The entire world may drool over the BRICs, but in terms of spinoffs only the ‘B’ (as in Brazil) seems to matter. Homebuilder Gafisa SA (GFA) is the country’s latest potential spin opportunity as the company announced that it is considering its strategic options – a phrase that often includes a sale, IPO or spinoff – for its Alphaville Urbanismo SA project.… Read More »
The next round of corporate action at Sears Holding (SHLD) is about to begin as the board of directors set today as the distribution date of the rights offerings to purchase shares of its Hometown & Outlet store spinoff. The new company is expected to trade under the ticker ‘SHOS’ and each SHLD shareholder will receive one rights offering, good for… Read More »
Do spinoffs actually outperform the market? We often receive this question and point to Joel Greenblatt’s work and some other older studies. Luckily there are other people still examining the data for us and new research by Credit Suisse’s quantitative team (highlighted in this Barron’s ‘Focus on Funds’ blog) suggests the answer is still yes. According to CS’s findings, when… Read More »
Anyone have any new ideas? I know we have mentioned this numerous times – sorry – but the business and investing world is chock full of followers. We recently wrote about one example in the defense industry, but alas, it is not an isolated case. Take the PC business. IBM (IBM) successfully converted itself into a very profitable software business by dumping… Read More »
Investors in hedge funds, private equity firms, start ups and even some public companies often need to be aware of ‘Key Man’ risk. This refers to the over-reliance on or importance of a few select individuals (or even just one) to the business. Think Warren Buffet and Berkshire Hathaway (no matter what he says). About a year and half… Read More »
If a certain investing strategy delivers returns then you can count on followers and imitators joining the party. Just google ‘how to invest like buffett’. Even this site is an offshoot of Joel Greenblatt’s successful investment strategy. Corporate strategy is the same, especially in the minds of analysts in the investing world – if an idea worked for one company then every company in the… Read More »
Time for a little housecleaning as we catch up on some old news regarding a few potential spins which ended up as sales instead. Can’t win them all. Loral Space & Communications (LORL) had long talked about spinning off its Space Systems/Loral (SSL) unit to shareholders, but instead sold the division to MacDonald, Dettwiler & Associates (TSX:MDA) for $875m. The… Read More »
It only took about a year since the idea was first publicly floated, but Kraft Food’s (KFT) board of directors formally approved the spinoff of its North American grocery business last week. The tax-free spin is expected to be completed after the close on October 1st and shareholders of KFT will receive 1 share of the new Kraft Foods… Read More »
This author wonders what activists will do once the market’s conglomerates have all been broken up. Nelson Peltz of Trian Group gaining a board seat at Ingersoll Rand may be the latest harbinger of yet another spinoff on the horizon. Peltz had been trying to get a board seat and push for change but the company up to this point… Read More »
It’s been a scant three months since Fiesta Restaurant Group(FRGI) was spun out of Carroll’s(TAST) but the new company has already produced impressive results in its first reported quarter. The stock, which began trading in May below $13, closed at $16.16 yesterday. Last week, Fiesta reported its results for the second quarter. The company showed strong comparable store… Read More »
For followers of John Malone and his family of companies, frequent restructurings are nothing new. And he continues to provide special situation investors plenty to do. On the heels of the announced Starz spin, Liberty Interactive executed a previously announced splitoff of the company into new tracking stocks Liberty Interactive (LINTA) and Liberty Ventures (LVNTA). Since the company is remaining one… Read More »
Back in January, we reported that Comverse Technology(CMVT) would be spinning off subsidiary Comverse, Inc., leaving the parent with majority ownership of Verint(VRNT), as well as Starhome, a private company. We speculated at the time that the company would then follow up by distributing its Verint shares and winding down the holding company. Today, it was announced that… Read More »
What do you do when your drug discovery costs swamp your profits from a successful marketed drug. If you’re Elan Corporation(ELN), you spin off your drug discovery business with a bundle of cash, keeping your marketed drugs and late stage pipeline. Elan, an Irish biotech firm, is driven largely by Tysabri,a multiple sclerosis drug marketed with Biogen Idec(BIIB).… Read More »
It’s tough to be a CEO or board member these days. It used to be so easy, but now those pesky shareholders cause too many headaches. ‘Say on Pay’? What? Do they think they own the company or something? The only thing worse are those so called ‘activist’ shareholders, pushing to create ‘value’ or profits in their pockets.… Read More »
Carl Icahn is not a patient man, but he also doesn’t easily give up. Throughout his storied career, he has profited from forcing companies to make tough decisions to unlock value. Icahn, who owns 9.64% of Oshkosh Corporation(OSK), lost a bruising proxy battle for six seats in January. At the time he had urged the company to reverse… Read More »