Share this page!

Enter URL or ID to Unroll

You can paste full URL like: https://x.com/threadreaderapp/status/1644127596119195649
or just the ID like: 1644127596119195649

How to get URL link on X (Twitter) App

  1. On the Twitter thread, click on or icon on the bottom
  2. Click again on or Share Via icon
  3. Click on Copy Link to Tweet
  4. Paste it above and click "Unroll Thread"!
  5. More info at Twitter Help
Rich Howe Profile picture
@stockspinoffss
Jun 24, 2021 • 8 tweets • 2 min read • Read on X
$GSK LEAPs look interesting.

GSK has low vol so options are cheap if you think the stock has upside (which I do)....

Just confirmed consumer spin-off will take place by mid-2022.....
Jefferies thinks the consumer business is worth 46BN GBP.

That implies a 22x multiple on 2020 EBIT of 2.1BN. Seems reasonable as P&G trades at 23x EBIT.

GSK owns 68% of the consumer business (PFE owns 32%)
If you assume RemainCo (pharma and vaccines) deserves to trade at 12x EBIT ('20 EBIT of 6.9BN), it is worth 82.8BN.

MRK, PFE, AZN, trade at 23x, 23x, and 18x.
Add it all up and subtract net debt, and it looks like there is ~32% upside. Image
32% upside is usually not enough to get me too excited, but the interesting thing here is that you can buy long dated options (LEAPs) for GSK.

That looks way more compelling (higher risk too!).
According to Schwab, GSK calls at a 35 strike expiring in Jan '23 last traded for $5.80.

If I'm right and GSK is worth $52.22, I see ~200% upside in this contract.

See math below. Image
Want more special situation / spin-off ideas?

Follow me here:

twitter.com/stockspinoffss
Disclosure: I'm long GSK LEAPs.

• • •

Missing some Tweet in this thread? You can try to force a refresh
　

Keep Current with Rich Howe

Rich Howe Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @stockspinoffss

Rich Howe Profile picture
Feb 16
Anyone an expert in index reconstitution and want to collaborate?

Here's my theory...

$GTX is going to be a massive beneficiary of passive index flows.

Here's my logic:
$PHIN, a company in the same sub industry as $GTX has 32% of shares held by passive investors (Vanguard, State Blackrock, etc).

$GTX has 2.6% of shares held by passive investors.

Why the difference?
GTX went bankrupt and came out of bankruptcy with a ton of pref shares.

Those have all been converted to common shares so the capitalization is much cleaner now.

How impactful will this be for $GTX?
Read 10 tweets
Rich Howe Profile picture
Oct 21, 2023
I’m a small investor, and it’s sometimes hard to get in touch with management or investor relations.

Today, I’m going to walk through the specific tactics that I use to get in touch with management/IR:
I love talking to investor relations / management.

Why?

A couple reasons:
1) It helps me confirm the facts.
2) It helps me get up to speed on a company faster.
3) It allows me to “feel” whether insiders are excited or not about their stock.
How do you find contact info to set up a call with a company?

The best place to look is the investor relations section of the website: Image
Read 11 tweets
Rich Howe Profile picture
Jul 2, 2023
Koyfin has become my favorite investing tool.

Here’s how I use it:
When I’m getting up to speed on a new company, my favorite tab is Snapshot:Overview:

At a glance, it shows you
- NTM and LTM valuation
- Consensus expectations
- A nice chart
- Recent news Image
Next, I love the charting functionality.

I’m not an advanced technical analyst but I do like to know where a stock is trading relative to its 200 and 50 day moving average.

This chart is exactly what I'm looking for: Image
Read 9 tweets
Rich Howe Profile picture
Jun 25, 2023
Great write-up from @ClarkinM this week on $MGTA.

It’s a biotech liquidation.

Here’s the quick pitch:
On May 3, $MGTA announced a reverse merger with Dianthus Therapeutics.

The stock closed down 14%.

Why?

Investors had been hoping for a liquidation.

Per the current deal, legacy $MGTA shareholders will get no cash.

Instead they will own 21.3% of the new company.
But shareholders have to approve the deal.

The vote will take place in Q3 and if it fails there is a reasonable probability that $MGTA will pursue a liquidation:
Read 8 tweets
Rich Howe Profile picture
May 26, 2023
Joel Greenblatt was recently interviewed on the Investor’s Chronicles podcast.

At the end of the interview, the host asked whether Greenblatt still likes spin-offs.

Here’s what he said:
"My first book I wrote is called, “You Can Be a Stock Market Spin-off” and about 40% or 50% of it was about spin-offs.

The questions is why.

I’m writing another book and the example I use to describe spin-offs is the following"
"...Suppose there was a law that said that every time you bought a house in New York you also had to buy one in Cleveland.

And every time you bought a house in Cleveland, you also had to buy one in New York.

The combined value of those two houses would be one price..."
Read 14 tweets
Rich Howe Profile picture
Mar 18, 2023
Warren Buffett has a strange approach to spin-offs.

He's made a lot of money investing in them.

But he would never spin off a Berkshire subsidiary.

This thread will explain why:
First, let's explore Buffett's spin-off investments.

From 1957 to 1969, Buffett investment partnership compounded at 29.5% annually.

He invested in 4 categories of investments:

1) Generals – Private Owner Basis
2) Generals – Relatively Undervalued
3) Workouts
4) Controls
Spin-offs fit into the "Controls" bucket.

Buffett doesn’t provide any spin-off case studies.

But we know he invested meaningful capital into spin-offs.

Fur example, his Partnership invested 23% of its portfolio in workouts (which included spin-offs) in 1969.
Read 13 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

Send Email!

:(