{ "docId": "019dd923-622c-750b-8b99-c8318190e1be", "docSlug": "c1709c763a52", "documentTitle": "Resideo Technologies, Inc. (REZI)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Capital Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2026-01-27 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 13, "pageCount": 93, "prevPage": 12, "nextPage": 14, "slideType": "executive_summary", "function": "summarize", "density": "overcrowded", "nDataPoints": 12, "notes": "The slide uses a 'red flag' icon to denote the primary thesis point.", "elementsJson": [ "headline_text", "paragraph" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-c8318190e1be/13", "deckHref": "/decks/019dd923-622c-750b-8b99-c8318190e1be", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-c8318190e1be.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-c8318190e1be#slide-13", "components": [ { "bbox": { "h": 0.18, "w": 0.9, "x": 0.07, "y": 0.77 }, "kind": "callout", "text": "Always follow the money: We observe that total insider ownership peaked in 2023 and has been declining. If management is to sell investors on its vision that splitting up the Company has value, then we would prefer to see their ownership increase with more stock compensation or open market purchases. We are troubled to see that ADI President Aarnes sold a large block of stock under a 10b5-1 program on the exact day that REZI’s separation announcement was made on July 30, 2025. Moreover, we are concerned by the recent practice of issuing deferred share units to Board members. In our view, this could signal director dissent, retention, or cash flow issues.", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ac2741d6-64c7-45de-8663-87a9e3302234", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "Always follow the money: We observe that total insider ownership peaked in 2023 and has been declining.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-2b62-723f-b672-be8c747177b5", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "downside risk: 25% - 50%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-2b62-723f-b672-c0640b2ab233", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.9, "x": 0.07, "y": 0.65 }, "kind": "paragraph", "text": "LTM leverage has also risen dangerously from 5.5x (up from 3.3x in 2018) with significant financial uncertainties ahead. We see few catalysts left to propel its share price higher after the split-up and Honeywell settlement announcements. Based on our sum-of-the-parts analysis, we believe the share price to be materially overvalued and see 25% – 50% downside risk. We expect shares to underperform the market and its related industries.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3993b38d-4333-41ae-845a-ff335317aeb4", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.9, "x": 0.07, "y": 0.37 }, "kind": "paragraph", "text": "Based on our sum-of-the-parts analysis which compares the profile of the ADI business and P&S segments vs. comparable companies, we believe it has both lower projected revenue growth and gross margins. For these reasons, along with our belief that REZI remains an operationally complex company with a track record of disappointment by current management, we value it at a discount to peer multiples. We also factor in $75 – $100m of separation costs. Of note, at least $80m of costs were incurred upon the initial spin-off of REZI from Honeywell in 2018.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "502ad404-7e76-4889-adba-763be5db5712", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.9, "x": 0.07, "y": 0.23 }, "kind": "paragraph", "text": "REZI is an underfollowed “special situation” now being promoted by only two analysts who estimate its average price target to be $45 (25% upside). We deconstruct the promotional case and believe it is easy to refute given the obvious failures by management and the significant financial uncertainties that remain including: 1) Changing end market dynamics and weakening growth opportunities 2) Transparency in ongoing ERP costs, and 3) The structure of the new entity and costs to execute.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d28ac7f5-3532-446c-ab3a-8609076a2d85", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.9, "x": 0.07, "y": 0.51 }, "kind": "paragraph", "text": "REZI currently trades at 1.3x 2026E revenue (double the median long-term multiple of 0.6x) based on our adjustments which considers: 1) The $500m convertible preferred stock as in-the-money equity, and 2) Incorporates environmental, pension and other tax liabilities of $215m. We believe 1.3x revenue is a rich multiple given that REZI is mostly a low-growth hardware manufacturer and distributor that fails to even disclose its true software spend.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f0ebbc1a-4716-4a9b-a9e8-27d059bd965d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.9, "x": 0.07, "y": 0.16 }, "kind": "title", "text": "REZI trades at a substantial premium to its sum-of-parts and has few, if any, catalysts remaining after the split-up announcement and removal of the Honeywell obligation:", "attrs": null, "subkind": "action-title", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2cdf9da1-96b5-49e2-9760-392e6b87a865", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.65, "x": 0.31, "y": 0.05 }, "kind": "title", "text": "We Are Short Resideo Technologies (NYSE: REZI) And See Potential 25% - 50% Downside Risk", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "92e6128b-059d-4083-88d2-ca00d69f6ac1", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "executive_summary", "slug": null, "matchId": "979ad257-3e35-4501-8b87-ae1692a6f7b8", "evidence": "Slide provides a high-level summary of the investment thesis.", "confidence": 1 } ], "arcBeats": [ { "to": 80, "from": 9, "beatId": "7202e722-c846-45f1-ac2f-eccd25950f31", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Agitate", "beatSlug": "problem-agitate-solution-agitate-make-it-worse", "evidence": "The deck agitates the problems, highlighting various contradictions, concerns, and red flags.", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }