder engagement strategy. JANA's total revenues are primarily driven by management and performance fees, which are calculated based on investment performance and various benchmarks. Management is optimistic about JANA's ability to grow assets under management (AUM), which is currently north of $2 billion, and generate consistent cash distributions for Cannae.

Alight: Navigating the HCM Landscape

Cannae holds a 7.70% ownership interest in Alight (ALIT), a technology-enabled services company. For the three months ended September 30, 2025, Alight reported total revenue of $533 million, a 4% decrease year-over-year. Despite this top-line decline, adjusted EBITDA, adjusted EBITDA margin, and free cash flow all improved significantly. However, management reduced its 2025 forecast ranges for revenue, adjusted EBITDA, and free cash flow to the lower end of prior forecasts, citing a lengthening sales cycle and flat participation count. Cannae's equity in losses from Alight was significantly impacted by its ratable portion of Alight's goodwill impairment, totaling $1,338 million in Q3 2025.

Alight's mid-term targets for 2027 include 4% to 6% organic revenue growth and 30% adjusted EBITDA margins, with an expectation of $1 billion in cumulative free cash flow generation between 2025 and 2027. While these targets are ambitious, the fair value of Cannae's investment in Alight remains below its book value as of September 30, 2025, posing a risk of future impairment charges if market conditions or Alight's performance deteriorates.

Restaurant Group: Operational Overhaul for Stability

The Restaurant Group, comprising O'Charley's and 99 Restaurants, continues to face a challenging casual dining environment. For the three months ended September 30, 2025, restaurant revenue decreased to $94.60 million from $102.10 million in the prior year. This decline was primarily due to reduced guest counts and the closure of 10 O'Charley's locations. O'Charley's comparable store sales decreased by 13.60% in Q3 2025, driven by an 18.30% drop in guest counts. In contrast, 99 Restaurants showed more resilience, with comparable store sales decreasing by a modest 0.80%, outperforming the broader casual dining segment.

Management is actively implementing an operational overhaul. O'Charley's has seen significant SKU reductions, store-level improvements to reduce labor, and new leadership appointments (President, COO, CFO). The Restaurant Group's headquarters will relocate to a space 80% smaller than its current footprint, projected to cut over $1 million annually in support costs. While portfolio rationalization is expected long-term, these initiatives aim to stabilize performance and improve profitability.

Watkins Company: Steady Growth in Flavoring Products

Cannae's majority stake in the 150-year-old Watkins Company, a flavoring products business, continues to show promise. The company delivered mid-single-digit growth in net sales and high single-digit growth in EBITDA in the first half of 2025. Although Q3 2025 was slightly softer than anticipated, the fourth quarter has started strong and is deemed critical for full-year results due to seasonality. Watkins anticipates sales to improve in the latter half of 2025, driven by new distribution at key accounts, improving consumer confidence, and more stable inventory levels. The company projects 2025 adjusted EBITDA to be in the range of $20 million, representing high single-digit growth over 2024.

Competitive Positioning and Outlook

Cannae's strategic pivot positions it uniquely within the investment landscape. Its focused investment expertise and flexible stake-taking approach allow it to be agile in niche markets, potentially leading to stronger customer loyalty and more efficient deal sourcing compared to larger, more generalized competitors. For instance, in the professional sports sector, BKFC's multi-club strategy, coupled with significant infrastructure investments and a focus on player development technology, aims to create a distinct competitive advantage in an industry attracting increasing capital. This contrasts with the broad, diversified portfolios of conglomerates like Berkshire Hathaway (BRK.B) or the often highly leveraged strategies of private equity firms like Apollo Global Management (APO).

However, Cannae's smaller scale compared to these larger players can present vulnerabilities, potentially limiting access to capital for very large deals or leading to higher customer acquisition costs in certain segments. While direct quantitative comparisons with all private competitors are challenging to ascertain, qualitative factors indicate that Cannae's operational execution and strategic adaptability are solid, though it may not always outpace the aggressive expansion and innovation speed of its largest rivals. The company's emphasis on active management and operational improvement within its portfolio companies is a direct response to these competitive dynamics, aiming to drive value from within.

Looking ahead, Cannae's outlook is shaped by its continued commitment to its strategic plan. The remaining $25 million of the $300 million committed for share repurchases and the $52 million earmarked for future dividends signal ongoing capital returns. The planned monetization of non-core assets to realize $55 million in tax refunds will further enhance liquidity and portfolio simplification. Management's guidance for portfolio companies like Watkins (high single-digit EBITDA growth in 2025) and Alight's mid-term targets (4-6% organic revenue growth, 30% adjusted EBITDA margins by 2027) provide concrete indicators of expected performance.

Despite this clear strategic direction, several risks warrant investor attention. Macroeconomic uncertainties, including consumer spending and capital market volatility, could impact portfolio company performance. The ongoing proxy contest, initiated by Carronade Capital, introduces potential distractions and costs, estimated at $5.9 million in excess of normal annual meeting expenses, and could lead to changes in board composition. Furthermore, a putative class action lawsuit related to the D&B sale, alleging fiduciary duty breaches and undervaluation, adds a layer of legal uncertainty. The "Put Right" for William P. Foley, obligating Cannae to repurchase 2.41 million shares at a premium, represents a future cash outflow.

Conclusion

Cannae Holdings is in the midst of a profound strategic transformation, shedding its legacy as a public equity holder to emerge as a focused permanent capital vehicle with a clear mandate for value creation. The successful divestiture of Dun & Bradstreet (DNB) has provided significant capital, which is being judiciously deployed to reduce debt, aggressively repurchase shares, and fund an increased dividend, all aimed at narrowing the persistent discount to NAV. The company's strategic pivot towards proprietary private investments, particularly in the high-growth sports sector through Black Knight Football Club, and active asset management via JANA Partners, offers a compelling narrative for long-term growth.

While operational challenges persist in segments like the Restaurant Group, management's decisive actions to streamline operations and enhance efficiency are indicative of a commitment to maximizing intrinsic value. The integration of technology across its portfolio companies, from Alight's cloud-based platform to BKFC's data-driven player development, underpins their competitive positioning. Despite facing macroeconomic headwinds and a proxy contest, Cannae's leadership is executing a well-defined strategy that prioritizes active management, targeted capital allocation, and direct shareholder returns, positioning the company for a compelling future as a specialized investment powerhouse.