Spinoff Odds & Ends: Talk CEO To Me Edition DWDP REZI HON

It may be a new year, but we are reviving our series of popular Odds and Ends pieces. In this end of week edition, we hear from CEOs of spin off related companies. The buck has to stop somewhere so why not hear it straight from the top?

  1. The WSJ recently featured a chat with Ed Breen, the current CEO of DowDuPont (DWDP). The recently merged chemical behemoth is currently in the process of breaking up into three separate companies in early 2019. At the end of the day Mr. Breen is expected to become CEO and Executive Chairman of the electronics, safety and nutrition focused ‘parent’ Dupont. He is also considered somewhat of a breakup and spin off expert having previously dismantling the famed Tyco (RIP) conglomerate into three. The brief interview touches on a number of relevant areas, but one area I found interesting was his relationship with activist investors and his advice in dealing with them.
  2. On that note, apparently 2018 was the year of the activist where ‘a record 284 companies around the world with market values of more than $500 million were publicly subjected to demands from activists’. Being a CEO is a tough job, but they get the big bucks and one reason is dealing with those pesky activists. Apparently, even mutual funds are trying to get in on the action! Increased activism (and successful activism) is a trend we have highlighted time and time again on this site and it seems to be one of the few ways for active managers to demonstrate (or at least try to demonstrate) ‘alpha’. The issue only seems to be getting more important and it will be interesting to see how activism and company responses evolve. Is ‘peak activist’ on the horizon?
  3. Finally, here is an interview with Resideo Technologies (REZI) CEO Mike Nefkens discussing the impact of trade tensions and of how its recent independence will impact different parts of its portfolio. Resideo was formed in 2018 when Honeywell (HON) spun off its home product business and ADI distribution unit into a standalone entity and the new company’s HQ is going to be in Austin, TX. Apparently, sometimes CEOs do think of things other than activist foes.

Disclosure: Author holds no position in any stock mentioned.