Broadridge: a model spinoff

Article Excerpt

Broadridge began trading on April 2, 2007, after former parent Automatic Data Processing Inc. (ADP) distributed its shares to its own stockholders as a special dividend, or “spinoff.” Like many spinoffs, Broadridge struggled at first. That’s partly because many ADP shareholders quickly sold their new shares. As well, institutional investors often ignore companies with smaller market caps (or the total value of shares outstanding). Broadridge later went into a deep slump over fears of big losses at its securities-clearing division during the 2008 credit crisis. However, as we’ve often pointed out, most spinoffs go on to produce above-average results over a period of years. Broadridge has rebounded strongly, partly because it decided to focus on helping companies communicate with their shareholders, which is less risky than securities clearing. Plus, it is using its improving earnings to buy other related firms and assets that will pay off for years to come. BROADRIDGE FINANCIAL SOLUTIONS INC. $22 (New York symbol BR; Aggressive Growth Portfolio, Finance…