Horizon Kinetics Positive On Associated Capital(AC), AMC Networks(AMCX) And Howard Hughes Corporation(HHC)

Horizon Kinetics is an asset management and research shop founded by Peter Doyle, Steven Bregman and Murray Stahl that has been analyzing spinoffs (and plenty of other things) for decades. Over the years, I’ve always enjoyed the various opportunities I’ve had to hear them speak. The firm even publishes a standalone research report dedicated to spinoffs and has its own spin-off composite index, the Horizon-Kinetics Global Spin-Off Index (GSPIN), which is tracked by Van Eck’s Spinoff ETF SPUN.

The firm recently released its 2016 Q4 Market Commentary and briefly discussed several of its positions including (not surprisingly) some recent and upcoming spinoffs:

1. AP Mollar-Maersk (AMKBY) – the company’s two main business lines – shipping and oil drilling and production – are both struggling during downturns in the business cycle. The company is planning on separating the two units over the next couple of years which should help them get added to various indexes. Basically, the idea is that at some point the cycle the turn and that AP Mollar-Maersk, as one of the largest players, will emerge in a stronger competitive position.
2. Associated Capital (AC) –  the alternative asset manager was spun off from Mario Gabelli’s GAMCO Investors (GBL) in 2016. Here is Horizon’s summary: ‘In essence, we believe Associated represents a low-risk, long-term call option on an asset allocation shift toward alternative strategies, and it has the respected GAMCO value reputation behind it’.
3. AMC Networks (AMCX) – yes, the network that gave us Breaking Bad and Mad Men was spun off from Cablevision (which has since been acquired) back in 2011. The market cap is currently ‘fairly modest’ and if the network were to develop another hit (no small feat in today’s market) or significantly improve its international division then Horizon thinks the stock could pop.

The firm is also positive on the Howard Hughes Corporation (HHC), a 2010 spinoff from General Growth Properties (GGP). Everyone has their own stories like this, but I still kick myself for not getting involved in GGP (HHC’s then bankrupt parent company) when I first heard Bill Ackman tell the story. While some of his recent investments haven’t fared so well (being kind), this one turned out to be an absolute home run.

Disclosure: Author holds no position in any stock mentioned.