Cendant Breakup Makes it a Sell (CD)

Well, now it looks as though I'll need to sell my shares of Cendant (CD) before too long. I wish I had been glued to the computer when the announcement came across as I might have sold early on today, before the news-related selloff, but since I didn't catch that I'll just hold on for a little while and see if it either a) recovers so I can get a better price; or b) I find a great deal somewhere else that I need to sell to take advantage of.

But Cendant has now definitely moved to the top of my sell list.

Why? This silly breakup of the company. Similar things have happened over and over, and I guess I shouldn't be surprised, but I'm getting sick of watching corporations spend all their time and money building up a conglomerate to create "synergy", only to realize that in order to get the share price up and their stock options vested they need to then break up their carefully constructed collussus to create "value." Lex reported on this today, among many others.

How does anyone benefit from this, aside from the myriad investment bankers who made money with both the buying and the selling?

The problem for me, beyond what I consider the shenanigans of the build/breakup cycle on Wall Street, is that now I'm left holding a stock that is going to break into four. I have what is for me quite a small position in Cendant and I've just been waiting for their businesses to continue turning around and for the market to realize the value of their brands. That means if I hold until this breakup, which thankfully won't be until next Summer, I'll end up with four different tiny odd-lot holdings that don't particularly interest me as individual investments.

I liked the Cendant portfolio, but I don't want personally to invest in Avis as a stand alone company, or in Howard Johnson's -- the reason for me to own Cendant was to have a stake in a diverse array of hospitality and real estate businesses that was, on the whole, undervalued. And the real kicker, and the reason I'll be selling as soon as I find a good opportunity, is that I don't want to have to sell four different stocks next summer to clear this part of my portfolio -- the commission from selling CD is irritating enough, paying four times the commission would be just stupid. I expect we'll see lots of individual investors gnashing their teeth over this, as they did over Interactive Corp's breakup and spinoff of Expedia, or Liberty Media's spinoff of it's international operations, or the Viacom fiasco. Enough, already.

So sometimes, in my opinion, the whole is more than the sum of the parts. I don't want all these tiny little parts cluttering up my portfolio. So please, Mr. Market, convince someone that this breakup will be good for shareholder value so I can get a better price soon.