Vectrus (VEC) was just spun off from Exelis (XLS) recently and subsequently sold off - now selling below $20.
Vectrus contains the slower growth, lower margin portion of Exelis' business - primarily service type operations. I've invested in XLS in the past so the spinoff intrigued me.
Long story short, I think Vectrus will provide a decent return over the next 1-3 years. The compensation seems to help align interest, with the CEO receiving a bulk of his salary based on meeting goals over the next several years, and I believe he also received some stock options as an initial founder's grant. Vectrus has a mostly variable cost structure, and should be able to produce FCF consistently. With the spinoff, they should now be able to pursue further growth opportunities as new markets become available in addition to their decent backlog.
We have opened a small position and may add to it should the price continue to drop.
Happy Investing,
Ben
Disclaimer: This post should not be construed as investment advice. These are MY thoughts on the company, and you should conduct your own due diligence before investing.
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