public offering

STANLEY BLACK & DECKER INC., $63.31, New York symbol SWK, is considering selling its consumer-hardware and home-improvement operations. These businesses make bath fixtures and other home accessories under brands such as Baldwin, Kwikset and Price Pfister. Stanley acquired these operations as part of its merger with rival toolmaker Black & Decker Corp. in March 2010. The company could receive $1.5 billion from these sales. That’s equal to 14% of its $10.8-billion market cap. Stanley will probably use the cash to add to its lineup of industrial tools and security devices, including locks, automatic doors and gates....

This is the latest in a series of video interviews in which Pat McKeough will give his investing advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies and still others will be comments on events that are affecting the markets and the economy. This week, the topic is the decision of Internet phenomenon Facebook to start selling shares to the public. The intense media limelight surrounding this initial public offering is just one of the things that should make investors cautious, in Pat’s opinion.
Q: Pat, a lot of people are excited about the fact that Facebook is going to start selling its stock to the public. Do you think people should buy it?...

GENERAL MOTORS CO. $27 (New York symbol GM; Shares outstanding: 1.6 billion; Market cap: $43.2 billion; www.gm.com) completed its initial public offering in November 2011, selling 555 million shares at $33.00 each. The U.S. government still owns 32.3% of General Motors in the wake of the company’s bankruptcy and restructuring. GM’s profits are rising again: in 2011, it earned $7.6 billion, or $4.58 a share, up 61.7% from $4.7 billion, or $2.89 a share, in 2010. Sales rose 10.8%, to $150.3 billion from $135.6 billion. However, the company’s European operations continue to lose money: a total of $15.6 billion since 1999. As well, rigid union contracts will make it difficult for GM to restructure this business. That could delay the company’s plan to resume paying dividends....

GENERAL MOTORS CO. $27 (New York symbol GM; Shares outstanding: 1.6 billion; Market cap: $43.2 billion; www.gm.com) completed its initial public offering in November 2011, selling 555 million shares at $33.00 each. The U.S. government still owns 32.3% of General Motors in the wake of the company’s bankruptcy and restructuring.

GM’s profits are rising again: in 2011, it earned $7.6 billion, or $4.58 a share, up 61.7% from $4.7 billion, or $2.89 a share, in 2010. Sales rose 10.8%, to $150.3 billion from $135.6 billion.

However, the company’s European operations continue to lose money: a total of $15.6 billion since 1999. As well, rigid union contracts will make it difficult for GM to restructure this business. That could delay the company’s plan to resume paying dividends.

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We come across a number of timely buys and sells when we’re researching stocks for members of our Inner Circle service. Here’s a particularly interesting question about SmartHeat (symbol HEAT on Nasdaq) from our latest weekly Inner Circle Q&A, in which I answer specific questions from our members. Like Sino-Forest, SmartHeat is a Chinese reverse-takeover (RTO) stock. Q: Pat: Would you please take a look at SmartHeat? Thanks....

MannKind Corp., $2.82, symbol MNKD on Nasdaq (Shares outstanding: 121.7 million; Market cap: $365.4 million; www.mannkindcorp.com), aims to discover, develop and sell treatments for diabetes and cancer. In January 2011, MannKind reached a high of $10.05, but on January 19 it dropped to around $6 in one day after the U.S. Food and Drug Administration (FDA) failed to approve its inhaled insulin treatment, Afrezza. This drug appeared to offer advantages over injected insulin. This was the second time the FDA declined to approve Afrezza. The FDA has now told MannKind to conduct at least two more clinical studies before it resubmits Afrezza for approval. Under the best scenario, however, the company won’t be able to resubmit the drug for 15 to 16 months. The FDA would then need six more months to decide whether to approve Afrezza....

Zungui Haixi Corp., $1.85, symbol ZUN on Toronto (Shares outstanding: 56.4 million; Market cap: $89.9 million; www.zunguihaixi.com), makes and sells athletic shoes, clothing and accessories in China. It also sells casual leather shoes. Zungui markets its casual and athletic sportswear under the Zungui brand, which is the eighth-largest domestic sportswear brand in China by revenue. The name Zungui comes from the Chinese symbols meaning “noble.” Zungui uses its “You are strong” slogan to promote its athletic products, and “High Quality, Fashionable and Durable” to promote its casual products....

Chinese stocks have lagged behind North American markets this year. That’s partly because investors are concerned about collapses of Chinese reverse-takeover stocks (RTOs), like Sino-Forest. That concern has spilled over to even high-quality Chinese stocks. RTOs bought bankrupt North American companies that were already listed on U.S. or Canadian exchanges. That bypassed the more rigourous initial public offering (IPO) process. Most are sound companies, but some, like Sino-Forest, have been accused of falsifying contracts and asset holdings. Still, the long-term outlook for China, and Chinese stocks, is bright. One of the best ways to profit is through low-fee exchange-traded funds (ETFs)....

SNC-LAVALIN GROUP INC., $52.78, Toronto symbol SNC, is a leading Canadian engineering and construction company. SNC also owns 16.77% of Highway 407, a 108-kilometre toll highway north of Toronto. This week, the Canadian Pension Plan Investment Board (CPPIB) agreed to buy 10% of Highway 407 from the highway’s main shareholder, Ferrovial S.A. of Spain. Ferrovial currently owns 53% of 407. CPPIB agreed to pay $894.3 million for 10% of the 407. However, SNC intends to exercise its right of first refusal and buy these shares from Ferrovial. That will raise SNC’s stake in the highway to 26.77%....

Athabasca Oil Sands, $11.83, symbol ATH on Toronto (Shares outstanding: 388.5 million; Market cap: $4.6 billion), aims to develop its six oil-sands properties in northeastern Alberta’s Athabasca region. The company is one of the largest leaseholders in the Athabasca region, with interests in over 1.3 million acres. Its properties are located within 15 to 30 kilometers of other major oil-sands projects. Athabasca first sold shares to the public at $18, and began trading on Toronto in April 2010. The company will put all of the money from its initial public offering toward developing its Alberta properties. Last year, state-owned PetroChina paid $1.9 billion for a 60% stake in two of Athabasca Oil Sands’ projects. Even if the Chinese overpaid, this suggests these properties hold a great deal of value, particularly now that the stock has dropped from the issue price....