Upcoming Spinoffs

[Saluki]

Rather than wait for an SEC Filing, maybe it's a good idea to have a post where people can list upcoming spinoffs so we can start our research early and have an easy place to find upcoming spinoffs.  Here's a few that I heard about: 

 

Danaher (DHR) is spinning off a company called Veralto: 

 

"Veralto is DHR’s Environmental & Applied Solutions unit and post-spinoff, it will be the global leader in Water Quality (59% of 2022 revenue) and Product Identification (41% of 2022 revenue)"

https://finance.yahoo.com/news/dhr-target-industrial-healthcare-firm-095800056.html?.tsrc=fin-srch

 

 

I've also mentioned on another post that Vista Outdoor (VSTO) is splitting itself into two companies this year.  One focused on outdoor (hiking, biking, fishing, camping) and another focused on ammunition.  

 

A days ago Imperial Tobacco (IMBBY) announced it was spinning off 60% of their hotel business to shareholders. 

 

If you know of any other upcoming spinoffs that look promising, post them here.  

[hasilp89]

22 minutes ago, Saluki said:

A days ago Imperial Tobacco (IMBBY) announced it was spinning off 60% of their hotel business to shareholders.

where did you see this. googled around and couldn't fine anything. I may be missing something!

[Saluki]

@hasilp89 https://www.reuters.com/world/india/indias-itc-demerge-hotel-business-2023-07-24/  Here you go.  Probably didn't come up in search because they call it a "demerger" instead of a spinoff.

[Spekulatius]

Rich Howe keeps a pretty good Spinoff calendar on his website:

https://stockspinoffinvesting.com/upcoming/

 

On a related note, investing in Spinoffs has become much harder than in Greenblatt's time in the 90's or early 2000's when he made it common knowledge.

 

I think the companies doing spinoffs have caught up with the inefficiency in the market and dedicated investor base for spinoff and they are now spinning of their hairball business loaded up with too much debt and often hard to access liabilities (See GTX, REZI, ZIMV etc). I think it has gotten to the point where it is better to invest in the RemainCo rather than the Spinco in many cases. of course there are exceptions from the Rule and still bargains to be found. My guess so is that if you were to buy all Spincos stocks at the spinoff date, you are going to considerably underperform.

Edited August 1, 2023 by Spekulatius

[Gregmal]

1 hour ago, Saluki said:

@hasilp89 https://www.reuters.com/world/india/indias-itc-demerge-hotel-business-2023-07-24/  Here you go.  Probably didn't come up in search because they call it a "demerger" instead of a spinoff.

Why do you know of this? Sounds interesting. Sorry for the lazy question lol 

[Saluki]

14 minutes ago, Gregmal said:

Why do you know of this? Sounds interesting. Sorry for the lazy question lol 

 

I own a small basket of Tobacco stocks (Mostly BTI and a little JAPAY, PM an IMBBY).  My broker doesn't allow me to directly buy Indian shares (only ADRs), so when IMBBY spins it out, I assume it will just get sold and there will be a small amount cash distributed. Might be interesting to someone with an Indian brokerage account. 

[Dinar]

Actually, it is not IMBBY spin-off.  It is a 30% owned subsidiary of BTI that is spinning 60% of its Indian hotel business.   Brokers think the valuation will be 40x EBIT for the spun-off piece.  Some depreciation is economic, some not.

[CorpRaider]

$K spinning snacking.

[KJP]

14 hours ago, Saluki said:

 

I own a small basket of Tobacco stocks (Mostly BTI and a little JAPAY, PM an IMBBY).  My broker doesn't allow me to directly buy Indian shares (only ADRs), so when IMBBY spins it out, I assume it will just get sold and there will be a small amount cash distributed. Might be interesting to someone with an Indian brokerage account. 

 

Isn't IMBBY the OTC symbol for Imperial Brands PLC, which trades in London under the ticker IMB?  https://www.imperialbrandsplc.com/etc.clientlibs/imperialbrands/corporate/components/content/oar/clientlibs/resources/pdfs/imperial-brands-2022-annual-report.pdf

 

My understanding is that the company spinning off its hotel business is ITC Ltd., which is an India-based holdco:  https://www.itcportal.com/ 

This company trades on the Indian exchange under the symbol ITC:  https://www.bloomberg.com/quote/ITC:IN#xj4y7vzkg

 

In short, IMBBY is not ITC Ltd.

Edited August 2, 2023 by KJP

[LC]

BTI owns ~30% of ITC (India Tobacco).

 

India Tobacco is spinning off 60% of its hotel business to shareholders.

[Saluki]

1 hour ago, KJP said:

 

 

In short, IMBBY is not ITC Ltd.

 

Yes, you're right.  My mistake.  

[Value_Added]

Anyone looked into SN?  Recently spun-off and consists of two extremely popular brands continually taking market share.  Not cheap but it doesn’t look ridiculously expensive either.  Haven’t done any work except reading their investor presentation…no position.

Edited September 7, 2023 by Value_Added

[hasilp89]

@Value_Added I started looking at it a bit. Wasn't particularly interested at first. On the face of it home appliances seem like a commodity, competitive, undifferentiated and cyclical. They market themselves to investors as being hyper focused on new product development and marketing - some of the case studies and their historical growth backs it. While this does seem to differentiate them from some of the sleepier brands i don't have a clear idea on how that lasts / develops over time. In terms of competitors i took a quick look at Hamilton Beach, Lifetime, Helen of Troy - who all seem to be all over the place in terms of brands/products/licenses and not as focused as these guys. The spin off element is interesting but like you say it doesn't seem to have traded off significantly.

[Spekulatius]

No comment on the stock, but I think the brands Shark and Ninja have value. We have a Shark vacuum and  Ninja air fryer and they are both and smart designed and solid and not overpriced either (Dyson...).  Much better brands than Hamilton beach or Black and Decker etc and many others.

[hasilp89]

17 minutes ago, Spekulatius said:

No comment on the stock, but I think the brands Shark and Ninja have value. We have a Shark vacuum and  Ninja air fryer and they are both and smart designed and solid and not overpriced either (Dyson...).  Much better brands than Hamilton beach or Black and Decker etc and many others.

thanks for sharing, i haven't bought much of this stuff historically so wasn't super familiar.

if you were shopping for a new toaster oven or another new appliance do you think you'd look to one of their brands first?

[Spekulatius]

13 minutes ago, hasilp89 said:

thanks for sharing, i haven't bought much of this stuff historically so wasn't super familiar.

if you were shopping for a new toaster oven or another new appliance do you think you'd look to one of their brands first?

Well  my wife typically shops these things. We typically prefer to buy at Costco and that's where we got the air fryer. I don't know if she looks at these brands first, but they are certainly on the list of brands to check out (depending on exactly what we buy) and then i give my input (which is typically - just buy it). I can say I had input on the vacuum and we chose this Shark model because it has the attachments that we use and wasn't super heavy as well as having multi use filters that are easy to clean. We bought this in 2015 and it's still running well.

 

As I said, solid and smart designs and well priced unlike some other brands that are clumsy and badly design and don't last. 

[Value_Added]

I can speak about Shark indirectly as I don’t own it but know others who do.  Never heard a bad thing about them and they are very often compared with Dyson when mentioned.  When we upgrade vacuums I am confident it will be a Shark due to all of the positive commentary and comparisons to a much higher priced product.

 

Ninja I can speak to directly as we own their pots/pans, blender, and air fryer.  Can’t say enough good things about them and without a doubt all small kitchen appliances will eventually be Ninja in our kitchen.  Bang for buck, there’s no real comparison in terms of the quality received. 

The quality is clearly there in both brands but I don’t know how that translates into the stock and longevity of revenue and earnings growth.  I suspect continued strong growth ahead simply because of the strong brand quality, affordability, and word of mouth (social media).  Once they get into your kitchen (many ways to do that as they continually release more products) there’s a good chance they stay and likely gain share in your appliance ownership as stuff is replaced.

 

I want to put this in the too hard pile but yet it seems so easy.  Is this one of those Peter Lynch no brainers?  Amazing brand(s), unfollowed by wallstreet sitting there trading at a 11.5x EV/EBITDA and 15x EV/EBIT while

growing at 20%?

 

 

[hasilp89]

10 minutes ago, Value_Added said:

I want to put this in the too hard pile but yet it seems so easy.  Is this one of those Peter Lynch no brainers?  Amazing brand(s), unfollowed by wallstreet sitting there trading at a 11.5x EV/EBITDA and 15x EV/EBIT while

growing at 20%?

From a first pass I agree with you. Knowing my temperament I’ll wait a week and see if it still appeals to me. Some things I’m thinking about

- how much does that 20% depend on international growth + how different are consumer eating behaviors in the European countries they’re going into

- are there any competitors of scale that come close on the innovation or marketing side (Dyson comes to mind for innovation)

- seems like they’re wide open on distribution and open to all channels - is this a business where dtc makes sense and higher margins are possible

- is there any operating leverage - iirc sga, r&d, and s&m have all grown with revenues