1) The first mention came from Leon Cooperman, Chairman of Omega Advisors whose picks at last year’s conference were big winners. While he was not as positive about this year’s top picks, the bunch included names such as Gaming and Leisure Properties (GLPI), a recent spinoff from Penn National Gaming (PENN) with a nice yield and QEP Resources (QEP) which is in the process of spinning off its midstream assets.
2) Glenview Capital’s Larry Robbins was on the same panel as Mr. Cooperman and he pushed the theme of leveraging up companies in order to take advantage of the abundance of cheap debt. There were two companies which have been on this site recently which made his list. The first was National Oilwell Varco (NOV) which recently spun off its distribution arm, NOW Inc (DNOW). Given its lack of debt and sizable cash balance, Mr. Robbins thinks the company will lever up and buy back a significant amount of stock. Hertz (HTZ), which is spinning off its equipment rental business, is another company which Mr. Robbins’ thinks should take more advantage of the loose capital markets. He is a fan of the spinoff.
3) Jeffrey Smith, CIO of the Starboard Value Fund, thinks that MeadWestvaco (MWV) is trading at a sizable conglomerate discount and he just so happened to have a few ideas on how to fix that. First, the packaging company should either spin off or sell its non-core specialty chemical business. Then it should cut its SG&A expenditures down to be more in line with the industry and at the same time, improve its margins across the board. Oh that’s it? Why not toss in double digit revenue growth or development of alchemy as well? The company also has an overfunded pension fund which he thinks can be used advantageously as part of a merger with an underfunded company. Ultimately, he thinks the company could be worth $59 per share, a sizable premium to the $43-44 that it currently trades at.
4) Finally, friend of the site Nelson Peltz, founder of Trian Partners, is sticking to his guns regarding Pepsi (PEP) and thinks the beverage behemoth should break itself up and separate its snacks business. Although the stock has had a nice year, he thinks the run up is solely due to his firm’s presence as a shareholder and nothing to do with current management’s actions. It must be nice to think that after so long. Mr. Peltz also talked a bit about the current state of activism and noted that he wasn’t going to discuss his ideas for the firm’s newest position, Bank of New York (BK), because he was still talking to management. I have a feeling that if they don’t cooperate, there is a good chance they end up getting discussed at some future conference…
That seems to be it for the spinoff world at Delivering Alpha. It’s worth reading fuller recaps of the conference as it featured other non-spinoff stock pitches and some interesting discussions on activism, the Fed and even bitcoin.
Disclosure: Author holds no position in any stock mentioned