Topic: How To Invest

What is Pat’s commentary for the week of April 23, 2019

Article Excerpt

Our Spinoffs, Takeovers and Special Situations newsletter focuses on the three types of investment opportunities in its name. Huntsman and Danaher were two of our earliest recommendations in the Spinoffs area. Each had just completed a spinoff of a smaller business. In July 2016, Danaher handed out 100% the shares in its Fortive subsidiary to its own shareholders, as a special dividend. Huntsman took a different, multi-stage approach to its spinoff. In November 2017, Huntsman used a “carveout” to begin the process of spinning off its Venator subsidiary. A carveout is a type of corporate reorganization that prepares the ground for a future spinoff. The carveout begins when a firm uses an initial public offering (IPO) to sell a minority interest in one of its subsidiaries to the public. It retains the rest—typically about an 80% stake. The parent may then hand out all or a portion of those remaining shares to its own investors, as a special dividend, or spinoff. By first listing…

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