DON’T GET EXCITED ABOUT UNBUNDLINGS
I always caution against shares that get unbundled from listed companies. Examples include Remgro passing Transhex and Implats onto poor shareholders, and more recently HCI unbundling its stake in Montauk. Soon we’ll have Glencore ditching its holding in Lonmin. The recent Montauk results show why HCI didn’t want it and this is nearly always the issue. The company unbundling the shares obviously doesn’t want them and is unable to sell them, so it just passes them on via an unbundling. Sure, we’ve had some better unbundlings – Spar is the only one that really comes to mind, and that was over a decade ago. As a shareholder in any of the companies proposing unbundlings, I will always sell the shares as soon as possible. Of course, the process of selling often isn’t so simple as small shareholders may get a small parcel of shares that is simply not economical to sell when costs are taken into account.