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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These two recent spinoffs should pay off for investors over the next few years. However, the increasing likelihood of an economic slowdown this year will depressed their share prices in the short term.
LITHIUM AMERICAS CORP. $28 is a hold, but only for highly aggressive investors. The company (Toronto symbol LAC; Resources sector; 151.1 million; Market cap: $4.2 billion; No dividend paid; Takeover Target Rating: Medium; www.lithiumamericas.com) plans to split its operations into two separate, publicly traded firms....
LITHIUM AMERICAS CORP. $28 is a hold, but only for highly aggressive investors. The company (Toronto symbol LAC; Resources sector; 151.1 million; Market cap: $4.2 billion; No dividend paid; Takeover Target Rating: Medium; www.lithiumamericas.com) plans to split its operations into two separate, publicly traded firms....
Mining firm Teck Resources recently announced that it will spin off its metallurgical coal (used for making steel) operations. It also recently sold its stake in an oil sands project.
These moves are part of its plan to focus on “low carbon metals,” particularly copper and zinc....
These moves are part of its plan to focus on “low carbon metals,” particularly copper and zinc....
TECK RESOURCES LTD., $52.81, Toronto symbol TECK.B, remains a buy for investors seeking long-term gains from the Resources sector of their portfolio.
The company now plans to spin off its metallurgical coal (a key ingredient in steelmaking) operations as a separate, publicly-traded company called Elk Valley Resources Ltd....
The company now plans to spin off its metallurgical coal (a key ingredient in steelmaking) operations as a separate, publicly-traded company called Elk Valley Resources Ltd....
Investing in the best Canadian stocks to buy right now will lead you towards dividend-paying blue chips, bank stocks, and more
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....
Investing part of your portfolio in aggressive investments can pay off. But buying aggressive short-term investments can put a big dent in your stock-market returns