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 [...]
Dividend As A Catalyst One of my favorite spin-off strategies is the "dividend as a catalyst" trade. Here's how it works: Identify a spin-off that will be indiscriminately sold, determine the expected dividend yield, wait to buy until 30% of shares out have traded and the stock is trading at attractive implied dividend yield, sell [...]
Top Ideas for 2021 For the five years prior to quitting in 2018, I worked for a large global investment bank. I learned a lot and enjoyed the people with whom I worked. But did I feel like a cog in the corporate industrial complex? Yep. The best thing about running your own business is [...]
Stock Spin-off Interview with Maj Soueidan Recently, Maj Soueidan of Geoinvesting interviewed me about a variety of topics including: My background Investing in spin-offs Whether it makes sense to invest in the parent or the spin-off Spin-offs I like today War stories (i.e. spin-off investing gone wrong!) I really enjoyed the conversation. Maj [...]
Short KTB: Front-run ETF Selling Summary Recently, Kontoor Brands (disclosure: we are short KTB) suspended its dividend. As a result, a dividend focused ETF, SDY, will likely sell the 9.1 million shares of KTB that it owns by tomorrow end of day. Average daily trading volume for KTB is 1.4 million shares so 9.1 million [...]
Golar LNG: The Spin-off (if it happens) Will Unlock Significant Value I recently had a chance to speak with J. Mintzmyer, a shipping expert with a top rated service on Seeking Alpha. The purpose of the call was to to better understand Golar LNG (GLNG) which intends to spin off its shipping business. J. [...]
Chewy is 15% Overvalued Background A subscriber recently asked me what I thought of Chewy (CHWY) so I spent some time digging into it. It was a fun exercise in part because it’s the opposite of what I typically look for. First, it was a recent initial public offering (IPO). IPOs are propped up by [...]
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 [...]
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 [...]
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). [...]
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 [...]
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 [...]
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, [...]
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 [...]
Background nVent Electric (NVT), a spin-off from Pentair (PNR) will begin trading tomorrow. NVT provides products and solutions that connect and protect electric equipment which improves the equipment’s utilization, lowers costs, and minimizes downtime. On a proforma basis, NVT generated $2.1BN in revenue and $440MM in EBITDA in 2017. In the when-issued market, NVT has [...]
ConAgra is spinning off Lamb Weston Holdings, its frozen potato business (think french fries). Joe Cornell did a nice job summarizing the pending spinoff in Forbes. The ticker will be LW and when issued trading will begin imminently. Regular way trading will begin on November 9th. ConAgra has been under pressure from Activist investors (Jana) [...]
After doing some work on QHC, I bought the stock based on the thesis that I outline below. Unfortunately, last week QHC reported a VERY DISAPPOINTING quarter the stock dropped by roughly 50%. I’ve sold out of the stock and cut my losses. The purpose of this post is to review my thesis and evaluate [...]