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XPO Logistics Spin-off Notes

Rich Howe2021-08-16T14:59:54-04:00

December 3, 2020

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I research spinoffs. The avg return from my recommendations is +25.5% (+10% vs. S&P500) with avg holding period of ~12 months | more info 👇

Rich Howe @stockspinoffss·

Why would a company spin off a business? What’s the incentive?
Wall Street likes simplicity. So one reason a business will be spun off is to make it easier to value.

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Rich Howe @stockspinoffss·

Oftentimes conglomerates will have a conglomerate discount. Which is when the market values the conglomerates at a small discount to the sum of parts valuation of each of its businesses.

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Rich Howe @stockspinoffss·

Any ideas on why $ZDGE is performing so poorly?

Grew rev 112% last fiscal year. Guidance for next year is 25% to 30% (they are usually conservative).

Chart looks horrible but it's trading at 10.9x TTM FCF.

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Rich Howe @stockspinoffss·

One area of the market that I’ve focused on recently is companies that are selling divisions then paying out special dividends.

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Rich Howe @stockspinoffss·

"Capitalism, with all its drawbacks, actually works." – Greenblatt

Rich Howe@stockspinoffss

Oftentimes a spin-off is like a startup that actually has solid financials...

Once freed from the restraints of corporate bureaucracy, management doesn’t have to fight for resources or approval from two to three layers of management.

Entrepreneurialism flourishes.

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