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 firms are planning spinoffs to pay down their high debt. However, their remaining businesses will likely still carry heavy debt loads.


DELL TECHNOLOGIES INC. $67 is a hold. The company (Nasdaq symbol DELL; Manufacturing sector; Shares outstanding: 746.7 million; Market cap: $50.0 billion; No dividend paid; Takeover Target Rating: Low; www.delltechnologies.com) is a leading maker of computers, monitors and related equipment for consumers and businesses.


The company is now considering spinning off its 80.1% stake in VMWARE INC....
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We go back a long way with medical-device supplier Baxter International. The stock is up a whopping 674.9% since we recommended it at $16.75 a share (adjusted for two 2-for-1 share splits) in our December 1999 inaugural issue of Wall Street Stock Forecaster....
A spinoff investment will likely be undervalued and it’s almost always a better option than new issues or IPOs

As we often remind readers that spinoffs are a great way for companies to unlock value for investors. A recent spinoff, Trane Technologies, has recovered most of its COVID-19-induced losses and is ready to move even higher. Shares of retailer L Brands have also jumped on plans to spin off its Victoria’s Secret’s chain....
Before you buy an investment that is not yet making money, it’s best to look at it from a “first principals” or “financial physics” standpoint. You can start by asking yourself some simple questions, such as:

“Where’s my profit coming from?”

“What’s special about this investment that makes it capable of profiting from this opportunity?”

“How long will it take for profits to start flowing?”

When you go back and analyze investments that lost money for you, you’ll often find that you failed to ask these questions....
Over the past five years, our Wall Street Stock Forecaster recommendation Conagra Brands has provided an example of how hidden assets can create low-risk opportunities for high investor profits. The company has transformed itself from a lethargic conglomerate with high costs and unfocused brands into a market leader with high profit margins and timely products that appeal to consumers.

We suspect the streamlined Conagra has a high likelihood of prospering even more for its shareholders.

I asked our Successful Investor research department to draw up this Inner Circle Spotlight report on the stock....
Savvy investors who track upcoming spinoffs position themselves to tap some of the market’s best performers
We continue to see attractive investment opportunities for our subscribers in drug stocks—and we’re adding the best of them to your Power Growth Investor. That includes AbbVie Inc.


Meanwhile, over the years, we’ve found that spinoffs are about as close as you can get to a sure thing in investing....
COVID-19 has slowed the announcement of new spinoffs That’s because the new firms could have trouble attracting investors during the current stock market volatility. That, in turn, would hurt their stock prices. However, we expect spinoff activity will pick up as the pandemic eases....