Good morning my dear readers,

Seems like a beautiful weekend is upon us.

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Today we talk about a company called Tenneco which went through multiple demergers from the late 1980s.

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Tenneco was a conglomerate involved in a range of industries, including natural gas pipelines, shipbuilding, automotive parts, packaging, and chemicals.

And as most often the case with holding companies and large conglomerates, the Tenneco stock was significantly undervalued because its many diverse operations made it difficult for investors to accurately value the company.

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Then entered Joel Greenblatt as he recognized the hidden value in Tenneco.

(Its important to note that he entered Tenneco before the spin offs began).

Over the next several years, Tenneco divested several of its businesses and paid out the proceeds to shareholders.

This was essentially a slow liquidation of the company, which allowed investors like Greenblatt to realize the true value of the company's various parts.

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From what I could count, Tenneco ended up spinning off atleast 7 entites.

Of these, the spin-off of Case Corporation, a manufacturer of agricultural and construction equipment, is particularly notable.

After its spin-off, Case Corporation merged with New Holland N.V. to form CNH Global, a leading global manufacturer of agricultural and construction equipment.

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Conclusion:

Joel Greenblatt successful realized the hidden value in Tenneco's Conglomerate structure and realized that the combined entity traded at a discount to fair value.

It is often regarded as one of Greenblatt's most successful investments.

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Friends, I am finding that we have covered a lot of topics and its now time to make our newsletter an 'once a week' affair.

So from now, you will receive the newsletter every Friday mornings only 🥲.

See you next Friday..stay safe.

My Best,

Neil Bahal

Founder

Negen Capital