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