I've been abnormally quiet these days on this blog because of my workload and my travel log getting clogged.
But this week-end I read an article in the WSJ that I think is worth mentioning, if you haven't read it yet.
HAL filed for a $500 mil IPO of its KBR unit, you probably all know that already. But the point of the author was to stress that besides the fact that KBR will likely be a hot IPO, it will free HAL from its diversified image.
Investors have preferred pure plays like Schlumberger in the past because of the complexity of HAL, making it trade at a lower multiple compared to its more focused peers.
Just like an introduction to an index (GOOG in the S&P 500 recently), becoming a pure play draws massive amounts of cash to your stock via the institutionnal investors looking to diversify.
Another point made by the author was that people associate KBR and HAL with military contract, but in reality it amounts to only a slight percentage of the companies income (although a bigger chunk of revenue, which means that a decline in military contract will improve the margins number) therefore the company isn't at the mercy of wars and conflicts, but rather merely uses them to generate some extra income.
That being said, I look for HAL to go past the par level at $100. I'll do some more research on HAL and will post further info when possible