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Spin-Off Mania Benefits Alert Investors

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The major difference between an IPO and a spin-off is that one gets major media 'spin', while the other can be vastly ignored. The lack of a major financial transaction-- and hence, fees-- tends to reduce the push by investment houses. Just by viewing articles posted on this very website one can quickly derive that the general public has less interests in spin-offs versus IPOs, to their own detriment. This provides a major advantage to alert investors. Outside the major spin-offs, like the upcoming ones at Kraft (KFT) and ConnocoPhillips (COP), the others fall under the radar by the investing community.

Historically, spin-offs have provided solid returns for savvy investors. This is partly due to investors ignoring or not understanding the new security, but also because spin-offs allow both the parent and the spun off company to thrive, with each management team free to focus on its direct business.

A few interesting spin-offs took place around year-end to little or no fanfare.

TripAdvisor (TRIP) from Expedia (EXPE) - See presentation
WPX Energy (WPX) from Williams Energy (WMB) - See presentation
Orchard Supply Hardware (OSH) from Sears Holdings (SHLD) - see presentation


Read the full article at Seeking Alpha.


Disclosure: No positions mentioned. Please review the disclaimer page for more details.




Comments

Anonymous said…
nice
February 20, 2012 at 3:03 AM
Jane Seacrest said…
Thanks for differentiating an IPO and a Spin-off. As a beginner in option trading, this post help me out in understanding how the stock market behaves.
February 20, 2012 at 3:04 AM
Stanley said…
Starters are always advised to learn various stock market terms and options trading tips to have better chances of succeeding.
November 26, 2012 at 8:18 PM
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