Author Archives: Inelegant Investor
Earlier this year, we mentioned analyst rumblings that Jonhson Controls(JCI) ought to spin off its automotive seating business. Now, the company has decided to undertake a major move, but not the one suggested. Johnson will be spinning off its auto interiors business into a joint venture with a subsidiary of Chinese auto maker SAIC. Johnson will own 30%… Read More »
“The wind goes toward the south, and turns about to the north; it turns about continually in its spin, and the wind returns again to its spin.”(Ecclesiastes 1:6) Some companies are such inveterate spinners, that one could get dizzy watching their machinations. In 2000, after 14 years of ownership, Ralston Purina spun off Energizer Holdings(ENR). Ralston Purina would… Read More »
Sometimes, businesses that begin based on natural synergies grow apart. This appears to be the case with Alliance Techsystems(ATK). The company has three divisions: Aerospace, Defense, and Outdoor Sports. This once made a great deal of sense, as the ammunition the company sells to the military is a similar product to the ammunition it sells to hunters. As… Read More »
You probably have not heard of Hop-On(HPNN). After all, its share price is so small, it shows up as 0.00 on Yahoo Finance. Unlike many such companies it appears to actually have a little revenue(793K in 2013), though it is unclear exactly what it is from. Recently, the company took a break from its usual bizarre rants Market… Read More »
Another week, another heavily leveraged spin from Eddie Lampert. Just last week, Sears Holdings(SHLD) shareholders received shiny new shares in Lands’ End(LE). But Sears received a bigger gift- $500 million in cash paid as tribute by the new company. Lands’ End, like many Sears and Kmart customers, borrowed heavily to give this gift and now will be constrained… Read More »
There’s much value to be found in spins, but not every spin is a winner. That’s the reminder from YCharts’ Jeff Bailey, who took a recent look at ADT’s(ADT) “alarming” performance. Despite a strong, post-spinoff start, the company plunged and has underperformed on poor earnings. in October 2012, and after an initial rally ADT shares turned down. Cable… Read More »
It’s been two and a half years since Xylem (XYL) was spun off from ITT Corp (ITT). Not a long time, but long enough for the company to hire its third CEO. Gretchen McClain, the CEO at the time of the spinoff, resigned abruptly last September amid poor results, and was replaced on an interim basis by Steven… Read More »
We’ve been quite remiss in not discussing Darden’s(DRI) plan to spinoff Red Lobster and the ongoing activist fight over the company’s direction. Both Barrington Capital with 2.8% of the company and Starboard Value, with 5.5%, have been sparring with the firm. Barrington had proposed that the the firm separate its low-growth brands, Red Lobster and Olive Garden, from… Read More »
The Dover(DOV) Board has approved the company’s previously announced spin off of Knowles(KN). Dover shareholders of record as of February 19, 2014 will receive one share of Knowles on February 28 for every two shares of Dover that they own. Knowles, which will trade under the ticker KN, will begin regular way trading on March 3. Both stocks… Read More »
Last week, we reported that Illinois Tool Works(ITW) had decided to sell its Industrial Packaging Unit rather than spin it off. Now, the company has reached an agreement to sell the unit to the Carlyle Group for $3.2 billion. The deal values the business at 8.5 times EBITDA. This represents a continuation of a trend where conglomerates are… Read More »
If Kimberly-Clark (KMB) ever misses its health care division in the midst of its breakup, it will still have lots of Kleenex to cry into. The manufacturer of Huggies diapers announced last week that it planned to spin off its health care division to shareholders. Like many of the companies we discuss, Kimberly-Clark is something of a serial… Read More »
Six months after completing its spinoff of CST Brands(CST), Valero(VLO) has sold off all of its remaining shares in the convenience store operator, CST announced yesterday. Valero sold 15,079,448 shares in an underwritten public offering after the underwriters exercised their over-allotment option in full. CST has risen 8.98% since its May 2 close, lagging the S&P 500. Nonetheless, given… Read More »
Never heard of SunEdison(SUNE)? Perhaps you know it better by its old name, MEMC Electronic Materials. The name was only the first thing to change in the company’s ongoing evolution. In August, the company announced plans to spin off its semiconductor business, which had been its initial core business. The company plans to conduct an IPO for a… Read More »
Like many companies with a focus on natural gas, Encana(ECA) has struggled with the glut of production causing sustained low prices. To some extent, the company has successfully shifted production to oil and natural gas liquids which have had far better economics over the past few years. There is still more that the company needs to do, however,… Read More »
At his last earnings call in August, Time Warner (TWX) CEO Jeff Bewkes pushed back the timing of the company’s spinoff of Time, Inc. Three months later, another earnings call, and another delay. What had once been planned for completion this year is now projected to occur in the second quarter of 2014. Without elaborating on the reasons… Read More »