~10% Historical yearly outperformance by Spinoffs

Somehow I was hesitant to buy ABB Ltd last year.
My initial thesis of “robots only go up!” still holds…
God may be giving me another sign now. :innocent:

ABB Ltd:

"On April 27, ABB announced it has separated the
E-mobility business into its own division
and initiated a carve out into a separate legal
structure. These steps will allow for preparation for
a possible public listing and create a platform for
accelerated growth and value creation in this
business. "

JULY 22, 2021 Q2 2021 results:

“We have also made good progress
with the announced portfolio changes and I expect to
announce an agreement for a divestment during the
third quarter.”


"…Furthermore, we will give an update on our plans for the Turbocharging exit and possible listing of our E-Mobility division in due course.”

My only concern is that the best place to buy them is SIX Swiss Exchange and the dividends there are 35%. Should I not overthink this detail?

Do you mean35% with-holding tax?

Also, what is the payout ratio (if at all) expected from the spinoff company?
They may not intend to give significant dividends.

@EquityInvestor Yes, that’s what I meant but somehow did not write it properly because of the late hours. :sleeping:

I would definitely not expect any dividends from their E-Mobility division since it might be in it’s infancy. Turbocharging business…maybe. :racing_car:

In that case taxes on dividends are not too important :slight_smile: .

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After the planned spin-off of Daimler Truck by the end of this year the shareholders of Daimler AG will hold a 65% stake in the new Daimler Truck Holding AG, which will then be listed on the stock exchange as an independent company. Daimler shareholders are to receive one additional share in Daimler Truck Holding AG, the global market leader for commercial vehicles, for every two shares they hold in Daimler AG.

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Another spin-off today, Universal Media Group.

I just noticed that @Joey_Fantana requested it on today’s IPO thread, so lets see if IBKR and T212 manage to have access to it soon :grinning_face_with_smiling_eyes::

Has anyone got access to their accounts or IPO filing?
I can’t find them.

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Found it now, here it is:

Was this the one that Ackman was targeting part of?

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Yes, I believe that as part of it , PSH owns part of UMG.

It was supposed to be the target for PSTH (Ackmans SPAC) but he made a mess of that trying to structure in comlicated ways, in the end as @EquityInvestor says he then just bought it through PSH instead, was it like 10% of UMG or something?

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Okay UMG is definitely interesting, although I would have some comments on it.


So I looked through the prospectus and found that projects for 2021 are 20% EBITDA growth (pdf page 78, UMG profit forecast).

On pdf page 19 of the 1H 2021 Unaudited Consolidated Condensed Financial Statements it’s stated that EBITDA is a relevant measure and after some DCF calculations (got very low values for the company using FCF) I would agree that EBITDA reflects a more realistic representation of profits.

EBITDA Growth rates in comparison to previous year:
2021: 20%
2022: 15%
2023: 13%
2024: 9%
2025: 6%
Perpetual growth rate: 5%

Discount rates used:
2021: 1.03 (year is almost over)
2022: 1.12^1
2023: 1.12^2
2024: 1.12^3
2025: 1.12^4
Perpetual: 2025 PV of the cash flows uses 1.12 (so PV of the perpetual flows worth in 2025), which is discounted again at 1.08^4 to get back to PV

Knowing this and using 2020 as the base for the EBITDA we get these expectations, discounting them and dividing them by numbers of shares (got those from the 1H 2021 as well) we get to a pv of €20.43 per share.

Although this is a simplistic approach and I don’t know the business that well based on these numbers I wouldn’t add the company to my portfolio unless I know more about it and see that my estimates are too conservative.


Following on from a post from @HRD on this forum querying the spin-off payment (on T212) of Sylvano Corporation by International Paper, I did some searching online and realised that there is little information out there on this spin-off.

As such, I had a quick dive into the SEC filings to see what was going on. Little news and publicity could signify a hidden opportunity.

Looking into the company it can be somewhat understood as it produces paper in an increasing electronic world and with additional falling revenues due to the pandemic (and also it’s boost for digital use). I think most of their paper is uncoated free sheet which is used for printing.

So, these are the documents and key values that I have found.

8-K Report with info on the transaction:

Investor presentation:

List of SEC filings in case you want to search for yourself:

Summary of spin-off indicating 44.1m shares outstanding:

Which at a price of 32.67 USD per share (according to Yahoo, checked after close today 04/10/2021) means it has a market capitalisation of 1.44B USD.

Note: Marketwatch, Yahoo and the Nasdaq websites show very different prices at close today, hence the highest value from Yahoo is used.

From the investor presentation:

  • Debt is 1250 million USD
  • Free Cash Flow of last 12 months, including the pandemic is 364 million USD

Based on this, the company has produced a free cash flow equivalent to 25% of its market cap, just in the last 12 months.
Looking at it from an Enterprise Value perspective, it seems to be currently priced such that its Enterprise Value is 7.4 times its Free Cash Flow.

Note: I have not subtracted the cash from the Enterprise Value because I have not been able to find a balance sheet statement (which would provide more useful information).
Also, not being able to see the complete financial statements means that I cannot verify whether the cash flow statement makes sense and is in line with the income statement.

Also, if it is true that it is among the lowest cost producers then even if paper demand or its price falls they are more likely to stay in business and avoid making a loss than other competitors. Nonetheless, it is hard to tell if the numbers/figures they provide in this regard are accurate.

All in all, it seems like it could be a company worth looking into. A sector clearly in distress, but is it maybe priced for failure and yet may it survive many years more with maybe flat-ish revenues and stable profits/cash flows?
If so, that could make it quite interesting with a 25% free cash flow on market capitalisation…

Please let me know your thoughts and if you do find any more information.

P.S. Some screenshots of slides in case anyone doesn’t want to go through the whole presentation:


Although I’m not aware of the company in your post, thanks for taking the time to go into a lot of detail.

Very insightful for people with my level of experience :ok_hand:

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What kind of paper - I would think :roll_of_toilet_paper: will always be needed in increasing numbers with population growth, unless people switch to using Bidet’s more.

They provide “uncoated free sheet” which when I searched online seemed to be for printing.

They also had this in their presentation:

So, likely that it’s mainly printing paper, the type of paper most affected by digitalisation and the pandemic. I guess that is the main reason for the low EV and market cap to Free Cash Flow.


You are welcome :slight_smile:
Some metrics can be useful for context and for a broad idea for if it may be cheap or not, however I definitely think that the best way to evaluate a company is by carrying out is a discounted cash flow on it.
See Etypsyno’s example above for UMG:

Note: Unfortunately carrying out a discounted cash flow takes out quite a bit of time as it requires quite good understanding of the company to forecast its cash flows and determine discount rates. So it’s not easy to do on the back of an envelope, like some of the ratios are.

Saw that it’s on the platform now, will take a deeper in a couple of weeks as it seems quite interesting.

The real question though is what technical support would be offered by Hammermill to physical sheets of paper? Mental support for papercuts? And why only in the US? Asking the real question.

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Overwhelming majority of shareholders in favour of spin-off of Daimler Truck and renaming of Daimler AG.

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Having said this and as we don’t have a lot of information, we might just want to estimate some kind of internal rate of return (IRR) for Sylvamo based on the terminal value of a discounted cash flow and the current share price. As we don´t have a weighted average cost of capital, I will just adjust the formula to calculate the implied internal rate of return at the current market price.
Screenshot source

Internal rate of return:
Screenshot source

Looking at sales and free cash flow it seems like 2021 will be better than 2020 (more movement of people, return to offices, etc). So I think it would be fair to take 364 and assume that will be this years free cash flow.

Considering the possibility that paper will be used even less in subsequent years due to the digitisation of the economy and society being more aware of sustainability impacts, I think the assumption that free cash flows are going to fall long term, makes sense. The question is, how much? 1% a year? 5%?
It’s not going to happen overnight, but the exact percentage might be hard to pinpoint. It is also worth keeping in mind that even during a year in which lots of their markets world-wide were in lockdown for probably around half the year, they still made a significant free cash flow of 284 million USD.

So, for the purpose of this back of the envelope calculation, I will assume a 5% decline, but not from the first year but from subsequent years onwards (hence I will only apply to the denominator in the fraction, not numerator).

Also, I think that from the terminal value we should subtract part of the debt of the company. It seems to be 1520 million (m) USD, however the company is also likely to have some assets sot we can probably assume that their tangible assets will cover a significant part of their debt and that we only need to take care of about half of it. So, for the purpose of subtracting debt to the equation I will use half of 1520, which is 760m USD.

I’d really like to see their annual statements for 2020 and the first half of 2021, I think that would make things clearer.

Current market capitalisation is 26.61 USD per share (according to the price for yesterday’s close - 08/10/2021 - on T212) x 44.1m shares = 1174m USD.

So, the equation now is:

Where debt is the debt considered to not be covered easily by their own assets (assumed to be half of total debt), the investment is the market capitalisation and the growth is the negative 5% (-0.05 in the equation).

Putting the numbers in and trying out for different values of “IRR”, we find that the IRR is nearly 14% (13.8%):

If we consider that the actual returns of the market long term is under 10% (depending which market you look it it can be much lower than 10% long-term, more like 3-7%) then it would seem like a reasonable IRR.

Obviously there are lots of assumptions in this and we are lacking data and assuming a lot, but I thought I’d share this rough calculation in case anyone else wants to comment.
If there is anything wrong with my methodology, please let me know.

Note: The calculation does not end in zero, it ends in around 2m, but that was the closest I could get to zero for a 3 digit number. Considering how rough this equation is and the very large assumptions, going anything beyond a 2 digit number (eg. 14%) is probably meaningless.

Obviously none of this is investment advice. This is just to comment on ideas and spark conversation :slight_smile: .


Here’s an initial spin-off pie of recent (haven’t clearly defined boundaries there yet) spin offs as I have not seen such a pie exist yet:

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