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John Clark
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I am an individual investor/trader who is always looking to refine any edge that is available to a person with my talents, experience, knowledge, and resources. I seek situations in which the necessary fundamental data is readily available and in which basic technical indicators such as price,... More
My blog:
http://www.stockspinoffblog.com
  • ITT Says It Will Be Better As Three 0 comments
    Feb 4, 2011 1:35 PM | about stocks: ITT

    ITT Corporation
    has announced that it intends to use a stock spin-off process to separate the company into three parts:  water technology, defense technology, and the rest of ITT that will be left with those two off on their own. 

    The is no lack of coverage or awareness of this or most other stock spin-offs now.  Perhaps there was a time when spin-off stocks traveled under most investors' radars, but that advantage for savvy value seekers has been diluted by websites, blogs, and even highly touted, heavily sold "all-you-to-do-to-beat-the-market" e-books and courses.

    The ITT spinoff even has its own website to explain exactly what is going to happen,  http://www.transformationitt.com .  "Three Strong Businesses Positioned to Create Significant Value for Shareholders as Standalone Companies" is apparently their motto.  The pro forma revenues are reported at $3.6 billion from water, $5.8 billion from defense, and $2.1 billion from ITT which they describe as "a diversified global manufacturer of highly engineered industrial products."

    As far as I can tell at this point, this spin-off does show signs of being a situation in which the sum of the parts could turn out to be worth more than the whole. 

    You may find helpful information for the current configuration in free content on the internet. For example, the Morningstar website  shows ITT's price/book ratio to be 2.6,  price/sales 1.0, forward Price/Earnings 12.7, and Price/Cash Flow 12.8 and the Guru Analysis & Stock Screener App at SeekingAlpha will tell you what the numbers mean according to various schools of thought.  And often, others will even do some calculations for each component of the spin-off for you, especially for the high visibility spin-offs like this one.  Take advantage of those.

    As with most stock spin-offs, there is plenty of time to watch the process unfold and decide if, when, and where to enter.  Make the trade come to you. 

    For more on this and other spin-offs you can go to the Stock Spinoff Blog too.


    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Themes: stock spin-off, spinoff Stocks: ITT
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