The Case of the Toxic Waste

Inspector Hale opens chapter three of You Can Be a Stock Market Genius, by Joel Greenblatt: Marriott split in 1992 and Host Marriott got the hotels and the debt. The Ledger: debt to the spinoff, each dollar adds one to the parent; five dollars of stock on twenty-five of debt, and a 15% rise in assets doubles it. Wren: so nobody wants it. Nightjar: its architect took the helm, insiders got nearly 20%, and it nearly tripled in four months. Wren: read the file before the crowd sells.

The strongest case in You Can Be a Stock Market Genius is chapter three's Host Marriott: when Marriott announced in October 1992 that it would split, the hotels and essentially all the debt went to Host Marriott while Marriott International took the management contracts, because every dollar of debt moved to a spinoff adds a dollar to the parent; analysts expected Host to trade at $3 to $5 a share with $20 to $25 of debt, so a 15 percent rise in its assets could nearly double the stock, nobody wanted it, yet the plan's architect Stephen Bollenbach took the job of running it and nearly 20 percent of its stock went to management and employee incentives, and the 'toxic waste' nearly tripled within four months of the spinoff.

On the book: You Can Be a Stock Market Genius by Joel Greenblatt

Starring

Inspector HaleWrenThe LedgerNightjar