What happened
The stock market was having a pretty strong day on Monday, with the S&P 500 benchmark index up by about 0.6% and most other major indices higher as well. However, asset management firm BrightSphere Investment Group (NYSE:BSIG) was a particular standout. As of 10:45 a.m. EDT, BrightSphere was higher by more than 11% and was trading at a fresh 52-week high.
So what
BrightSphere's move wasn't related to earnings -- those aren't due out until next week. Rather, the company announced the sale of some key assets that will provide an influx of cash.
IMAGE SOURCE: GETTY IMAGES.
Specifically, BrightSphere announced agreements to sell two assets -- its 75.1% ownership stake in investment manager Barrow Hanley for $320 million after taxes and a smaller equity stake in Copper Rock for after-tax proceeds of about $15 million.
Now what
BrightSphere plans to use the proceeds from these asset sales to pay down debt and repurchase shares, which it estimates will result in "double-digit accretion" to 2021 earnings.
In addition to the influx of cash, the divestiture of these assets will result in a more focused business for BrightSphere, which is the most important thing from a long-term perspective. According to the press release announcing the sales, the business will be "much more focused on our diversified quantitative and secondary private market strategies and will have a history of consistently generating positive net flows."
In a nutshell, investors seem to be happy about these asset sales. A narrowing focus on a core competency is almost always applauded by investors, especially when it comes with increased financial flexibility for the company.
