Report
Alexander Korda
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Updated Edge Study: Trends in Announced Spinoffs in the US (2010-17)

What's Interesting? The Edge Intelligence...
In an effort to find unique ideas, we have conducted a study into trends of companies that have announced Spinoffs in the United States between 2010-18.

We have focused on the below key parameters to narrow down the potential ideas for companies that have announced their upcoming Spins:

Market Cap;
Sector analysis;
Sector Landscape;

Identifying Potential Ideas - Resulting from the 3-Step Analysis...
In 2018, there have been 11 companies which have announced it will be doing a Spinoff, either by 2018 or 2019. Out of these, five are Large Caps, five are Mid-Caps and one is Small Cap. Among this, the sector break-up is: Basic Material (1), Consumer Cyclical (3), Consumer Non-cyclical (1), Energy (2), Industrial (3) and Technology (1).

From the list of names on the calendar, we have identified four announced Spinoffs with upside potential leading to their distribution:

EQT Corp. (EQT);
Brunswick Corp. (BC);
Genuine Parts Co. (GPC);
FMC Corp. (FMC);

All four of these names have been evaluated based on Spinoff rationale, management play, the involvement of activist investors, insider buying/selling, sector dynamics and peer comparison. Please see the second half of the attached document for specifics on each company.
Underlyings
Brunswick Corp.

Brunswick designs, manufactures, and markets recreation products including marine engines, boats, fitness equipment, and active recreation products. The company's engine-related products include: outboard, sterndrive, and inboard engines; trolling motors; propellers; engine control systems; and marine parts and accessories. The company makes fiberglass pleasure, sport cruiser, sport fishing and center-console, offshore fishing, aluminum and fiberglass fishing, pontoon, deck, inflatable, and aluminum boats. The company's fitness products include cardiovascular and strength training equipment. The company also sell products for active aging and rehabilitation, billiards tables, and other game room tables and accessories.

EQT Corporation

EQT conducts its business through five business segments: EQT Production, EQT Gathering, EQT Transmission, RMP Gathering and RMP Water. EQT Production is a natural gas producer. EQM Gathering and EQM Transmission provide gathering, transmission and storage services for the company's produced gas, as well as for third parties across the Appalachian Basin. RMP Gathering provides natural gas gathering services to the company in the dry gas core of the Marcellus Shale. RMP Water provides water services that support well completion activities and collects and recycles or disposes of flowback and produced water for the company and third parties in Washington and Greene Counties, PA and Belmont County, OH.

FMC Corp.

FMC is chemical company serving agricultural, consumer and industrial markets globally. The company operates in two business segments: FMC Agricultural Solutions and FMC Lithium. The company's FMC Agricultural Solutions segment develops, markets and sells three classes of crop protection chemicals, including insecticides, herbicides and fungicides, which insecticides are used to control a wide spectrum of pests, while herbicide portfolio primarily targets a variety of difficult-to-control weeds. The company's FMC Lithium segment manufactures lithium for use in a range of lithium products, which are used primarily in energy storage, specialty polymers and chemical synthesis application.

Genuine Parts Co.

Genuine Parts is engaged in the distribution of automotive replacement parts, industrial parts and electrical materials and business products. The company's segments are: Automotive, which distributes automotive parts and accessory items; Industrial, which distributes industrial replacement parts and related supplies such as bearings, mechanical and electrical power transmission products, industrial automation, hose, hydraulic and pneumatic components, industrial and safety supplies and material handling products; and Business Products, which is operated through S.P. Richards Company, is engaged in the wholesale distribution of a range of office and other business related products.

Provider
The Edge Group LLC
The Edge Group LLC

The Edge Group - Global Fundamental Catalyst Investing. The Edge provides investors with access to hidden corporate value from Global Special Situations using a pioneering approach to investments. Founded in 2005 by fund management and investment banking professionals to provide high quality, private equity-level research on Global Corporate Divestitures for the benefit of fundamental event-driven, growth and value-oriented investors in this difficult to track, but proven investment space.

The Edge will look to screen and analyze include Spinoffs; Reverse Morris Trusts; Squeeze Outs; Privatizations; Demutualization; Deep Discounted; Rights Issues; Rights Offering; Restructuring; Insider Purchases / Buying Change of Management / CEO Change; Deteriorating fundamentals; Post-Bankruptcy; Reorganization; Tender Offer; M&A Deals; Secondary Offering; Share Swap; Thrift Conversions; Share Buybacks; Activist; Mergers. All analyzed from a fundamental point of view.

 

 

Analysts
Alexander Korda

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