Why Blyth's Shares Got Crushed

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 home fragrance direct seller Blyth (NYSE: BTH  ) were stinking it up today, falling as much as 23% in intraday trading after its ViSalus subsidiary announced the withdrawal of its initial public offering.

So what: The plan had been for ViSalus to sell up to $175 million of stock in an IPO and Blyth, which owns 73% of ViSalus, would turn around and pay its shareholders a nice special dividend. Now, if that's still going to happen, it's going to happen at some unknown time in the future. Citing "uncertain market conditions," ViSalus pulled the IPO today.

Now what: Investors may have reason to be upset simply because they're not going to get that special dividend -- the August announcement of that payout caused Blyth's stock to climb 17%.

But I can't help wondering whether there's more to be concerned about here. It's true that this isn't an ideal time for IPOs. However, not only are IPOs getting done, but some -- like Kayak (Nasdaq: KYAK  ) and, more recently, Trulia (Nasdaq: TRLA  ) -- are even getting priced above the expected offering range. The worry, then, is that despite ViSalus' 450% first-half 2012 revenue growth, institutional investors don't see the company worth as much as Blyth and ViSalus insiders do.

To be sure, it's tough to keep a good company down, and if ViSalus keeps growing like that, it'll become very difficult for the IPO market to pooh-pooh it. However, current Blyth investors may want to revisit their assumptions about how much ViSalus is worth.

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Fool contributor Matt Koppenheffer has no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.

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  • Report this Comment On September 26, 2012, at 10:23 PM, philsie1 wrote:

    Vacuous and lacking in depth, typical MF of late. Why even bother?

    The special div is only to pre-ipo holders, ie Blyth but not holders of BTH, and to senior Visalus folks.

    Plus, BTH owes $270mil or greater in performance payments to Vi by April of next year.

    The CC today was the biggest load of crap ever in s CC. Did you at least listen to that before cranking out this article?

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