Resideo IPOs, Then Plunges

By: Dan Gelinas, Published on Oct 31, 2018

ADI and Honeywell Homes management have been touting their spinout and IPO for months, including appearing on Wall Street as they widely shared on social media:

And:

However, the stock is down 29% from the start of when-issued trading, as shown below:

[Update: it fell again on day 3, falling as far as $19.40 but finishing the day down just another 3.79% at $21.08.

What is happening? What is the outlook for the newly independent company?

In this note we look at:

  • Strong Optimism from Resideo
  • Resideo's IPO
  • Steady Decline Over First Two Days
  • Valuation
  • Bull and Bear Case from Financial Experts

*** *** ********* ***** management **** **** ******* their ******* *** *** for ******, ********* ********* on **** ****** ** they ************ ** ****** *****:

***:

*******, *** ***** ** down **% **** *** start ** ****-****** *******, as ***** *****:

[******: ** **** ***** on *** *, ******* as *** ** $**.** but ********* *** *** down **** ******* *.**% at $**.**.

**** ** *********? **** is *** ******* *** the ***** *********** *******?

** **** **** ** look **:

  • ****** ******** **** *******
  • *******'* ***
  • ****** ******* **** ***** Two ****
  • *********
  • **** *** **** **** from ********* *******

[***************]

Strong ******** **** *******

*** ******* ******* *** announced ** ******* **** and **** *** ********* year, *** ******* ******** for *** ************ ******** ********** **** in *** **** **** on ******* **, ****, **** ***** *** Joe ***** ********** ********** that *** ******* ***** launch, **** *** *** create ***** *** ************:

***** ***, **'** ******* to *** *** **** executed ****. ****'* ********* number *. ***** ***, it's ***** ******* *** of *** ***** *** being ******. **** ** not * ***** ** company ****'* ****** ** figure *** *** ** get *** ******** **** he ***********. ** **** a ****** ******* ***** and **** **** ****. We **** **** **** top *** ****** *****. I’m ********* **** *** team **’** *** ********. We’re ****-********** ** ***** shareholder ****** **** *** future.

** *** ******** ****, Resideo ****** ******* ** company ***** ******* *** opening **** ** *** New **** ***** ******** on ******* ****, ********** with *** ***:

Resideo's ***

*** ***** ***** "****-****** *******" ** ******* ** at $** *** ** fell *** *** **** 2 ***** ** **** officially **** ******* ******* at ~$**, * **** of ***** **%:

Steady ******* **** ***** *** ****

*******'* ***** *** * steady ******* **** *** first *** **** ** trading *** ******** ********* under $**:

*********

*** *******'* ****** ********* is *** ~$*.* ******* USD (*** ******* ****** x ~$** *** *****) compared ** ******* ** ~$4.5 *******. ** ** low ******** ** *****.

***** **** ************ / **** distributor ******* ***** ********* but **** **** ****, it ** *** ***.

************ **** ** *** significantly ***** ********** ******** to ***** ***** ***** those businesses ******** ***** ****** relative ** ***** **** manufacturers. *** *******, ******* does ****** ~$ * billion ** ******* *** only *** * ****** market ************** ** ~$* billion. ** * ******* ratio, *** *** **** of *******'* ******** ***** ***** at ~$*** *******.

*** ********* **** **** of *** ******** ** significantly **** ********** **** the *** ****, **** though ***** *** ******** less *******. *************, **** with ****** ****** ***** like ********* ***** **** to ***** ** ** revenue ** ******.

********, **** ***** ************** put ******* ** * $3.2 ******* *********.

Analyst *****

** ******* ** ************.****** **** *********** ****** to *** ***** *** Resideo ****** *** ** ********* as ** ***, ******** **** the **** *** ** attributed *** *******. *****, that ***** ********* *** being ******** ** ****:

****-**** *** *********** ** investors (*** **** **** in ** ***) *** so ***** ** **** little ********* ********* *** new *******. *********, ** or *** ******** ***** the ***** *** ** it ** *** ******** to ************* *********. *******, the ****-*** ** ******* much ******* **** *** parent *******, *** **********, institutional ********* *** ********** **** ****** shares ** *** ****-***. Let ** *******. ** a ***** *** ****** fund ******* **** * large *** ******* ***** distributes * ***** *** spin-off, **** ****** **** manager’s ********** ******* ******** the ******* **** ******* the ****-***. *** ***** reasons, **** ********* **** their ****** ** *** spin-off ********** ** ***** or ********** *****.

******, **** ********** ******* a *** ******** ***** price:

*** ********** **** ** the *** ****-*** *** very ****** ********* ** promote *** ******* *********. In ****, *** ********** team ** ************ ** *** ******* the *****. ***? ******* management ***** ******* *** usually ****** ***** ** the ***** ****** ***** of *******. *** ***** the ***** ****** *********, the ******* ***** ********* the ******* ****.

********

******,* **-**** ********************* & **. ***** *** **** **** *** stock ***** **** **** **** 12-18 ****** ** $** (or ** ********* ********* of $*.* *******):

*** ****** ******** *** forecast, ******** **** * shift ****** ****** ****** products *** *** **** win *** ***:

**** ****** ****** *** categories, *** * ******** mix ***** ****** ******-****** Products ******** *** ********* revenues, ** ***** **** is ** *********** ********** opportunity. *** ** ** spun *** **** ****** Honeywell, ******* ** ******* on *** ************ ******* and ****** ******* ****** shares ** ********, ******* & **** *** ************. Its ***** *** *** line ****** *** ********* from *** ***** ****** “connected” *******, *** ******** could ***** ************. *** spin-off ** *** *** October **. ** ******** coverage **** ** ********** and $** ***** ******.

Bear ****

*************.*** ******* ***** *** **** ****, *********** that ******* *** ** pay ********* ** ** $140 ******* ******** *** the **** ** *****:

******* **** **** ******** to ********* ***** ******** indemnification *** ************* ********** that ******* ****** *********'* related ****** ********* ********, including *** ****** ******** liability **** ****** **** the ********** ** *** legacy ************** ******* ********... Given **** ***** ** no ***** ********* ****** and *** **** **** the ******* ** ** the **** *** *** next ** *****, ***** that ***** ** ******* visibility ********* *** ********* future **** ******, ****** it **** **** ********* to ********* ** ***** intrinsic *****. ***** *** maximum ********* **** *** company *** *** ** any ***** **** ** $140 *******, ** ** unclear ** **** *** magnitude ** ***** ******** will **.

**** ******** **** ***** $1.2 ******* **** *** risk **** ******** ******** could **** ** * recession:

********, ***** **** *** company ******* **** ** will ***** **** * limited ****** ** **** and *** ***** *** $1.2 ******* ******* ** loans ** **** *** financing *****, ** ***** that **** ******* ******** is *********. ** * prospective ********, *** ****** that ******* ************ ***** face ****** *********** ** over $*** ******* **** its ****** *********** *** interest ******** ******** ***** me ******* **** *** company ***** **** ** face ******* ******* ** there ** **** * sharp ******** ********. **** risk ******* ************ ********* when *** ******* **** the ******** ******** **** the ******* ****** **** is ******* *************.

Challenges ** ***** ******

***** ****** ***** ** magnify **** *** *** cycles *** *********, ********* to **** ******* **** Honovich:

***** ******* ** * small **** ** * publicly ****** ******* (** Resideo ********** ***) *** the ********* ** ******** information ***** * *******’* performance *** ********. **** things *** ***** ****, employees *** ***** *** brag ***, *** **** side ** **** **** do ***, ******** *** find ***. ********, *.*., lived ******* **** ***** of ****. ******* ** very ******* ****** *** good *** *** ** this.

******,*********'* *** **** ******* * ****** **** picked ***** ******** ** Canon **** ***** ******, noting:

[*****] ******, *** ********** would ** ****** ************, and **’* ********** ** under ******** ** ***********. To ** ******* ******, it ****’* ********* * was ******* ******* **.

******* ** *** ******* is ******* ******* ** this, **** *** ****. And *** **** **** is **** **** **** low ***** *****, **** do **** *** ********* to ****.

Poll / ****

Comments (17)

John Honovich

IPVM | 10/31/18 02:06pm

***, **** ****.

***, ***, **'* **** ***** *****, *** ***** $**:

Undisclosed #1

In reply to John Honovich | 10/31/18 02:57pm

$**, ** * *** * ***** ** ***********, ** * share ** *******? ***** ****. *'** ******** **** *** * few ***** ***** **** ** *****, ****** ** ***** * better ***, ********* ** **** *** **** **** *** ** the ***** **** **** ****.

Avatar

Dan Gelinas

IPVM | In reply to John Honovich | 10/31/18 03:39pm

****** ****. * ****. **'* **** ** * *****. ** will ** *********** ** *** ** **** *** ******** ****************** ******** *********** ** *** ************ *****.

John Honovich

IPVM | 10/31/18 02:11pm

***** *** *** *** ***** *** ***** ** *** ** their ***** *****...

Avatar

John Bazyk

IPVMU Certified | In reply to John Honovich | 10/31/18 02:49pm

**** ******* ***. ****’* *** *** ***** ***** ***** ****. 😂😂

Avatar

Ross Vander Klok

IPVMU Certified | In reply to John Honovich | 10/31/18 06:00pm

**** ** **** *****!!! *****, *** *****.

Undisclosed #2

10/31/18 06:18pm

*******'* ******** **** * **** **** ** ***** **** ** Connected ****. ** **** ********* ***** *** **** *******, ********** is ******** ****** ***********. *** ** ************* ** *** ********** space **** ***** ****? *** **** ** *** ******** ****, the *************' ** ********** ******* *** *** ** ****** *** "love" *** ** ***. *** *** ****'* **** *** ** miss **** **** **** **** ******* ** ** * ****. ADI **** ******** ***** ** ****** ** * ********** ** other *************' ** *******, ********, ***. ***'* ********* *** ** other ************? * **** ***** ********** ** ** ****** ** ADI. * **** ********* ***'* *** **** *********** *** **** has ** ** ********* ** **** *****. ** ** *** growing ** ***** ***** **** ** ***** ** *** **** sales ** *****, ******, ***. ** ***** *** * ******** Confidence ***** ** *************' ********** ***** *** ***, **** ***** it **** ****?

Undisclosed Manufacturer #3

11/01/18 01:52pm

* ******* **** ************* ** *** ******** ******, ** **** is **** ***** *** *** "**** ** *****" ****. ******* will **** *** *** ** *****-********** ********* *** * **** time.

* *** *** **** **** ********** ** ******* ****** *****, with ****** ********, ******** *********, *** *** ******* ** **** to * ******* ****** ** *****-**** ******* ** * ****, completely ****** ***** ***** ** *** *********** ****.

**********: *** ****** **** ** **** *** ** * ****.

Undisclosed Integrator #4

11/01/18 08:06am

*** **** *** **** ** * ********. ***** *** **'* ADI *** *********. *** **** ******* * ***** *** ** worse **** ***** *** ** *******.

Avatar

Dan Gelinas

IPVM | 11/01/18 07:16pm

**** ****** ** ******** ** *** ***** ***** ** **** as **** ** ********:

** ******* ** ************.****** **** *********** ****** ** *** ***** *** ******* ****** *** ** ********* ** ** ***, ******** **** *** drop *** ** ********** *** *******. *****, **** ***** ********* are ***** ******** ** ****:

****-**** *** *********** ** ********* (*** **** **** ** ** IPO) *** ** ***** ** **** ****** ********* ********* *** new *******. *********, ** ** *** ******** ***** *** ***** and ** ** ** *** ******** ** ************* *********. *******, the ****-*** ** ******* **** ******* **** *** ****** *******, and **********, ************* ********* *** ********** **** ****** ****** ** the ****-***. *** ** *******. ** * ***** *** ****** fund ******* **** * ***** *** ******* ***** *********** * small *** ****-***, **** ****** **** *******’* ********** ******* ******** the ******* **** ******* *** ****-***. *** ***** *******, **** investors **** ***** ****** ** *** ****-*** ********** ** ***** or ********** *****.

******, **** ********** ******* * *** ******** ***** *****:

*** ********** **** ** *** *** ****-*** *** **** ****** incentive ** ******* *** ******* *********. ** ****, *** ********** team ** ************ ** *** ******* *** *****. ***? ******* management ***** ******* *** ******* ****** ***** ** *** ***** couple ***** ** *******. *** ***** *** ***** ****** *********, the ******* ***** ********* *** ******* ****.

John Honovich

IPVM | 11/30/18 01:15pm

******* ***** ***** ****, * ***** *****, *** ******* * bump ** *** ***** **** ** ********, ***** ** ***** $21:

John Honovich

IPVM | 12/12/18 02:15pm

******* **** *% ******* *** ***** *** ********* *****, ***** for ******* ****** ******* ** $** *******, *** *** *****, CFO, ** ******** ******* ******** **********.

Undisclosed #1

In reply to John Honovich | 12/12/18 02:53pm

******* ** ***** $***??? ($*** ** *% ** $***).

Avatar

Dan Gelinas

IPVM | In reply to Undisclosed #1 | 12/12/18 03:05pm

*** *********** #*, **** ********* ** **** ** ********** ** our ********* ** *** ******** *****:

*********

*** *******'* ****** ********* ** *** ~$*.* ******* *** (*** million ****** * ~$** *** *****) ******** ** ******* ** ~$4.5 *******. ** ** *** ******** ** *****.

***** **** ************ / **** *********** ******* ***** ********* *** even **** ****, ** ** *** ***.

************ **** ** *** ************* ***** ********** ******** ** ***** sales ***** ***** ********** ******** ***** ****** ******** ** ***** than *************. *** *******, ******* **** ****** ~$ * ******* in ******* *** **** *** * ****** ****** ************** ** ~$2 *******. ** * ******* *****, *** *** **** ** Resideo's ******** ***** ***** ** ~$*** *******.

*** ********* **** **** ** *** ******** ** ************* **** profitable **** *** *** ****, **** ****** ***** *** ******** less *******. *************, **** **** ****** ****** ***** **** ********* Homes **** ** ***** ** ** ******* ** ******.

********, **** ***** ************** *** ******* ** * $*.* ******* valuation.

Undisclosed #1

In reply to Dan Gelinas | 12/12/18 03:16pm

*****, *** ****'** ****** *** *% ** *******, *** *********. I *** ******** *** ********* *** * ****** *** ** future-looking ****/***** ** **, *** **** **** ****'** ********* ****** at **. ***** * *******'* ** *** *********, *** ****** considered.

John Honovich

IPVM | 03/07/19 11:09pm

******* ************** ** ********** *** *** ***** **** **%:

Undisclosed Manufacturer #5

03/07/19 03:55pm

***** * ******* *****? ***** **** ****!

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