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Are More Big Spin-Offs and Break-Ups Imminent? (ITT, MRO, FO, GE, MMM, UTX, HON, DHR, DOV, TXT, OTTR, BRK-B)

Administrator — Thu, 13 Jan 2011 15:55:45 +0000

The reaction to the news of a conglomerate break-up in a three-way separation was incredible for ITT Corporation (NYSE: ITT) yesterday. Shares closed up 16.5% rather than over 20% and the closing price was $61.50. We thought that maybe all of the good news was being priced in even having received the analyst notes from Gabelli & Co. with a “buy” rating and an $89.00 target (with new $90 value this morning).

Now we have a break-up into two happening from Marathon Oil Corporation (NYSE: MRO). Marathon is far from a conglomerate, but its split into two for its exploration activities and its refining activities follows the same path as ITT. Fortune Brands Inc. (NYSE: FO) gained 15% after its late-2010 break-up announcement. We can’t help but wonder if other conglomerates and quasi-conglomerates might consider similar strategies. That leads to reviews of General Electric Co. (NYSE: GE), United Technologies Corp. (NYSE: UTX), 3M Co. (NYSE: MMM), Honeywell International Inc. (NYSE: HON), Danaher Corp. (NYSE: DHR), Dover Corp. (NYSE: DOV), Textron Inc. (NYSE: TXT), and even a small company called Otter Tail Corporation (NASDAQ: OTTR). Lastly, what about Berkshire Hathaway Inc. (NYSE: BRK-B)?

Filed under: Activist Investor, Banking, Brokerage Firms, Buffett, business and finance, Business Services, Conglomerates, Consumer Goods, Corporate Governance, Editor's Picks, Financial Stocks, IPOs, Large Cap Stocks, Mergers and Buy Outs, Private Equity, Shareholder Issues, Value Investing Tagged: BRK-B, DHR, DOV, FO, GE, HON, ITT, MMM, MRO, OTTR, TXT, UTX

Bankruptcy in Wind Turbine Maker Highlights Sector Risks (GE, SI, ZOLT, OTTR, BWEN)

247wallst — Tue, 27 Oct 2009 15:33:50 +0000

Wind energy is supposed to be one of the key puzzle pieces in the quest to get off the dependence of foreign energy sources. Yet a fairly disturbing story from the Daily Camera in Boulder. Colorado last night highlighted how all the federal grant money and all the alternative energy money in the world will still not be enough to keep every player alive. Entegrity Wind Systems Inc. is a Canada-based wind turbine manufacturer that has based some operations in Boulder, CO. And now the company has gone bankrupt. In now way will this kill the efforts and ambition of the two giants in the U.S.: General Electric Co. (NYSE: GE) and Siemens AG (NYSE: SI). It might even be good news for the giants as one less future competitor may be gone. However, it does highlight at least some of the potential risks and ongoing risks for three smaller companies:

Zoltek Companies Inc. (NASDAQ: ZOLT), which makes carbon fibers for wind turbines and other key infrastructure;
Otter Tail Corporation (NASDAQ: OTTR), a small conglomerate in Minnesota with wind operations;
Broadwind Energy, Inc. (NASDAQ: BWEN), which manufactures and sells high precision gears for wind turbines.

Even though these three companies are very small compared to the giants, they are also relatively giants if you compare these to the bankrupt company. And in no way is there a direct tie that we are aware of. This bankruptcy might even benefit all existing players because it makes them all have one less competitor if this bankruptcy goes along the same path as many other bankruptcies that go from protection to liquidation.

The bankruptcy news from Entegrity Wind Systems was actually out of Canada over recent days but is small enough that it flew under the radar. The article noted that New Brunswick-based A.C. Poirier & Associates Inc. is going to be the receiver and manager of Entegrity during the bankruptcy. Where this gets a bit disturbing for the green crowd is that the debt is just not that large considering the hype and hope for the field of wind energy. And for the field of alternative energy.

Listed was a debt of over $3 million to Mercantile Finance Services in Toronto and over $6 million to other institutions. Then there is the widening loss because of manufacturing problems in some of the turbines.

You can read the full story from the Daily Camera with many more issues outlined in the piece over the last two weeks since the bankruptcy filing in Canada. This may be of little or no concern to the larger players. In fact, this is just one less rodent to deal with as far as they are concerned. But it also highlights the risks that are still present in an emerging field full of hope and hype. You could even take the same approach in solar, where this earnings season should set apart the children from the adults in that sector.

Jon C. Ogg

Posted in Alternative Energy, Bankruptcy, Green Biz Tagged: BWEN, GE, OTTR, SI, ZOLT

Bill Gates Top Holdings (ABT, AN, BRK-A, BP, CNI, CAT, KO, COST, CCI, EK, XOM, FMX, JNJ, MCD, OTTR, RSG, SGP, WMT, WMI)

247wallst — Tue, 17 Feb 2009 13:48:31 +0000

We compiled a list of the equity holdings of the Bill & Melinda Gates Foundation and for Bill Gates’ personal investment vehicle Cascade Investment. These are as of December 31, 2008 and we have taken out the positions listed as under $50 million to make this list easier to read. This list also excludes the massive holdings in Microsoft (MSFT).

BILL & MELINDA GATES FOUNDATION
COMPANY (TICKER)    $(000)     SHARES
ABBOTT LABS (ABT)            185,199   3,470,100
AUTONATION INC (AN)          101,192   10,242,100
BAXTER INTL INC (BAX)     107,180   2,000,000
BERKSHIRE HATHAWAY (BRK) 4,342,918 1,351,250
BP PLC (BP)               216,546   4,633,000
CANADIAN NATL RY CO       308,771   8,399,653
CATERPILLAR INC (CAT)     227,370   5,090,000
COCA COLA CO (KO)           257,224   5,682,000
COCA COLA FEMSA (KOF)      198,452   4,561,072
COSTCO WHOLESALE (COST)    321,720   6,128,000
CROWN CASTLE INTL (CCI)       93,752    5,332,900
EXPEDITORS INTL (EXPD)     54,829    1,648,000
EXXON MOBIL CORP (XOM)       342,072   4,285,000
FEDEX CORP (FDX)            97,829    1,525,000
GRUPO TELEVISA (TV)         99,961    6,690,800
JOHNSON & JOHNSON (JNJ)       150,482   2,515,156
MCDONALDS CORP (MCD)        395,995   6,367,500
MERCK & CO INC (MRK)          245,041   8,060,550
PFIZER INC (PFE)            60,049    3,390,700
REPUBLIC SERVICES (RSG)     33,467    1,350,000
SCHERING PLOUGH (SGP)     254,721   14,957,200
WAL-MART STORES (WMT)    266,453   4,753,000
WASTE MANAGEMENT (WMI)   259,128   7,819,200
WYETH (WYE)                    140,040   3,733,400

Cascade Investment, L.L.C.
COMPANY (TICKER)            $(000)    SHARES
AUTONATION INC (AN)        111,799   11,315,688
BERKSHIRE HATHAWAY (BRK-A) 391,230   4,050
CANADIAN NATL RY (CNI)       1,279,599   34,809,544
COCA-COLA FEMSA (KOF)        37,294     857,128
EASTMAN KODAK (EK)             52,311    7,950,000
FOMENTO ECONOMICO (FMX)       678,431   22,516,795
GRUPO TELEVISA (TV)           301,495   20,180,400
OTTER TAIL CORP (OTTR)    79,474    3,406,499
PNM RES INC (PNM)           70,757    7,019,550
REPUBLIC SERVICES (RSG)        879,233   35,467,230

Smaller positions listed as under $50 million for the BILL & MELINDA GATES FOUNDATION are BANK FLA CORP NAPLES, VIACOM, COCA COLA ENTERPRISES, COX RADIO, CROCS INC, DAIMLER, DICKS SPORTING GOODS, EASTMAN KODAK, GREATER CHINA FUNDD INC, HOME DEPOT, IAC/INTERACTIVE CORP, ELI LILLY & CO, PEABODY ENERGY, PROGRESSIVE CORP, SEATTLE GENETICS, TEVA PHAMRACEUTICAL, TRACTOR SUPPLY, VIACOM…. We listed Republic Services (RSG) because Bill Gates’ Cascade has been acquiring these share actively via Cascade.

Smaller positions listed as under $50 million for CASCADE INVESTMENTS are CROCS, FISHER COMMUNICATIONS, GAMCO INVESTORS, PATRIOT COAL, PLANETOUT INC, SIX FLAGS, STRATEGIC HOTELS & RESORTS.

JON C. OGG
FEBRUARY 17, 2009

Posted in Activist Investor, Insider Activity Tagged: ABT, AN, BP, BRK-A, CAT, CCI, CNI, COST, EK, FMX, JNJ, KO, MCD, OTTR, RSG, SGP, WMI, WMT, XOM

Bill Gates & Cascade New Stock Holdings (AN, BRK-A, CNI, KOF, FSCI, FMX, GBL, TV, OTTR, PCX, LGBT, PNM, RSG, SIX, BEE)

247wallst — Fri, 14 Nov 2008 16:35:35 +0000

These are the new holdings (sans ETF and sans derivatives) for Bill Gates’ CASDADE INVESTMENT LLC As of September 30, 2008:

AUTONATION (NYSE: AN) 5,263,588
BERKSHIRE HATHAWAY (NYSE: BRK-A) 4,050
CANADIAN NATL RY (NYSE: CNI) 33,859,544
COCA COLA FEMSA S A B (NYSE: KOF) 857,128
FISHER COMMUNICATIONS (NASDAQ: FSCI) 455,700
FOMENTO ECONOMICO (NYSE: FMX) 20,966,795
GAMCO INVESTORS (NYSE: GBL) 90,845
GRUPO TELEVISA SA (NYSE: TV) 19,680,400
OTTER TAIL (NASDAQ: OTTR) 2,556,499
PATRIOT COAL (NYSE: PCX) 2,408,653
PLANETOUT (NASDAQ: LGBT) 521,739
PNM RESOURCES (NYSE: PNM) 7,019,550
REPUBLIC SERVICES (NYSE: RSG) 34,873,836
SIX FLAGS (NYSE: SIX) 10,210,600
STRATEGIC HOTELS & RESORT (NYSE: BEE) 4,190,000

You can join our open email distribution list to hear about holdings of Warren Buffett, Bill Gates, IPO’s, secondary offerings, private placements, merger, special situations, rumors, and more.

Jon C. Ogg
November 14, 2008

Posted in Activist Investor, Insider Activity Tagged: AN, BEE, BRK-A, CNI, FMX, FSCI, GBL, KOF, LGBT, OTTR, PCX, PNM, RSG, SIX, TV

Top Pre-Market Upgrades & Downgrades (AB, ABFS, CNY, DKX, BEN, KMT, ODFL, OTTR, PZN, RJF, JOE, TROW, YRCW)

247wallst — Mon, 22 Sep 2008 06:27:31 +0000

These are not all of the research calls affecting shares of stock, but these are some we have our eyes on this Monday:

Alliance Bernstein (AB) Raised to Outperform at KBW.
Arkansas Best (ABFS) Cut to Underweight at JPMorgan.
Con-Way (CNY) Cut to Neutral at JPMorgan.
Dick’s Sporting Goods (DKS) Started as Overweight at Lehman.
Franklin Resources (BEN) Cut to Market Perform at KBW.
Kennametal (KMT) Cut to Sell at Goldman Sachs.
Old Dominion Freight Line (ODFL) Cut to Neutral at JPMorgan.
Otter Tail (OTTR) Raised to Outperform at Baird.
Pzena (PZN) Cut to Underperform at KBW.
Raymond James Financial (RJF) Cut to Market Perform at KBW.
St. Joe (JOE) Cut to Market Perform at KBW.
T. Rowe Price (TROW) Cut to Underperform at KBW.
YRC Worldwide (YRCW) Cut to Underweight at JPMorgan.

Jon C. Ogg
September 22, 2008

Posted in Analyst Calls Tagged: AB, ABFS, BEN, CNY, DKX, JOE, KMT, ODFL, OTTR, PZN, RJF, TROW, YRCW

The 52-Week Low Club 9/19/2008 (IHS)(DM)(OTTR)

247wallst — Fri, 19 Sep 2008 14:49:29 +0000

Bad day for the 52-week low club.

IHS (IHS) Decision to buy Global Insight for $200 million drives shares down. Bottom at $45.66 from 52-week high of $72.19.

Dolan Media (DM) No news, just a sell-off. Drops to $11.22 from 52-week high of $31.15.

Otter Tail Power (OTTR) Market unhappy with company’s plan to sell stock and with new guidance. Sells off to $29.71 from 52-week high of $46.15.

Douglas A. McIntyre

Posted in HI/LOW Tagged: DM, IHS, OTTR

Otter Tail Secondary Comes To Roost (OTTR)

247wallst — Fri, 19 Sep 2008 07:40:20 +0000

Otter Tail Corp. (NASDAQ: OTTR) is trading lower this morning after pricing its secondary offering. The proposed 5 million share offering came in at 4.5 million shares. It also priced at $30 after closing at $33. last night. Shares have also been hit hard as its 52-week trading range is $31.28 to $46.15.

You might be shocked at the size of the underwriting groupfor an offering of this size. Merrill Lynch is the sole book-runner.Joint lead managers are R.W. Baird and JPMorgan. Co-managers arelisted as Banc of America, Wells Fargo, and KeyBanc Capital.

The last 5 days have been rough on the company. Last Friday, this was a$40 stock. But an earnings warning and an announcement it was goingto raise cash took care of the bullish hopes. That is part ofthe reason for the discount to the close.

This was a former cult stock which was given positive mention by Jim Cramer on CNBC during the wind power demand craze. This is also a personal holding of Bill Gates.

So far shares are down almost 5% at $31.30 in early pre-market trading.

Jon C. Ogg
September 19, 2008

Posted in Alternative Energy, Conglomerates, Secondary Offering Tagged: OTTR

Status on Companies Raising Cash (ORA, TCBI, VRTX, OTTR)

247wallst — Thu, 18 Sep 2008 08:18:43 +0000

We have seen three issues so far since yesterday’s close to sell shares of stock and one offering still pending on the calendar for the week. We have seen filings out of Ormat Technologies Inc. (NYSE: ORA), Texas Capital Bancshares, Inc. (NASDAQ: TCBI), and Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX). We are also still waiting for pricing from Otter Tail Corp. (NASDAQ: OTTR) on its secondary offering.

Ormat Technologies Inc. (NYSE: ORA) filed last night for a universalshelf registration of up to $1.5 Billion in mixed securities. Itscurrent market cap is $1.69 Billion and as of June 30 it had $709.79million in total liabilities. There are no indications pre-market onthis stock.

Texas Capital Bancshares, Inc. (NASDAQ: TCBI) has filed for existingshareholders to sell up to 4,000,000 shares of common stock. Allshares will be sold by selling shareholders and the company willreceive none of the proceeds from the sale of stock. It will have over30.8 million shares outstanding after this offering. Shares closed at$18.89 yesterday and have not traded this morning before the open. Wewould note that the reason this isn’t an impact is because earlier thismonth the company sold these shares to T. Rowe Price (NASDAQ: TROW)funds and these are those shares.

Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) announced last nightthat it was going to sell 7 million shares of common stock subject tomarket conditions via Goldman Sachs. It priced its offering with moreshare at 7.5 million shares for a price of $25.50. Shares are tradingdown 4%at $25.50 and the 52-week trading range is $13.84 to $40.10.

Otter Tail (NASDAQ: OTTR) has already filed to sell 5 million shares ofcommon stock and we were expecting that to come this week. As of thismorning we have not seen a pricing nor any color on how the currentmarket meltdown will play into this.

Jon C. Ogg
September 18, 2008

Otter Tail Loses Its Tail (OTTR)

247wallst — Tue, 05 Aug 2008 05:45:57 +0000

Otter Tail Corp. (NASDAQ: OTTR) may have been caught with its tail between its legs. The small diversified mini-conglomerate has warned that its earnings were going to fall short of expectations. For those new to Otter Tail, this is one which Jim Cramer featured for its wind power operations. Based on its very diversified operations and its small size, we’ve dubbed this on "General Eclectic" to describe the manner of the conglomerate’s operations. We have also noticed how Bill Gates was an owner of this one.

The company posted $0.11 EPS on $326.5 million in revenues. We onlysaw two estimates at $0.53 & $0.59 on EPS and $ 322.8M and $339.9Min revenues. There were some items in the quarter that affectedearnings, but the company’s CEO cited challenges in its manufacturingsegment and the impact of a rate case decision in Minnesota as reasonsfor the shortfall.

Based upon the data, the company did say that it was cutting its full2008 guidance down to a range of $1.40 to $1.65 from a prior range of$1.75 to $2.00, and well under the two estimates of $1.82 and $1.90.

The company received permission for a 2.9% rate increase inelectricity, but it had requested a 6.7% increase and it recorded aliability of $2.2 million that it will use for refunds from 2007terms. It sees plastics running below normal levels for 2008 andexpects a decrease in manufacturing net income and in health services.As elsewhere, corporate costs are also rising in 2008.

Shares were only about $2.00 short of the 52-week highs, so this wasn’t just a surprise. It may be dealt with harshly. This news came out last night and he initial reaction was a haircut of 10%.

Jon C. Ogg
August 5, 2008

Short Sellers Targeting Solar & Alternative Energy (AKNS, ASTI, CSIQ, CPST, ESLR, FTEK, OTTR, SPWR)

247wallst — Wed, 28 May 2008 09:58:55 +0000

The overall short interest on NASDAQ stocks was actually pretty dull from the end of April to Mid-May, or at least that is the case until you go straight into looking at solar stocks and other alternative energy stocks. Many of these have seen their stock prices rise sharply over the last few months. Many were viable with $70 or $80 oil, but after $100 and then $130 oil you can imagine that short sellers are targeting the most up or most speculative names.
                                                      MAY 15    APRIL 30    CHANGE
Akeena Solar, Inc. (NASDAQ: AKNS) 3,280,165 3,042,025    7.83%
Ascent Solar Tech (NASDAQ: ASTI)    2,106,784 1,889,624    11.49%
Canadian Solar Inc. (NASDAQ: CSIQ) 4,311,126 3,562,672    21.01%
Capstone Turbine (NASDAQ: CPST)    12,860,110 11,491,389 11.91%
Evergreen Solar (NASDAQ: ESLR)    22,122,144 20,622,446    7.27%
Fuel Tech, Inc. (NASDAQ: FTEK)       7,488,443 6,443,583    16.22%
Otter Tail Corp. (NASDAQ: OTTR)       2,126,732 1,960,651       8.47%
SunPower Corp. (NASDAQ: SPWR)    15,231,873 14,016,469    8.67%

As you have seen, most of these are solar plays, but some aren’t. Fuel Tech helps power plants burn cleaner coal, and it has had more problems over the last year on making its earnings numbers. Otter Tail is a diversified "General Eclectic" but it has become more well known for making wind towers of late; and it hasn’t hurt that Bill Gates has been a holder for quite some time. Capstone Turbine has been our largest winner in our weekly "10 Stocks Under $10" newsletter in the sector with a 200% gain; and it is still an active hold in that group. We also just featured Akeena Solar over at VSinvestor.com for a highly unusual volume spike alert.

These are the ones we screened with the largest short interest increases in the sector seem to be more speculative names, although there were some that saw decreases and we excluded those from this list. Out of the alternative energy or "cleaner" energy stocks we follow, these were the ones with the largest increase in the short interest.

You can join our open email distribution list to hear about other issues in short interest, secondary offerings, IPO’s, private equity, special financings.

Jon Ogg
May 28, 2008