Fed up with the discounted share price that Wall Street was awarding their big, intertwined mortgage title-insurance and financial data-processing businesses, executives at Fidelity National decided in April to jettison a third operation — a holding company that held stakes in both. They hoped that analysts and portfolio managers would then more easily understand the two operating units. Only a few months before, Fidelity had divided itself from one unit into three.
“A title-insurance analyst did not understand processing and the processing analyst really didn’t want to get on board because we are known as a title-insurance company,” explains William P. Foley II, the Jacksonville, Fla., company’s founder, chairman, chief executive and largest individual stockholder. “Then, when we formed the holding company, we probably confused people even more,” he added.
Of course, while the restructuring may simplify things over the long term, it prolongs the period of obfuscation. For a year after the reorganization, comparisons of results to the prior year will not be… well… comparable.
FIS 1-yr chart: