Janus' Top 3 Contrarian Picks - Dover (NYSE:DOV), Knowles (NYSE:KN)

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Spin-offs are generally regarded as a measure for big corporations to unlock value for shareholders. However, most people overlook the value in the spun-off entity itself and the advantages of investing in a leaner, more focussed company.

Dan Kozlowski, CFA and portfolio manager of Janus Contrarian Fund, was recently on CNBC to discuss the spin-off investment theme and share his three contrarian picks in this theme. His top choices include:

Motorola Solutions Inc (NYSE: MSI)
Knowles Corp (NYSE: KN)
Synchrony Financial (NYSE: SYF)

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'Spin-Offs Are Interesting'

“We focus on change factor investing and one of those change factors are spin-offs,” Kozlowoski said.“Spin-offs are interesting regardless of the macroeconomic environment, because the management teams can set their incentives to be more aligned with the shareholders of their core business as well as control the cash-flow allocation.”

Motorola Solutions (NYSE: MSI)

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“Motorola Solutions is a gem of a business,” Kozlowoski said.“It basically produces the government public safety infrastructure for two-way radios. So, if you are pulled over for a speeding ticket in Norway or Nebraska, odds are that Motorola Solutions equipment is in the police car.”“But what’s so interesting about Motorola Solutions, a spin-off a few years ago, is that it sold another subsidiary at the end of last year, generated a lot of cash and is now shrinking the share count aggressively.”>

Knowles Corp (NYSE: KN)

“Knowles is interesting; it spun out of Dover Corporation. Dover is a classic industrial company that had effectively, from most likely a venture capital perspective or private equity perspective, incubated Knowles Corp in its portfolio and spun it out last year.”“Knowles is the dominant player in the mems microphone market [...] it’s a content story, because in the last couple of years we have moved from one microphone to three microphones per device.”

Synchrony Financial (NYSE: SYF)

“Funding costs are low and credit strong. The company generates an ROA of 3.5p [...] That’s pretty exceptional within financials,” Kozlowski said.