Topic: How To Invest

What is Pat’s commentary for the week of November 12, 2019

Article Excerpt

In October 2018, Honeywell International Inc. spun off two of its smaller operations—Garrett Motion and Resideo Technologies. Honeywell is up about 20% since the spinoffs. However, the two new firms have moved lower, which is not unusual for new spinoffs with little earnings history or broker attention. In addition, share prices of these two may have suffered more than usual because investors didn’t like the way that Honeywell transferred some debt to the new companies. As part of the spinoffs, Honeywell transferred to Garrett 90% of the asbestos liabilities tied to its former subsidiary Bendix Friction Materials. It sold that business in 2014, and the extent of those liabilities, or claims, has largely been set. Bendix manufactured vehicle brake pads and related parts. Thousands of individuals have alleged personal injury from exposure to asbestos from the brakes. Honeywell also transferred to Resideo 90% of its environmental remediation liabilities related to 230 sites. That cleanup has already started, and, here too, Honeywell’s ongoing costs have…

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