Note: Please see below the table for commentary on each company.
|Spin-Off Name||Spin-Off Ticker||Parent Name||Parent Ticker||Spin-Off Type||Spin-Off Date||Resources|
|Fox Corporation||FOX / FOXA||Twenty-First Century Fox||FOX / FOXA||Spin-Off||3/19/2019||Research Report|
|Wabtec||WAB||GE Transportation||GE||Spin-Off||2/25/2019||Research Report|
|Covetrus||CVET||Henry Schein||HSIC||Spin-Off||2/7/2019||Research Report|
|Equitrans Midstream||ETRN||EQT Corp||EQT||Spin-Off||11/12/2018||Spin-Off Brief|
|Arcosa, Inc.||ACA||Trinity Industries||TRN||Spin-Off||11/1/2018||Research Report|
|Resideo Technologies||REZI||Honeywell International||HON||Spin-Off||10/29/2018||Research Report|
|Livent Corporation||LTHM||FMC Corp||FMC||Carve-Out||10/11/2018||Research Report|
|Garrett Motion||GTX||Honeywell International||HON||Spin-Off||10/1/2018||Research Report|
|Fortive A&S Segment||AIMC||Fortive||FTV||Split-Off||10/1/2018||Research Report|
|Elanco Animal Health||ELAN||Eli Lilly||LLY||Carve-Out||9/20/2018||Research Report|
|KLX Energy Services||KLXE||KLX Inc.||KLXI||Spin-Off||9/14/2018||Research Report|
Alcon is the largest eye care devices company in the world, generating ~$7.1 billion in revenue during 2018. They spun-off from Novartis in April 2019 and are now an independent, stand-alone company for the first time in many decades. Alcon operates through two segments: Surgical and Vision Care. They develop, manufacture, distribute and sell ophthalmic products and equipment for different surgical procedures, as well as contact lenses and other ocular health products. Their solutions help eye care professionals treat refractive errors, presbyopia, dry eye, cataracts, retinal diseases, and glaucoma. Please see the Alcon Research Report (subscription required) to learn more about the investment opportunity, eye care industry dynamics, and Alcon’s business strategy, competitive strengths, capital allocation decisions, financial profile, key risks, and management team.
Dow is an enormous global commodity chemical conglomerate that spun-off from DowDuPont in April 2019. The spin-off comes a few years after Dow and DuPont merged, combined various segments, and then spun-off into multiple companies. In 2018, Dow generated pro forma revenue of about $49 billion and operating EBIT of nearly $6.2 billion. They have large fixed assets around the globe, as well as JVs with strategic partners in cost-advantaged locations. The main business driver is the difference between feedstock costs and the price received for their end products. Please see the Dow Research Report (subscription required) to learn all about the company and the various dynamics within the chemical industry.
In March 2019, Twenty-First Century Fox merged with Disney and spun-off various cable channels, the FOX Network, and company-owned television stations as Fox Corporation. Their most valuable assets are the cable channels (FOX News, FOX Business, FOX Sports, etc.) and the FOX Network (sports programming rights for NFL, MLB, NASCAR, etc.). This ‘must have’ content should continue to be relevant regardless of how its distributed. However, the industry is rapidly evolving and becoming more competitive. Please see the FOX Research Report (subscription required) for all the details on the investment opportunity and state of the media industry, as well an analysis of the business and corporate governance.
General Electric spun-off their transportation segment and merged it with Wabtec in February 2019. GE Corporate continues to own a significant stake in the post-merger company, with the rest of Wabtec owned by GE shareholders and Wabtec shareholders. Prior to the transaction, Wabtec was one of the largest providers of products and services for new and existing locomotives, freight cars, and passenger transit vehicles. On the other hand, GE Transportation is not only one of the largest locomotive manufacturers, but also one of the largest servicers. As a result, this transaction combines GE’s locomotive manufacturing assets and servicing portfolio with Wabtec’s wide range of freight and transit products. Wabtec has historically been a well-managed company and they are executing this merger at what could end up being the bottom of the freight cycle. You can read all about the transaction, business fundamentals, competitive strengths, and management team in the WAB Research Report (subscription required).
In February 2019, Henry Schein spun-off their Animal health distribution business and merged it with Vets First Choice to form Covetrus. They are one of the leading veterinary supply chain and technology providers in the world. Covetrus serves as a key partner to help a very fragmented customer base of veterinarians make their practices more efficient and profitable while improving customer service. A number of different factors should continue to drive growth in the veterinary industry over time and provide a tailwind for Covetrus. Please see the CVET Research Report (subscription required) to learn more about the company, investment opportunity, animal health industry, and management team.
Arcosa is a small-cap industrial conglomerate that spun-off from Trinity Industries in November 2018. They operate the business through three different segments: Construction Products, Energy Equipment, and Transportation Products. These segments produce everything from aggregates and wind towers to inland barges and pressurized storage containers. Overall, some of their businesses are slightly above average while others are below average. With the spin-off, a new CEO is running the company and is focused on improving the business’ through the cycle return profile. Please see the ACA Research Report (subscription required) to learn more about the investment opportunity, business strategy, key risks, and management team.
Resideo Technologies Inc
Resideo Technologies manufactures security and comfort products for residential and commercial buildings as well as operates a distribution business. Their products are installed in over 150 million homes and include control and monitoring equipment for temperature, humidity, water, thermal, air, and security. They spun off from Honeywell in October 2018 and include the original Honeywell thermostat business. The business is mainly driven by residential construction and renovation & remodeling activity within the U.S. You can learn more about the business, investment opportunity, and important risks in the REZI Research Report (subscription required).
Livent Corp is a vertically integrated lithium company that produces a variety of lithium compounds, such as battery-grade lithium hydroxide, butyllithium, and high purity lithium metal. Their products form the raw materials for a wide variety of applications, including electric vehicle batteries, greases, pharmaceuticals, and polymers. Livent was carved-out of FMC Corporation in October 2018 and fully distributed to shareholders in March 2019. They have assets in cost-advantaged areas and technical expertise in supplying processed compounds to customers. Please see the LTHM Research Report (subscription required) to learn more about the business, lithium industry, investment opportunity, key risks, and management team.
Garrett Motion Inc
Garrett Motion is one of the largest manufacturers of turbochargers and electric-boosting technologies for light and commercial automotive OEMs and the aftermarket. A turbocharger provides an engine with a controlled and pressurized air intake, which improves the combustion of fuel to increase the amount of power sent through the transmission. Garrett spun-off from Honeywell in October 2018. You can read all about the company, opportunity, and key risks in the GTX Research Report (subscription required).
Frontdoor is a national leader in home warranties covering the repair and replacement of many major home systems, components, and appliances. They own multiple home service brands, including HSA, OneGuard, Landmark, and American Home Shield (one of the largest providers of home service plans in the U.S.). They were spun-off from ServiceMaster Global in October 2018. Overall, the company serves around two million customers through its national network of ~14,000 pre-qualified contractors. Please see the FTDR Research Report (subscription required) to learn more about the business, unique financial profile, important industry trends, key risks, and investment opportunity.
Fortive A&S Segment Split-Off and Merger with Altra Industrial Motion Corp
Altra Industrial Motion produces a wide range of mechanical power transmission components used to control and transmit power and torque in industrial applications involving movement. The A&S business produces a variety of electromechanical and electronic motion control products and mechanical components, as well as supplemental braking systems for commercial vehicles. The transaction closed in October 2018.
The combination of these two businesses creates a leading power transmission and motion control company with a portfolio of leading brands. To learn more about Fortive’s portfolio transition and the combined Altra combined business, please see the FTV/AIMC Research Report (subscription required).
Elanco Animal Health Inc
Elanco develops, manufactures, and markets products for both production and companion animals. They were carved-out of Eli Lilly in September 2018 and distributed to shareholders in March 2019 through an exchange offer.
Their products for production animals do everything from improving feed efficiency and leanness to treating different illnesses. On the companion side of the business, their products include chewable tablets for flea and heartworm along with anti-inflammatory tablets and rabies vaccines. While some may think that an animal health pharmaceutical company and a human health pharmaceutical business are similar, they are in fact quite different. They have large differences in R&D cycles, distribution, and end market drivers, just to name a few. Please see the ELAN Research Report (subscription required) to learn more about the investment opportunity, company, industry, and important risks.
KLX Energy Services
The aptly named KLX Energy Services is an energy services company that predominately serves the E&P companies in the U.S. shale basins. The spin-off occurred in September 2018 as part of KLX Inc.’s merger with Boeing. KLX Energy mainly provides completion, intervention and production services that help well operators reduce non-productive time and develop cost-effective, customized tools for customers’ service needs. Please see the KLXE Research Report to learn more about the business, industry, unique management team/compensation structure, key risks, and investment opportunity.