What will happen to Atmus Filtration (ATMU) after the exchange concludes? One situation that I’m closely following is Cummin’s (CMI) spin off of Atmus Filtration (ATMU). The situation is/was a fun one to watch because there was an “odd lot” arbitrage. In a nutshell, there was an opportunity to make a low risk $2k. The [...]
How to Buy Your Favorite Stock at a Discount One of my favorite strategies for adding to a favorite stock is by selling puts. When you sell a put, someone is paying you cash today to buy a stock below its current price. What’s the catch? You must genuinely want to own the stock and [...]
Spin-off Mailbag: How do you get in touch with Investor Relations? One of the reasons that I love investing in small and micro-cap companies is that generally it’s easy to get in touch with management and/or investor relations. But sometimes, investor relations is hard to track down. Today, I’m going to walk through the specific [...]
A “SOTP” Horror Story Sum-of-the-part or SOTP analysis is a key tool that I use when analyzing a spin-off. Most conglomerates trade at a “conglomerate discount” and so SOTP analysis can be useful to understand if a spin-off will create value. However, SOTP analysis cannot be followed blindly. I just published a case study on [...]
Spin-off Mailbag: Why Don’t Investors Short All Spin-Offs? I got a great question in my Twitter DMs related to shorting spin-offs.... Here's my answer: First, it’s hard to short spin-offs right when they come out. Typically, no shares are available to borrow from my broker (Schwab) so shorting is challenging (maybe some brokers are better?). [...]
Spin-off Calendar Danaher (DHR) spun off Veralto Corporation (VLTO) on September 30. You can read my deep dive on Veralto here (paywall) Aramark (ARMK) spun off its uniform services business, Vestis (VSTS) on Sept 29. You can read my deep dive on Vestis here (paywall) On October 2, 2023, Kellogg (K) spun off WK Kellogg (KLG) in a tax-free transaction. You can read my notes here. On October 4, Novartis (NVS) spun off Sandoz [...]
Spin-off Links - October 2023 There has been a TON of spin-off activity. Let’s get right into it…. New Spin-off Announcements On September 21, 2023, W. P. Carey (WPC) announced that it will exit the office assets within its portfolio. It will sell 87 office properties and put another 59 into a new company which [...]
Seth Klarman Special Situations Investing Case Study Seth Klarman, famous value investor and CEO of Baupost Group, was recently interviewed on the “Capital Allocators” podcast. It was a terrific interview, and I recommend listening to the full conversation. Today, I want to highlight a case study that Klarman walked through. I LOVE case studies. [...]
Talking Spin-offs with Schroders The Value Perspective I recently had the opportunity to talk spin-offs with Juan Torres Rodriguez, host of The Value Perspective. I had a blast! Here's what we covered: 3:02: My Background 7:28: What is Special Situation Investing? 11:38: What are the main challenges of investing in special situations? 15:24: Special [...]
3 Biases to Avoid as a Special Situations Investor I was recently interviewed for a podcast, and the host asked me about behavioral biases. Specifically, the host asked: What are the behavioral biases most commonly found around special situation investing? For me, the 3 most relevant biases are: Disposition Effect Overconfidence Effect. Consistency Bias. Today, [...]
Joel Greenblatt Podcast Joel Greenblatt is my favorite investor. He specializes in special situations and generated 50% annual returns for a decade. Whenever he’s interviewed, I drop everything and listen in. Greenblatt was recently interviewed on the Investor’s Chronicles podcast. The whole interview is interesting, but my favorite section was towards the end when the [...]
Spin-offs Links - May 2023 It’s been a busy five months in the spin-off world. Let’s get right into it…. Recently Announced Spin-offs On May 18, 2023, Alibaba (BABA) announced that it will be spinning off its Cloud Intelligence Group in the next 12 months. This follows the company’s March 28 announcement of a large [...]
5 Ways That I Use BamSEC One of my favorite investing tools out there is BamSEC. Here are the 5 ways that I use it: 1) Let's start with spin-offs.... Months before it starts trading, a spin-off will file a Form 10 with all its historical financial information. A Form 10 is similar to a [...]
Updated Spin-off Calendar Star Holding (STHO) was spun off of iStar (STAR) on Friday, March 31. You can read my thoughts here. Imminent Spin-offs: 1) Crane Co (CR) will be spun off from Crane NXT on Monday, April 3. You can read my notes here. 2) Madison Square Garden Entertainment (MSGE) will spin off Sphere Entertainment Co (SPHR) on April 20. You can read my notes here. Want a printable spin-off calendar? Here you go: Upcoming Spin-off Calendar [...]
Warren Buffett and Spin-offs Warren Buffett, the world’s greatest investor, has a complicated history with spin-offs. On the one hand, he’s made a lot of money investing in them. But he would never spin off a Berkshire subsidiary unless forced to by regulators. And I have to say, I agree with his seemingly contradictory [...]
Spin-offs with Insider Buying (March 2022) I recently scanned my spin-off / special sits watch list for insider buying and found 7 stocks that are worth highlighting. Let’s go in alphabetical order… Altisource (ASPS) Altisource is an old 2009 spin-off. For a period of time, it was one of the best performing spin-offs of [...]
Talking Spin-offs with Value Investor Chatter Last week, I had the opportunity to talk spin-offs with Beko Jang on the Value Investor Chatter Podcast. Here's what we covered: 5:01: Exploring the Benefits of Spin-off Investing 8:10: Forced Selling in Spin-offs 16:07: Analyzing Management Incentives 19:20: The Most Important Factors to Consider When Considering Investing [...]
How to Invest in Biotech (without being a specialist) I know many investors who don’t invest in certain sectors because they require specialized expertise. A few of the most common examples: Financials Energy Biotech And there is definitely something to be said for staying within your circle of competence. But for better or worse, [...]
Spin-off Links - February 2023 Lot’s going on in the spin-off world. Let’s get right into it… Recently Announced Spin-offs Baxter (BAX) announced on January 6 that it plans to spin off its Renal Care and Acute Therapies global business units into an independent company within 12-18 months. Here’s Baxter’s slide deck with additional [...]
The Strategy John Malone Uses to Generate Income John Malone is one of the best operators and investors in the world. He is profiled in value investing cult favorite The Outsiders. Malone is best known today for running the Liberty Media complex, but he started his career in the cable industry at TCI. Here’s [...]
[Podcast] Stock Spin-off Investing for Beginners I recently had the opportunity to talk with the guys from The Investing for Beginners Podcast. It was a blast! Here's what we covered: · How would Rich explain what a spinoff is, and how they work? · Are there certain cycles or market cycles better for spinoffs? · How do companies [...]
2seventy bio: A Double with Downside Protection The biotech market is in a bear market and it’s been that way for a while. XBI, the leading biotech ETF, is down 53% from its peak in 2020. What is even more interesting is that a record number of biotechs are trading at negative enterprise values. In [...]
Spin-offs with Insider Buying (November 2022) I recently scanned my spin-off watch list for insider buying and found 4 stocks that are worth highlighting. Let’s go in alphabetical order… Conduent (CNDT) Conduent is a business processes outsourcing company that was spun off from Xerox in 2016. It hasn’t had much success as a public company… [...]
Spin-off Links - October 2022 There has been a TON of spin-off activity. And valuations generally look quite attractive. I don’t know when the bear market will end, but I do know I’m seeing a ton of value from a bottom up perspective. Before we get into the spin-off news, I want to share some [...]
Market Champions Podcast I recently had the opportunity to speak with Srivatsan Prakash on his podcast. Fun fact about Srivatsan: He's been podcasting since 2019 but is only 18!! Fun fact #2: He convinced Jim Rogers (as in the business partner to George Soros) to come on his podcast. It was a ton [...]
How Long Will the Bear Market Last The U.S stock market has been brutal in 2022. Through the first two quarters of the year, the S&P 500 is down 20%. While the market is up slightly in July, it’s not much of a consolation. We are in a bear market, and it doesn’t feel good. [...]
10 Rules for Spin-off Success I've been investing in spin-offs for the past 15 years and have learned many lessons. How'd I learn them? Mainly, the hard way! But today I'm sharing those lessons so you don't have to make the same mistakes. #1. Forget that “spin-offs outperform” In aggregate, they generally will but [...]
Buffett On Inflation Over The Last 50 Years There have been four key times when Warren Buffett has given his insights on inflation in Berkshire Hathaway's annual reports since the 70s. 1979 - After explaining that Berkshire’s book value compounded 20.5% annually for the previous 15 years, Buffett comments: “But before we drown in [...]
Buy NexPoint Diversified (NXDT) NexPoint Diversified REIT Investment Case June 15, 2022 Ticker: NXDT Price: $15.23 Market Cap: $565MM Price Target: $25 Upside: +64% Summary: NexPoint (NXDT) is a closed end fund that is transitioning into a real estate investment trust (REIT). It trades at a 40% discount to NAV and is significantly below where [...]
There has been a lot of spin-off news since my last “spin-off links” article… But before we dive into it I just want to highlight that I just published a new idea. Usually I look for obscure, hidden opportunities, but my latest recommendation is a large cap that is too cheap to ignore. It’s a [...]