Imation: Option-Like Payoff With Downside Protection

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Imation: An Option-Like Payoff With Downside Protection
Current Price: $11.16

Imation is a distressed manufacturer of storage media that sells at a sufficiently depressed value to provide investors with an option-like payoff. The core business is low-margin and slowly contracting, which has contributed to the company’s financial woes and a 75% collapse in its stock price since 2007. This price decline, combined with its immense financial stability, creates the option-like effect. It is unlikely to trade below liquidation value but possesses the financial tools to effect a modest turnaround.