holding company

Foodmaker Post Holdings recently initiated a “carve-out,” using an IPO to sell a portion of its active nutrition business, BellRing Brands. That now pure-play firm makes protein bars, shakes and nutritional supplements.


Post used the proceeds from the sale to pay down its debt and strengthen value for investors....

The stock market turmoil caused by COVID-19 will likely prompt many companies to postpone their upcoming spinoffs or strategic sales. Even so, when business conditions improve, we expect Vonage and Archer Daniels to follow through with their own plans to add investor value.


VONAGE HOLDINGS CORP....

SONY CORP. ADRs $62 is still a hold. The Japanese conglomerate (New York symbol SNE; Manufacturing sector; ADRs outstanding: 1.3 billion; Market cap: $80.6 billion; Dividend yield: 0.6%; Takeover Target Rating: Lowest; www.sony.net) has created a new subsidiary called Sony Electronics Corporation to hold three of its businesses—Imaging Products and Solutions, Home Entertainment and Voice, and Mobile Communication.


The reorganization seems to be in response to reports that activist investor Daniel Loeb is taking advantage of Sony’s weaker stock price during the COVID-19 outbreak to increase his stake in the company.


At last report, he held about 2% of Sony, and still wants the company to separate its entertainment businesses (including Columbia Studios and Sony Music) from its electronic-manufacturing operations....

Sharp share-price drops due to the coronavirus outbreak will likely encourage activist investors to raise their stake in—and influence on—these three firms (including Sony—see box). However, for reasons outlined below, we advise you to stay on the sidelines, at least for now.


OCCIDENTAL PETROLEUM CORP....

We first recommended Leidos to you as buy in our December 2017 issue at $62; your shares then rose to $125 in February 2020 before the coronavirus outbreak pulled down the market. Even so, Leidos is still up an impressive 50% since our initial 2017 recommendation.


Your long-term prospects with this stock remain strong....

Spinoffs offer flexibility. Spinning off unwanted assets lets the parent company’s managers focus on that part of the business they want to retain. Usually they hold on to operations best suited to their talents.


Spun-off shares often slump when they begin trading. Many investors routinely dump stock they receive in a spinoff....

We think today’s bear market has done as much damage as it is likely to do. In fact, the market has now moved back up enough that investors worry about whether to buy now or to “wait for a dip” when “things settle down.”


My view is that you should look beyond short-term setbacks....

Under a new long-term strategy, Pfizer is concentrating on what it does best: developing new patented drugs that generate strong returns for its shareholders.


As part of that plan, the company is merging its over-the-counter and generic drugs businesses with those of other pharmaceutical firms to form joint ventures....

As I’ve said since mid-March, I suspect the bulk of the damage to the stock market may already be behind us. Obviously, I could be wrong. I’ll explain why and say more over the next few weeks in our newsletters and weekly Hotlines.


Meanwhile, I advise against selling high-quality stocks, especially if they are part of a portfolio that’s diversified across most if not all of the five main economic sectors.


This issue highlights several high-quality stocks we feel are poised to deliver strong gains as the pandemic eases and the economy recovers.


Those include CGI, our top Aggressive pick for 2020....

GREAT-WEST LIFECO INC. $24 remains a hold. The company (Toronto symbol GWO; Conservative Growth Payer Portfolio, Finance sector; shares outstanding: 928.9 million; Market cap: $22.3 billion; Dividend yield: 7.3%; Dividend Sustainability Rating: Above Average; www.greatwestlifeco.com) is Canada’s second-largest life insurer, after Manulife Financial....