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ValueXVail 2013 - Evan Tindell

ValueXVail 2013 - Evan Tindell

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Published by: VitaliyKatsenelson on Jul 13, 2013
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12/28/2013

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Evan TindellBallentine Capitaletindell@ballentinecap.comVail VALUEX 2013
 
A number of theories to explain returns
Management focus
Ability to optimize cost structure
Execution of new business models
New stock useful as acquisition andcompensation currency
Artificial causes of investor disinterest
Frequently much smaller in size
Often involves change of industry
Above result in lack of analyst coverage
Source: “Predictability of Long
-Term Spinoff 
Returns”
 ,
McConnell 2004
0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%0102030
Months from Spin
Excess Returns
Size/IndustryAdjustedPrice/BookAdjusted
Combo of business advantages and investor disinterest creates opportunity
 
Defense contractor that needed a change
Top 10 contractor by revenues
Poor stock performance, lagging peers last 3 years
Revenues declining despite billions spent on acquisitions
2011: decides to spin off SETA, war related business as Engility
$0$200$400$600$800$1,000$1,200$1,400$1,600$1,800$2,000$13,000$13,500$14,000$14,500$15,000$15,500$16,000200720082009201020112012SalesTotal Spent on Acquisitions (RHS)607080901001101201301401501604-Jun-094-Jun-104-Jun-114-Jun-12LLLiShares Defense ETF
Sources: Bloomberg, LLL 10-
k’s
 

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