A news story today indicates that Cardinal Health (CAH) still plans to spin off its medical device business next year in spite of the present economic turmoil, according to the CFO who was quoted as saying that the only question is when.  It will require some credit and apparently they are not willing to say that they are sure exactly how that will work out several months into the future.

There’s also the matter of hospital administrators (and most everyone else it seems) severely curtailing the purchase of anything they can get along without right now, which doesn’t add confidence that the new company will be able to hit the ground running if present conditions continue at the completion of the spin off.

Maybe a good idea whose time isn’t right now?  Who knows?

But, this too will pass in one way or another and this is one to put on our watchlist.  You can read the whole article on the spin off here.

Wow! Who would have thought the market would come to this! I know. I know. More than a couple of old fuds have been warning us for years.

And, of course, the politicians know just what went wrong and they are going to “fix us right up”. If a mechanic told us that, most of us would get a second opinion, but in this case, who would you ask?

I recently got a book about watching trends written by Ron Insana from a $1 table at a local bookstore. I can see why it wasn’t a bestseller, but I have found one priceless gem so far.

He noted that when you hear intelligent, experienced people explaining the present situation in ways that simply make no sense, watch out! Things are quite likely to be on the verge of a blow up in one way or another.

I don’t know about you, but I feel like I’ve been hearing a lot of things lately to which I can only reply with – -”huh?” They’re using a lot of big words, big concepts, and confident tones, but there’s something funny about all of it. And, definitely from smart people.

Reminds me of the old Bill Cosby routine in which he’s describing brain surgery under a local anesthetic where the patient says “Who said oops?” “I know what it means when I say oops!”

If you want to execute a spin-off, or any other, strategy in this market, be my guest.

I intend to let this storm front pass and then to see which way the wind is blowing before I shake any reefs out of my sails.

Tags: stock market

The recently announced stock spin-off by Walter Industries (WLT) of its financial/home building unit by has a unique twist to it and this one is attracting attention for the parent’s potential for coming out ahead more than the spun off company. (Though I wonder if this isn’t a home builder that has simply been caught in a downdraft that it is likely to come out of it strong and growing.)

The company started in the home building business in 1946. Jim Walters built and sold one house. Today they build houses on the buyer’s land in 12 states across the southern United States and, until recently they financed the purchase often using the buyer’s land as the collateral for loan. Going forward they will be using third party mortgages, and they are closing a number of sales offices, but they are still in the housing business and apparently are quite good at it.

So why are they spinning off the housing and what are they spinning it off from?

Even though the company started in home building, what it is now best known for is metallurgical coal.

A case can be made that given its position in the steel industry and steel’s outlook in the intermediate and longer term, Walter’s share price is very depressed and ripe for a strong spring back.

WLT, Walter Industries, certainly looks like it belongs on a value investing watchlist.

Tags: spin-off stock, stock spin-off, Value Investing, Walter Industries, WLT

Arvin Meritor (ARM) says that it is re-thinking its previously announced stock spin-off of its car parts unit and cutting jobs in light of its projections of future business conditions.

Seems like a sane thing to do given not only the level of current economic slowing down and uncertainty.

Any investing model is based on assumptions about how prices of securities are arrived at.  In times like these when the  rules of the game seem to be in flux,  maybe  to eventually settle down and go on more or less as before or maybe to change significantly, perhaps it is best to stay alert, watch and wait.  This goes for individual companies as well as for us.

The real trick, it seems to me, is to not “go to sleep at the switch” and miss the signs that a new trend is shaping up while trying to not get impulsive.

I believe it was Gerald Loeb who said many years ago that for us investors that it is not just fear and greed that push us into bad decisions, but also impatience.

Staying patient and awake.  That is the challenge now.

Tags: ARM, Arvin Meritor, fear, greed, impatience, spin off, spin-off stocks, stock spin-off