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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (61777)3/7/2019 6:26:05 PM
From: Spekulatius2 Recommendations

Recommended By
ekimaa
Lance Bredvold

  Read Replies (1) of 78751
 
Bought some REZI (Honeywell spin-off) today on weakness. I also added to WBA. REZI has an interesting capital structure. it’s a bit of an leveraged equity stub because in addition to some debt ($900M), they have a liability to pay up to $140M/ year for up to 25 years to pay for environmental remedies. This payment is capped and administered by Honeywell, but it’s not tax deductible for REZI. If the environmental remediation is less, the amount and duration will be reduced.

The business itself is the old thermostat/sensor/ controller business from Honeywell an pretty stable and cash generative. I bought a reasonable position be sure the upside is pretty good, if management can grow this business.
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