Value Investing Hertz Seeks Unusual $1bn Share Sale While in Bankruptcy |
- Hertz Seeks Unusual $1bn Share Sale While in Bankruptcy
- Brookfield Asset Management Letter to Shareholders
- Episode 29: Spin-off Extravaganza (OTIS, MSGE, IAC/MTCH) w/ Richard Howe, StockSpinOffInvesting.com
- Carrier - Spinoff
- Is There Really A "Looming Bank Collapse?"
- Are Banks Commodity Businesses?
- A Guide to Social Media in China
- Cruise Ship Pirates: How $OSW’s Management Plundered Their Shareholders
- Smart Clothing Market Analysis
| Hertz Seeks Unusual $1bn Share Sale While in Bankruptcy Posted: 11 Jun 2020 11:15 PM PDT |
| Brookfield Asset Management Letter to Shareholders Posted: 11 Jun 2020 01:32 PM PDT |
| Episode 29: Spin-off Extravaganza (OTIS, MSGE, IAC/MTCH) w/ Richard Howe, StockSpinOffInvesting.com Posted: 12 Jun 2020 05:27 AM PDT |
| Posted: 11 Jun 2020 09:52 AM PDT Recent spinoffs may present interesting opportunities during a market downturn, as these companies can fall due to simple neglect. One that caught my eye is Carrier. They were spun-off in April 2020. I'm sure many of you recognize the name. The company has somewhere between 10-20% market share of the U.S. HVAC market and it is either 1st or 2nd in market share (both residential and light commercial). Their investor presentation claims that they are the #1 competitor in commercial refrigeration (such as you might see in a grocery store) and refrigeration transport. It also claims that they are either #1 or #2 in the market for residential and commercial fire detection / alarm and security systems. The market price for their equity is $18.5 B. Their S-1 filing shows net income of about $1.5 B to $2.5 B from 2015-2019, meaning a P/E of between 7.5 to 12.5. Over the period, they earned roughly a 10% return on assets. Service / after-market is about 1/3 of their revenues. MEANWHILE, the $10 B of bonds that they issued earlier this year are yielding between 1%-4%, which is pretty amazing for the corporate bond market. One of these bonds goes out to 2040 and another goes out to 2050. All are rated Baa3 by Moody's (equivalent to BBB- for S&P), so it is just barely considered to be "investment" grade. Pretty big gap between the apparent yield on equity and the yield on their bonds. On this superficial level, it looks like a good deal. But their Q1 2020 results were pretty bad. $0.1 B for the quarter, 1/4 as good as Q1 2019. Caused primarily by lower product sales. They blame this on COVID-19. But I wonder to what extent their former parent company pumped up 2019 numbers in preparation for the spin-off. Their Q1 2020 presentation provides guidance for $1.7 B to $2.0 B of "adjusted operating profit" and >$1 B of free cash flow for FY 2020. Pretty speculative of them to even make a forecast on this, given how badly COVID rocked their Q1, and it being known at the time that they made the presentation that Q2 will probably be even worse. Their investor presentation mentions "China expansion" as a growth initiative, which makes me worried, but their overall theme seems to be that they are primarily focused on the nuts-and-bolts of their business. But, this company has been around forever and HVACs are obviously needed, regardless of where we are in the economic cycle. Same is true for refrigeration and fire detection systems... though new product sales (2/3 of their revenue) is to a heavy extent driven by the homebuilding cycle. Perhaps the P/E is 15x earnings at the low point of the business cycle and 10x earnings at the high point of the business cycle. Is that expensive for a long-time market leader? Thoughts? Would love to hear the perspective of someone who is deep into this industry. ... S-1 filing: https://www.sec.gov/Archives/edgar/data/1783180/000114036120005750/nt10009876x1_s1.htm 10-Q: https://www.sec.gov/ix?doc=/Archives/edgar/data/1783180/000178318020000019/carr-20200331.htm General investor presentation (March 2020): https://ir.carrier.com/static-files/a9cc6ceb-d7e8-46e5-ac87-fff92cb11401 Q1 2020 earnings presentation: https://ir.carrier.com/static-files/ec676228-e85b-46f5-8a6a-f772761c0e5d [link] [comments]  |
| Is There Really A "Looming Bank Collapse?" Posted: 11 Jun 2020 11:51 AM PDT |
| Are Banks Commodity Businesses? Posted: 11 Jun 2020 05:59 PM PDT Is retail banking a commodity business? I've been thinking lately about competitive advantage in banking, and they don't seem to be very durable? Anyone have any thoughts on this? I made a quick list: Intangibles
Tangibles
External
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| A Guide to Social Media in China Posted: 11 Jun 2020 10:30 AM PDT |
| Cruise Ship Pirates: How $OSW’s Management Plundered Their Shareholders Posted: 11 Jun 2020 10:31 AM PDT |
| Smart Clothing Market Analysis Posted: 11 Jun 2020 12:28 PM PDT |
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