Placing Solventum (SOLV) on a Buy
Solventum (SOLV), a spinoff of 3M’s healthcare business, was mentioned in last week’s CTL podcast. The company engages in the developing, manufacturing, and commercializing of a portfolio of solutions to address critical customer and patient needs, including advanced wound care, I.V. site management, sterilization, temperature management, surgical supplies and dental products.
The stock took a hit shortly after going public in late March, falling 45% over the next couple of months. But now that the IPO-chasers are out of the market, there’s been some evidence lately that deep-pocketed value investors and institutions have stepped in to fill the void. One of them was the billionaire investor Nelson Peltz’s Trian Fund Management, which recently initiated a stake in Solventum, to the tune of 5.4 million shares.
What typically follows is a gradual return to the IPO high, which I think is likely to materialize for Solventum in the coming months. The stock is not without risks, of course, given its relative lack of trading history, but participants who don’t mind it can start a small position around the current level of 66. Accordingly, I’m adding SOLV to the Cabot Turnaround Letter portfolio with a target of 90. BUY
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