KEDM Lite Vol. 11
A low frequency but juicy strategy where the edge is government incompetence.
Let’s dig in…
This week’s additions and highlights
1. SPIN-OFFS
- Honeywell (HON US). It might be a good time to look at Honeywell, which recently corrected on rather poor results. The company is preparing to separate Aerospace, while also selling non-core businesses (last one is PSS to Brady for $1.4bn). Aerospace faced a tough Q1 on supply chain disruptions, ending a long streak of quarters with solid growth, though March was solid again. Aerospace will trade under HONA, with an investor day planned in June. Another interesting note, a reminder that Honeywell also owns a big stake in Quantinuum, a pretty interesting quantum bet which has filed for an IPO. NVDA participated in the latest funding round which was already up in double digit $bn. Nice optionality.
2. STRATEGIC ALTERNATIVES & REVIEWS
(Potential take-outs, asset sales, M&A, etc.)
- Franklin Street Properties (FSP US). FSP expanded its strategic review, adding ao BofA to evaluate potential transactions. The company believes that “… FSP’s share price does not adequately reflect the underlying value of our real estate…”. The company has roughly $600m BV of RE assets (and decline) and c. $250m debt. The market values this at ~0.1x BV, it clearly doesn’t still buy book. Here lies the opportunity.
- TransAct Technologies (TACT US). Interesting net cash micro-cap with an actual product that has long been assessing strategic alternatives. Stock has been hammered over the past years, with the company actively trying to turn the ship. More recently, the former issued a public letter criticizing the company’s strategic direction and performance since his 2023 departure. He argues TransAct has failed to launch new products and win major customers and warns that the company is overinvesting in food‑service software where it lacks advantage, urging a return to core hardware strengths and partnerships instead. In the meantime, net cash is now roughly 60% of the company’s market cap.
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Kuppy’s Event Driven Monitor (“KEDM”) is not a financial or investment advisor and the information contained in this publication is not intended to constitute legal, accounting, or text advice or individually-tailored investment advice and is not designed to meet your personal financial situation. The investments discussed in this publication may not be suitable for you. You are required to conduct your own due diligence, analyses, draw your own conclusions, and make your own investment decisions. Any areas concerning legal, accounting, or tax advice or individually-tailored investment advice should be referred to your lawyers, accountants, tax advisors, investment advisers, or other professionals registered or otherwise authorized to provide such advice. KEDM makes no recommendations whatsoever regarding buying, selling, or holding a specified security, a class of securities, or the securities of a class of issuers, and all commentary is for educational purposes only. The investment examples noted are intended to provide and example of the events and data KEDM flags each week and is not representative of typical returns generated by each event or any future returns.