Sara Lee spinoff of Hanesbrands
A few days ago Sara Lee finalized the spinoff of Hanesbrands to its shareholders.
A few gleanings from the updated Form 10:
1. HBI will have only around 95 million shares outstanding: - This could cause liquidity issues and exacerbate any short-term pressures on the stock It seems likely that institutions and fund managers might dump a lot of HBI shares given that HBIs debt has been rated ‘junk’ and there is no certainty yet around which index’s HBI will be included in.
2. HBI management will be exceptionally well rewarded: - The Hanesbrands Omnibus Incentive Plan of 2006 allows for a total of 13.1 million shares or about 13% of outstanding stock to be issued to directors and employees. Initial awards will be issued on the 15th trading day following the distribution date and the excersise price will be 100% of the fair market value of the stock on that date.
It seems to me that it would be to HBIs management’s advantage for its shares to trade down till their stock options are priced on the 15th trading day following the distribution date.
I intend to hold on to my SLE shares. Also given how well incentivised HBIs management is going to be to ensure that it outperforms I may well increase my position in HBI should an opportunity to buy at depressed prices present itself.
posted by Random Walker @ 6:26 PM
4 comments
4 Comments:
Good post.
Just found your blog.
Nice to see another Greenblatt disciple.
Hey Random Walker, nice site. I've been following the SLE/HBI spinoff for a while.
Hanesbrands started trading this afternoon on a when-issued basis (symbol HBI WI at my brokerage, HBI-WI to find it at Yahoo Finance).
Opened at $21.00, traded down to $19.50. Looks like HBI's price will be under pressure as you noted in your posts.
Look forward to more of your thoughts on HBI as well as the upcoming FDC-Western Union spinoff.
Long FDC and will be long on HBI if my limit order gets filled.
It was announced today that HBI will be included in the S&P Midcap 400 at the end of the trading day on 9-5.
Also FWIW, my initial limit order was filled on 8-17 at 18.25, certainly will be looking for more at that level or lower should the price come under pressure when regualar trading begins.
Regards,
Russell F.
Im long HBI via my SLE holding. If HBI falls signifcantly ex-distribution I intend to increase my position many times over.
Am long FDC too. In this case tho the more attractive part to me is the FDC business not WU.
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