Finally, Cramer reviewed a recent corporate break-up that he saw as the perfect example of using a split to unlock shareholder value and re-focus the fragmented parts of a company.
In March 2016, Manitowoc, a manufacturer of cranes used in construction projects, spun off its food service equipment business into a separate company called Welbilt.
“This was a textbook example of a company that actually deserved to be broken up. In fact, I recommended they should break themselves up in Get Rich Carefully, my last book,” he said. “There’s no universe where cranes and kitchen equipment belong under the same roof. I mean, no one ever walked into Manitowoc’s sales office and said, ‘You know what? I need some heavy lifting machinery for a new construction project, oh and I’ll also take a Frymaster.'”
Sure enough, since the breakup, Manitowoc’s stock has run 145 percent and Welbilt’s stock has seen a 64 percent gain. Investors who held on to both parts got an 83 percent composite gain, well above the S&P 500’s 34 percent run over the same time period.
“Like I’ve been saying all along, companies have their own unique characteristics and the decisions made by management actually matter,” Cramer said. “With the stroke of a pen, management broke up the old business and gave investors two smaller, much more appealing companies. I say three cheers for Manitowoc. And sometimes, it really is that easy.”