Wednesday, December 7, 2011

Imation: Is Change Possible?

Greenbackd had a great post on Imation last week. Imation has been discussed a few times on this site; it was once on the Stock Ideas page, and having undergone some price appreciation it found itself off that page and on the Value In Action page in February of this year. Since then, however, its price has fallen by some 50%, putting it in value territory once again.

The guest author's piece extensively covers what I consider to be the biggest negative of an investment in this company: management's capital allocation. The company generates a ton of cash relative to its share price; the problem is that it blows that cash on acquisitions that haven't and/or aren't working out.

I'm not convinced this situation won't continue, however. But give the article a read and see for yourself if you'd consider an investment in this beaten down stock.

Disclosure: No position

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