Summary
- Spectrum Brands has 2 hard catalysts in process to unlock value.
- 1 – SPB is in the process of selling their Hardware & Home Improvement business for a 14x FY21 Adjusted EBITDA. That’s a rich price. The transaction will create value.
- 2 – SPB talks about spinning-off or another transaction of their Home Personal Care business.
- SPB is cheap. The market is not recognizing the full value of the steps management is taking to transform the business. A SOTP approach suggests that is undervalued.
- SPB will go from a net debt to a gross cash position. SPB will be a more focused, leaner, and simpler business. A better business warrants a higher valuation.
Q2 2022 hedge fund letters, conferences and more
My submission for the contest is Spectrum Brands Holdings Inc (NYSE:SPB). Spectrum Brands Holdings is a leading global branded consumer products and home essentials company. In other words, they sell stuff you need or use at home. Their slogan is “We Make Living Better at Home”. They sell everything from kitchen faucets to indoor grills and curling irons.
The name Spectrum Brands probably doesn’t mean much to you (former Rayovac) but you probably used some of their products. You are most likely familiar with some of their brands such as: Kwikset, Baldwin, Pfister, Weiser, Black Flag, Hot Shot, Spectracide, Remington, George Foreman (the grill), Black + Decker, PowerXL… and there are many more. I just listed some of the ones I recognized.
SPB operates as a holding company and is basically four businesses:
- Global Pet Care (GPC)
- Home & Garden (H&G)
- Home & Personal Care (HPC) – now called “Empower Brands”
- Hardware & Home Improvement (HHI)
Here’s a snapshot of SPB’s capitalization summary:
