Cementing Value

An asymmetric post-spin off situation offering 50% - 100%+ upside.

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Value Situations is NOT investment advice and the author is not an investment advisor.

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In this issue of the newsletter, I profile an event-driven idea on my watchlist that I think offers a very attractive prospective return over a ~24 month timeframe.

The subject stock is a European-listed cement business that recently completed a partial spin-off of its US subsidiary. The spin should unlock significant value for shareholders in the European parent RemainCo, given how US cement/construction materials stocks currently trade at an average ~50% premium to European peers.

Post-spin, the RemainCo still retains majority ownership of the US SpinCo, and backing out the current market value of RemainCo’s stake in the SpinCo indicates the market is valuing RemainCo at a ~27% discount to European-listed peers and a ~50% discount to US-listed peers.

Assuming a full realisation of the RemainCo’s interest in the SpinCo and a market re-rating in with European peers, I see upside of 50% - 100%+ for RemainCo shareholders.

I believe this is compelling and highly asymmetric situation. The stock in question is …