Companies That Show a Good Fight Despite Cliff Scare

Josef Ray is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

I don’t own shares in Harbinger Group (NYSE: HRG) but if I did and got news that shares dropped more than 25%, which happened in the Dec 13 trading session, then my reaction would definitely be one of agitation and concern for my money. Concerns such as the sustainability of the business in spite of crisis, anxiety, and other emotional factors may make you pessimistic whether to stay your position with Harbinger’s effort or not.

This has been put into question due to the events that happened in December 13 when shares went almost flat. Activity on the side of Harbinger’s stocks was low due to announcements that may have worried investors. Some were having doubts about the strategy of certain shareholders that have sold over 20% of the overall shares of the company, comprising 20% of everything Harbinger has, even though analysts are on the positive. While many are feeling the air of concern with such events, majority of their capitalists have remained firm as Harbinger Capital Partners Master Fund holds most of its stake in the company.

Harbinger Group is a diversified holding company whose principal operations are carried out through subsidiaries. They offer life insurance, annuity goods, and branded consumer wares such as batteries, small household appliances, personal care, pet supplies, home and garden pest control products. With such a wide industry scope, including secured notes of over $700 million in its hands being used for acquisitions and subsidiary support, many can say that it performs well despite of the Fiscal Cliff.

Energizer Holdings (NYSE: ENR), one of the world’s largest manufacturers of primary batteries and flashlights and a leader in the business of providing portable power with almost the same operations as HGI, is among the top ten gainers in this day’s after-hours trading, at $84.42 up 5.3%, an indication of the health and viability of diversified operations such as theirs and Harbinger’s. Just as it mentioned that “it keeps going, and going, and going…” Energizer is expected to experience its development and growth at the beginning of the 1st quarter of 2013, whose EPS is projected to increase an additional 10% in the next coming years.

Spectrum Brands (NYSE: SPB), in the same league with the first two holdings and a member of the Russell 2000 index dropped share price, down -3.91%, which is not unusual really in the stock market where share price can change any minute. It has even been reported that there are Senior Notes due 2020 and 2022, duly owned and announced, at values of $520 million combined principal amount of 6.375% and $570 million amassed principal amount of 6.625%, when Spectrum Brands mentioned of the acquisition of Hardware & Home Improvement Group of Stanley Black & Decker, Inc. For comparative analysis, Harbinger’s EPS is 0.15 with P/E 50.94; Energizer has EPS 6.22 and P/E 12.87; and Spectrum Brands has EPS 0.92 and P/E 48.17.

The financial market is quite apprehensive these days and the fiscal cliff will continue to shape its behavior not just for Harbinger but also for other holding companies like them until a resolution can be reached to avoid the economy going over the cliff. Investors have varied reactions among themselves. It is not surprising for the stock market to be in the slump on one hour and get back up the next. The roller coaster effect sometimes continues either until it pans out, goes northerly, or stops completely. Seasoned investors comment often that, “smart investing is about long-term business, not short-term politics.” It’s crucial for investors to be level-headed in looking at the long-term view with the companies they’re investing in.

During times of monetary depression, many clever investors have made money by buying their favorite companies at low prices. Others who have protected themselves by liquidating their stocks sometimes regret their decision when the stocks they sold went on a bigger rebound. Smart investing really is about taking some risks. Indeed, value investors understand that expected revenues always come with some possibility.

The same as most investors, I am positive that the fiscal cliff will be avoided and Congress can, despite the threats, the deadlocks, and the bickering that accompany their deliberations, be counted on to do the right thing, hopefully.


JosefRayDagatan has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Energizer Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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