Why Visteon Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of automotive supplier Visteon (NYSE: VC  ) climbed as much as 11% today after the company announced that chairman and CEO Don Stebbins had resigned, and two new directors had come on to the board. Director Tim Leuliette has replaced Stebbins as interim chairman and CEO.

So what: This kind of response to a leader stepping down is generally a sign of a company in distress, and Visteon is no different. The stock had fallen 50% since its IPO less than two years ago, and investors have been hankering for a breakup in the company that could unlock value in its investments in two Asian auto suppliers. Previous instability in the board has indicated a debate over the strategic direction of the company.

Now what: Investing on speculation of a breakup is always risky, but it can pay off. Visteon's CFO had been ousted last October, and rumors of splitting up the company have been swirling ever since. Management has insisted that its four business segments are closely intertwined, making a breakup unfeasible, but some analysts estimate the value of its investments in Halla Climate Control and Yanfeng Visteon Automotive Trim Systems to be between $3 billion and $4 billion. Meanwhile, the entire market cap of Visteon is just $2.25 billion.

Want to get updates on the potential breakup at Visteon? Just add Visteon to your Watchlist.

Fool contributor Jeremy Bowman holds no positions in the companies above. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1982761, ~/Articles/ArticleHandler.aspx, 10/21/2016 1:19:04 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,113.31 -49.04 -0.27%
S&P 500 2,137.58 -3.76 -0.18%
NASD 5,251.36 9.53 0.18%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 1:02 PM
VC $67.59 Up +0.07 +0.10%
Visteon CAPS Rating: ***