I’ve been lukewarm on Colfax (CFX) for a while now, and I don’t really feel like I’ve missed out on much. The shares have basically kept pace with the broader industrial space since my last write-up, while names I preferred like Eaton (ETN), ITT (ITT), and Parker-Hannifin (PH) have done better, and the longer-term results (annualized returns over the last five and 10 years) are likewise substandard.
Now there’s another twist in the Colfax story, with management deciding to split the company apart. Given the different needs and demands of the two businesses (MedTech will need more R&D and M&A investments, as well as more working capital), it makes sense and there’s definitely positive attributes to both businesses – including a welding business that has been outperforming Lincoln Electric (LECO) recently.
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