Spin-offs are well-known as one of the situations where value can easily be found. Spin-offs offer value because they are usually underappreciated by the market. Large funds which own a stake in the parent may find themselves having to sell off the smaller spin-co as it breaches investment rules. What’s more, during the first few quarters of the spin-cos life, fundamentals tend to be difficult to understand, and the likely of a mispricing is, therefore, greater.
Value investors have long known that investing in spin-offs can generate excess returns and now there’s solid evidence to prove...
Login required to continue reading.
Setup a free account to get access to this article (no credit card required).
View Full ArticleAlready a member? Log in here
