Our friends over at My Investing Notebook recently dug up Ralcorp’s(RAH) comments from its 2007 acquisition of Post Cereals, and compared them to its comments regarding this month’s spin off of Post(POST) as an independent company. We were salivating to buy the stock based on the mouth-watering descriptions of future profits to be had as a result of… both transactions. Ralcorp was, and is, primarily a private label manufacturer. Its failure to capitalize on and support the branded Post cereals is probably not surprising, but it would be nice if management acknowledged its failure as it paints its rosy picture of the future. Many spinoffs do have their roots in previous acquisitions, though usually a longer period of time elapses before the acquirer throws in the towel.
Disclosure: The author holds no position in any stock mentioned