Spin-off Links (July 2019) Recent Members Only Research Golar LNG Spin-off - What’s It Worth? Madison Square Garden Spin-off - Deep Dive Corteva - Deep Dive Kontoor Brands - Deep Dive Riviera Resources - Notes from Meeting with Management Insurance Auto Auctions - Deep Dive Recently Announced Spin-offs On July 17, 2019, Ardagh Group (ARD), [...]
The Yield Curve Is Still Inverted. Is a Recession Imminent? In the past year, a lot has been written about U.S. interest rates and 1) whether or not the yield curve is inverted and 2) whether or not that matters. The purpose of this article is to look at the yield curve today and [...]
June 2019 - Spin-off Links Spin-off Resources Interview: My Spin-off Investment Process How Do Spin-offs Perform? Why Do Spin-offs Outperform? Recently Announced Spin-offs On June 17 2019, AECOM (ACM), announced that it would be spinning off its government management services business. The division generates ~$4BN in revenue which represents ~27% of total ACM revenue. The remaining [...]
CorePoint Lodging is Down 50% - Is it a Buy? Background (courtesy of Yet Another Value Blog): La Quinta used to consist of two businesses: the La Quinta brand / franchise and the ownership of 317 La Quinta hotels. In early 2017 the company announced a plan to pursue a taxable spin-off that would split the [...]
Why Do Spin-offs Outperform? While not every spin-off will outperform (I’ve learned this lesson the hard way), on average, they do quite well. See below for long-term performance of Bloomberg spin-off Index vs. the S&P 500. What drives the outperformance? Usually stock spin-offs begin trading at a low valuation. This occurs for a couple [...]
Spin-off Links - May 2019 Recent Members Only Research VF Corp - Kontoor Brands Spin-off Deep Dive Arlo - Good First Quarter Results DowDuPont - Initial Thoughts on DowDuPont’s Corteva Spin-off KAR Auction Services - Spin-off (IAA) Deep Dive Spin-off Resources An interview where I discuss my best and worst spin-off investments as [...]
My Interview on Investing in Stock Spin-offs Last week, I had the pleasure of speaking with Greggory Miller of Spin-off Investing Simplified. It was a great conversation and Gregg was kind enough to record the conversation. I've posted segments of the interview below for those who are interested. Why Invest in Stock [...]
Spin-off Links - April 2019 Recent Members Only Research Alcon Spin-off Thoughts New Dow Spin-off Analysis Livent Spin-off Overview KAR Auction Services Spin-off (IAA) Deep Dive Recently Announced Spin-offs On March 25, 2019, Naspers (NPSNY) announced that it will be spinning off its stake in Tencent (TCEHY) and other internet assets by the [...]
Spin-off Links - March 2019 Recent Spin-offs On February 8, Henry Schein (HSIC) spun off its animal animal health business and then immediately merged it with Vet’s First Choice to create a new company called Covetrus (CVET). The stock opened at $41 and has declined to $33.69. It’s still expensive trading at 19.2x [...]
LLY / Elanco Exchange Offer [This article was published to my premium subscribers last week, but I released it to the public to share the type of analysis that is available for premium subscribers.] Summary The LLY/ELAN exchange offer represents a very low risk way to make $890 in two weeks. My expected return [...]
Summary On a sum-of-the-parts basis, UTX is currently undervalued by ~20%. While it will take time for the value to be unlocked, the stock looks attractive at current levels. The break-up is schedule to be complete by mid 2020. Background Way back in August 2017, rumors first started to emerge that activist investors [...]
Stock Spin-off Links Update on Premium Service For a limited time, we are offering a 7 day free trial. Take advantage today as this opportunity will expire on Thursday, January 31. Stock spin-off recommendations published on the site have generated a 50.0% return versus the S&P 500 at 14.9% over the same time [...]
Honeywell: Spin Offs Allow the Company to Focus on High Growth Areas This article is a guest contribution by Nathan Parsh of Sure Dividend. Sure Dividend helps investors build high quality income portfolios for retirement. Companies can spin off portions of its businesses for a variety of reasons. Perhaps a certain segment no [...]
Arlo: A Cheap Way to Play The Connected Home Theme? Arlo Spin-off Background On December 31, 2018, Netgear (NTGR) spun off its remaining 62,500,000 shares of Arlo Technologies (ARLO), which is focused on smart video cameras, to existing shareholders. The first day of trading post this distribution will be today (January 2, 2018). [...]
Stock Spin-off Links Recently Announced Spin-offs On November 5, 2018, FMC Corp (FMC) a chemical company focused primarily on the agriculture market, announced that it would spin off its remaining ~85% stake in Livent (LTHM), its pure-play lithium subsidiary, on March 1, 2019. FMC previously sold ~15% of LVTH in an October IPO. [...]
United Technologies - Will the Break-up Unlock Value? For over a year, United Technologies (UTX) management has been under pressure from large activist investor, Third Point, to break up the company. Management finally succumbed to that pressure and announced on November 26, that it would indeed move forward with a split. UTX will [...]
Madison Square Garden Spin-off Madison Square Garden (MSG) will be spinning of its sports business in the first half of 2019. Rationale for the Spin-off In a statement, MSG wrote: “The proposed separation of the sports and entertainment businesses would enable investors to more clearly evaluate each company’s assets and future [...]
Stock Spin-off Links Recent Spin-offs On October 29, 2018, Honeywell (HON) spun off, Resideo (REZI), its home products (thermostats, fire protection, etc.) and distribution business (security, fire protection, etc.) REZI has declined 30% since the spin-off. By my math, REZI trades at 7.2x 2019 EBITDA. I think a more appropropriate valuation would be [...]
Equitrans Spin-off EQT’s spin-off, Equitrans Midstream (ETRN), began regular way trading this morning under the ticker ETRN. Ever since EQT acquired Rice Energy in 2017, activists Jana and D.E. Shaw have urged a break up to separate the midstream and upstream businesses to increase shareholder returns. Equitrans midstream is a corporation and owns units [...]
Stock Spin-off Links Recent Spin-offs On September 26, 2018, Fortive’s Automation and Specialty Business, completed its merger and split off. Fortive (FTV) shareholders who elected to exchange their shares received shares in Altra Industrial Motion (AIMC). Since the split off, AIMC shares have declined ~21%. AIMC is currently trading at $32.87 and is [...]
Stock Spin-off Case Study: Nuvectra - Microcap Spin-off Trading Below Net Cash Overview On March 13, 2016, Integer (NYSE: ITGR), formerly known as Greatbatch, Inc, spun off its neuromodulation business, Nuvectra Corporation (Nasdaq: NVTR). Integer’s core business was outsourced medical device manufacturing. Nuvectra, which was known as QiG Group, was a small money [...]
Stock Spin-off Links Premium Service In July, I launched a premium stock spin-off service. For $29 per month, I cherry pick the most promising stock spin-off investments for your benefit. So far, I have two recommendations: First recommendation is a small cap spin-off in the real estate sector. My price target implies ~94% [...]
Spin-off Case Study: Long NTGR, Short ARLO Last week, I executed a pair trade involving buying Netgear (NTGR) and shorting Arlo (ARLO). I’ve underwrote the trade to generate a ~17.5% return and a ~56% IRR over a 4 month time period. I was in the process of writing it up as an official recommendation, [...]
Stock Spin-off Links Stock Spin-off Resources Just a heads-up, I recently published an updated stock spin-off resources page. I include a bunch of information including: A one page “What is a Spin-off?” guide Links to 11 stock spin-offs studies and articles (BCG, McKinsey, Credit Suisse, J.P. Morgan and many others) You can check [...]
Stock Spin-off Links Premium Spin-offs In case you missed it, I recently launched a premium newsletter and my first recommendation. The stock is already up ~11% since I published my thesis, but plenty more upside remains. I’ve launched at the extremely affordable price of $29/month (less than a dollar per day) for a [...]
Stock Spin-off Links Recent Spin-offs There have been a ton of recent spin-offs this week. Yesterday, CorePoint Lodging (CPLG), a La Quinta (LQ) spin-off, began trading. LQ had run up after it was profiled recently at the Sohn Contest and it looks like the thesis has already played out as the spin-off, CPLG, [...]
Stock Spin-offs Continue to Outperform It has been a while since we've taken a look at the relative performance of the Bloomberg US Spin-off Index so we pulled the latest data today. As displayed below, from 12/31/2005 to today (5/24/2018) the index has generated a total return of ~512%, outpacing the S&P 500 by [...]
Imminent Spin-offs La Quinta’s (LQ) spin-off, CorePoint (CPLG), will begin trading on May 31, 2018. Additional information here, here, here, and here. Euroseas’s (ESEA) spin-off, Eurodry, will begin trading on June 1, 2018. Additional information here. DXC Technology’s (DXC) spin-off, Perspecta (PRSP), will begin trading on June 1, 2018. Additional information here. Spirit Realty Capital’s (SRC) spin-off, Spirit MTA REIT (SMTA), will begin trading on June 1, [...]
Recent Spin-offs On Tuesday, May 1, nVent (NVT) began trading on the NYSE. It opened at $21 and but rallied and is currently trading in the $25 range. So much for indiscriminate selling! I think its fairly valued at current levels and wouldn’t be a buyer unless there was significant sell off. To view [...]
Background Dover (DOV) announced in September 2017 that it was reviewing strategic options (sell, merge, or spin-off) for its energy business. A month later, activist investor, Dan Loeb, disclosed his DOV position and urged management to sell its energy business. Loeb noted, “Removing the cyclicality from Dover will greatly reduce earnings volatility, allowing investors to [...]