spinoffs
A spinoff takes place when a company decides to get rid of a portion of its asset base, possibly because it wants to focus its activities elsewhere, but is unable to sell the assets for a price that it feels reflects their value. Instead, the parent company sets the assets up as a separate company, then hands out shares in that publicly listed firm to its current investors.
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You can see our Spinoff Stock Portfolio for March 2023 here.
Why we like spinoffs so much
We think that spinoffs are the closest thing you can find to a sure thing for two main reasons:
1) The management of a parent company will only hand out shares in a subsidiary to its own investors if it’s all but certain that business, and the parent, will be better off after the spinoff.
2) Spinoffs involve a lot of work and legal fees....
Spinoffs remain a great way for companies to unlock value for investors. That’s why we still like Danaher, which is moving ahead with its third spinoff in seven years. On the other hand, Ammo recently suspended its spinoff plan, which further clouds its already poor outlook.
DANAHER CORP....
DANAHER CORP....
It bears repeating: spinoffs let companies narrow their focus to their core businesses. That pleases investors, as they prefer “pure play” firms that are easier to value.
A good example is cardboard maker WestRock, which spun off its Ingevity chemical business in 2016 to create two pure-play firms....
A good example is cardboard maker WestRock, which spun off its Ingevity chemical business in 2016 to create two pure-play firms....
Conglomerate General Electric is moving ahead with its plan to break itself into three separate companies: Healthcare products (X-ray equipment, MRI and ultrasound scanners); renewable energy and power (turbines and equipment for wind farms); and Aviation equipment (jet engines).
Studies show that spinoffs tend to outperform comparable stocks for several years, and we expect the breakup plan will ultimately pay off for GE investors....
GENERAL ELECTRIC CO., $71.96, New York symbol GE, remains a hold.
The industrial conglomerate has completed the first step in its plan to break itself up into three separate companies.
This week, GE spun off its healthcare business as a new firm called GE HEALTHCARE TECHNOLOGIES INC., $58.95, Nasdaq symbol GEHC....
The industrial conglomerate has completed the first step in its plan to break itself up into three separate companies.
This week, GE spun off its healthcare business as a new firm called GE HEALTHCARE TECHNOLOGIES INC., $58.95, Nasdaq symbol GEHC....
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Swiss pharmaceutical giant Novartis spun off Alcon in 2019. And as we’ve said many times before, spinoffs are the closest thing you can find to a sure thing, regardless of the market’s rise and fall.
The stock is already up over 78% from its March 2020 low, but we think it can go much higher....
The stock is already up over 78% from its March 2020 low, but we think it can go much higher....
When searching for undervalued stocks, look at factors like hidden assets, financial ratios, and growth prospects. Read on to find out more about this process.
This week we present a Spotlight Report on a stock that has already spun off some profitable spinoffs and may do more in the future.
Danaher is a great example of how a company can unlock value for shareholders by “spinning off” businesses....
Danaher is a great example of how a company can unlock value for shareholders by “spinning off” businesses....