Our advice on three recent spinoffs

Article Excerpt

Three of our long-time recommendations recently spun off a subsidiary as separate firm. This is a great way to unlock hidden value, as studies have shown that after an initial adjustment period of a few months, spinoffs tend to outperform groups of comparable stocks for several years. Needless to say, things don’t always work out this well. Spinoffs and their parents do sometimes run into unforeseeable woes, which is why we don’t see all of these stocks as buys right now. EBAY INC. $29 (Nasdaq symbol EBAY; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.2 billion; Market cap: $34.8 billion; Priceto- sales ratio: 1.9; No dividends paid; TSINetwork Rating: Above Average; www.ebay.com) launched its online auction site in September 1995 and now has 157 million users worldwide. Sellers pay fees to list and sell their goods through eBay’s websites. In addition to used goods, the company continues to sell more merchandise from retailers, which is helping it compete with Amazon.com….