Alcoa’s (AA) decision to split into two public companies was the right move, according to Jim Cramer, portfolio manager of Action Alerts Plus charitable trust portfolio. One of the companies will include Alcoa’s commodity business, and will keep the Alcoa name. The other business will be known as the value-add company, and will include its engineered products that are used in the aerospace and automotive industries. Cramer said the newer business is similar to Precision Castparts (PCP), which Warren Buffett recently acquired. Cramer said he prefers the value-add business, but notes that both pieces of Alcoa have good cash flow. He said that might not be reflected in Alcoa’s stock price, simply because we are in a bear market.
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