spinoffs

BROADRIDGE FINANCIAL SOLUTIONS $22.57 (New York symbol BR: SI Rating: Extra risk) (201-714 3000; www.broadridge.com; Shares outstanding: 139.4 million; Market cap: $3.1 million) specializes in three areas of service to the investment industry: investor communications; securities processing; and transaction clearing, trade settlements and other back office operations. Clients include 250 banks, 500 mutual fund families and 5,000 publicly listed companies. Broadridge began trading on April 2, 2007 after it was distributed as a dividend or spinoff to shareholders of New York-listed ADP. Broadridge has built its business over 40 years as a subsidiary of accounting industry leader ADP. As well, spinoffs often beat the average for several years after investors receive them from the parent. The company distributes over one billion investor communications each year, including investor account statements, trade confirmations and tax statements. Components of its securities processing services are used by seven of the top 10 U.S. broker-dealers. Broadridge mails and processes over 70% of all proxy votes. Its fixed income business processes trades with a settlement value of $2 trillion a day....

BROADRIDGE FINANCIAL SOLUTIONS $20.68 (New York symbol BR: SI Rating: Extra risk) (201-714-3000; www.broadridge.com; Shares outstanding: 138.7 million; Market cap: $2.9 million) specializes in three areas of service to the investment industry: investor communications; securities processing; and transaction clearing, trade settlements and other back office operations. Clients include 250 banks, 500 mutual fund families and 5,000 publicly listed companies. Broadridge began trading on April 2, 2007 after it was distributed as a dividend or spinoff to shareholders of New York-listed ADP. Broadridge has built its business over 40 years as a subsidiary of accounting industry leader ADP. As well, spinoffs often beat the average for several years after investors receive them from the parent. The company distributes over one billion investor communications each year, including investor account statements, trade confirmations and tax statements. Components of its securities processing services are used by seven of the top 10 U.S. broker-dealers. Broadbridge mails and processes over 70% of all proxy votes. Its fixed income business processes trades with a settlement value of $2 trillion a day....

WYNDHAM WORLDWIDE $34.57 (New York symbol WYN; SI Rating: Extra risk) (973-753-6000; www.wyndhamworldwide.com; Shares outstanding: 188.2 million; Market cap: $6.2 billion) is one of the world’s largest hospitality companies. Wyndham was a subsidiary of conglomerate Cendant Corp., before Cendant distributed its 100% holding in Wyndham to its shareholders in July, 2006. The shares then began trading on the New York exchange. Spinoffs usually do better than comparable stocks for years after a spinoff. That’s what we expect in this case. Wyndham provides services in three areas: 1) Wyndham’s RCI Global Vacation Network has 3.4 million members who have exchange access to 60,000 non-hotel vacation properties (cottages, villas, houses and apartments) in 100 countries. RCI is the world’s largest vacation exchange network and among the largest global marketers of vacation rental properties. RCI has 50 worldwide offices. Its vacation rental business has a roster of 35,000 property owners in 22 countries. RCI accounts for 54% of Wyndham’s revenues. 2) Wyndham Vacation Ownership develops and sells timeshares, and also provides consumer financing and property management services to owners. Its 150 timeshare resorts serve 800,000 owners in North America, the Caribbean and the South Pacific. Wyndham is the world’s largest timeshare developer and manager. This division accounts for 29% of revenues....

WINDSTREAM CORP. $15 (New York symbol WIN; Income Portfolio, Utilities sector; Shares outstanding: 476.8 million; Market cap: $7.2 billion; WSSF Rating: Average) provides traditional telephone services to over 3 million customers, mainly in rural areas across 16 states. It also offers Internet access and business communication services. The company took its present form in July 2006, when Alltel Corp. merged its telephone operations with Valor Communications Group Inc. Alltel investors received a tax-deferred dividend of 1.0339267 shares of Windstream for each Alltel share held. The spin-off let Alltel focus on its wireless operations....

Many studies show that one of the best ways for a company to unlock hidden value is to spin off a subsidiary as a separate company. Shares of the new company sometimes fall in the first few months, as many investors tend to sell their new stock. But over time, both the parent and the spin-off usually outperform comparable stocks. In the past two years, several of our recommendations have completed spin-offs. All of these new companies have done well. That’s not surprising, since they came from well-managed parent companies with long histories of rising profits. Here are five recent spin-offs. We like all of them, but only three are buys right now....