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It's been 14 months since my Special Situations portfolio bought shares of consumer products and services marketer United Online (UNKNOWN: UNTD.DL ) , and shares have gone up more than 70% in that time as the company pursued a spinoff of its FTD unit. It's been a nice run, but I think it's time to move on.
United Online was something of a contrarian pick. The reputation of its rapidly fading dial-up business overshadowed the more robust FTD segment. But the decision to spin off the unit, which it acquired in 2008, made obvious the value there. And with the pre-spinoff United Online's enterprise value priced at much less than what the company purchased FTD for, I thought there was little downside here.
In my original article, I valued the two parts of the business separately. Today's price -- just on the final cusp of the spinoff -- falls between my middle valuation (up 50%) and my upper valuation (up 80%).
With the stand-alone United Online fading fast, I'm content to move on and sell stakes in both businesses. The parent may yet contain value as it looks to monetize its patent portfolio and perhaps other assets, but that was not the original thesis here. I like the FTD segment better, but growth has been moribund in recent years.
I have other excellent ideas for cash in my Special Situations portfolio. So I'm taking my 66% gains and moving on. In the next few days I'll add another stock to the portfolio. If you want to know which one, join me on my discussion board and follow me on Twitter.
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