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Activist Stocks

Did Joel Greenblatt lie to us about spinoffs?

Spinoffs are quite the rage. But not for the reasons Joel Greenblatt told us about back in ‘97. Rather, we’ve seen a number of implosions in the spinoff universe of late.

@y0ungmoneyblog has an exciting post on 25 spinoffs that blew up [link]

We’re bringing the idea of spinoff blow ups to 2015. As part of the catalyst watchlist, here’s a look at how the major spinoffs [over the last twelve months] have done.

First, Strategas found that the median spinoff has underperformed the S&P 500 by 2.6 percentage points over the last six years. The broad strategy of investing in all spinoffs just doesn’t work anymore.

You know the selling point for spinning a company off, and the thesis for why they underperform in the near-term, so I won’t rehash that here. Instead, let’s assume that Joel had the right idea, here’s some of the worst performing spinoffs of 2015; and more importantly, a few names worth buying. Keys - avoid ridiculous levels of debt, those coming out with “high” valuations, and those spinoffs that are actually fundamentally broken business (read: parent is cutting the cord on its POS segment).

Don't forget - sign up for our free daily newsletter to stay in the activist investing know. More on the catalyst watchlist here.

Notable readings for certain spins:

$CC - Devin Stearns

$JMG - Horizon Kinetics

$CSAL - J. Allen

$SPNE - Marketfolly

$HZN - Activist Stocks

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