Weekly Update (REZI, LBTYA, KBR )

August 1, 2026

Next Friday, August 7th, I’ll host my monthly live call at 1pm ET.

Join here: https://us06web.zoom.us/j/89270022837

Here’s what I’ll cover:

  1. Latest thoughts on Resideo (REZI) RemainCo and ADI Global (ADIG) spin-off
  2. Earnings review (APTV, BRSL, WDC, MAGN, LION, ZD)
  3. My highest-conviction current idea
  4. Updates on all recommendations
  5. Q&A

If there are specific questions you’d like me to address ahead of time, just let me know.

Alright, on to the rest of the update.

Weekly Update

If you haven’t already, consider joining our Discord channel (included with your paid subscription):

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It’s basically a chat room where we discuss what’s going on in the special situation market.

Here are a few things we discussed this week:

(1) New Idea: Buy REZI

(2) An options idea for REZI ahead of the spin-off

Recommendations Updates

(1) Liberty Global

Liberty filed an 8-K this week authorizing management to repurchase its Class A and Class C shares. The company says it doesn’t anticipate more than $200MM of selective repurchases in any twelve-month period, so this is an opportunistic authorization, not a firm commitment.

But the signal fits my thesis cleanly. Management’s own math is that the stock trades at roughly a 20% discount to the value of the cash and the Liberty Growth portfolio alone, with the entire European telecom business thrown in for free. Buying back stock at that level is exactly the accretive use of the balance sheet I want to see, and it comes right after they rebuilt year-end corporate cash to $2BN and raised over $1.2BN from asset sales this year.

My sum-of-the-parts analysis implies significant upside even under conservative assumptions.

Imminent Spin-off

Next week, Resideo Technologies (REZI) will spin off its distribution arm, ADI Global Distribution, Inc. (ADIG). with regular-way trading set to begin 8/4/2026 (when-issued ADIG WI trades starting around 7/29). Holders receive one ADIG share for every two REZI shares.

I think this transaction will unlock value, and I recommended buying REZI this week and bought shares. I’m planning to build a ~5% position ahead of the spin-off.

Here is a summary of the investment case:

  1. It’s a classic de-merger arbitrage setup. Even in the worst case, where RemainCo trades at the cheapest multiple in its peer group (~10x 2027 EBITDA) and ADIG trades at the cheapest distributor multiple (6.2x), I still get ~5% upside from today’s price. On more reasonable comp assumptions, I get ~38% upside. In other words, the market is already valuing both pieces at the bottom of their comp ranges, so the downside looks well protected while the upside is real.
  2. Both are good businesses, and the better one is being punished for the weaker one’s problems. RemainCo (the Products & Solutions business) is the higher-quality piece: ~20% EBITDA margins, sticky repair-and-replace demand, and a consistent track record of margin expansion. ADI has near-term challenges digesting its Snap One acquisition and softness in high-end residential AV, but distribution is a proven model, and value-added distributors have been terrific long-term stocks with heavy interest from both institutional investors and private equity. Tellingly, RemainCo grew EBITDA double digits last quarter while ADI dragged, yet the whole company sold off. The quality half is being priced for the distribution half’s issues.
  3. We are well aligned. Private equity firm Clayton, Dubilier & Rice (CD&R) will be the largest shareholder of both companies, owning ~20% of ADIG and ~17% of RemainCo. CD&R first got involved by financing Resideo’s Snap One distribution acquisition with a $500MM preferred investment, and it has kept buying common in the open market as recently as November 2025 in the mid-$30s, right where the stock trades today. Incentives are aligned. I wouldn’t be surprised to see CD&R eventually take ADIG (or REZI RemainCo) private, though a deal for ADIG may need to wait roughly two years to preserve the spin’s tax-free treatment.

It’s hard to predict how the spin-off and RemainCo will trade in the weeks ahead, but I like both businesses and would add to both if a dislocation emerges.

Here is my updated SOTP ahead of the spin-off next week:

Spin-off Links

Update to KBR Mission Technology Solutions Spin-off

  • Spin-off is targeted for January 4, 2027
  • Looks cheap on SOTP and absolute basis.

Rich Pzena Podcast interview

  • Joel Greenblatt seeded his firm and then he grew it to $80BN AUM
  • Looking forward to listening.

Spin-off Calendar

Upcoming Spin-off Calendar | Completed Spin-off Calendar

Current Positioning

(updated once a month)

Hope you had a great week!

Rich

Disclaimer:

Rich Howe, owner of Stock Spin-off Investing (“SSOI”), currently is long IDT, MEDXF, IAC, UNTC, HGHCF, WDC, MAGN, LION, STRZ, NLOP, BRSL, TSE: 3134, TSE: 441A, NATL, ZD, APTV, VSNT, and REZI.  All expressions of opinion are subject to change without notice. This email is provided for informational purposes. Please do your own due diligence and consult with an investment adviser before buying any stock mentioned on www.stockspinoffinvesting.com.