Spinoffs

Often, the parent company starts by selling a portion of the new company to the public, to establish a market and a following among investors. That way, by the time of the spin-off, stock in the new company may be liquid enough to be sold relatively easily, or retained with some confidence as a worthwhile investment.

In our experience, and in most academic studies of the subject, this helps the parent and its corporate spinoff. Both generally do better than comparable companies for at least several years after the spinoff takes place.

When a company carries out a spinoff, it sets up one of its subsidiaries or divisions as a separate company, then hands out shares in the new company to its own shareholders. It may hand out the shares as a special dividend, or give its shareholders an opportunity to swap shares of the parent company for the shares of the newly established spinoff.

Study after study has shown that after an initial adjustment period of a few months, stock spinoffs tend to outperform groups of comparable stocks for several years. (For that matter, the parent companies also tend to outperform comparable firms for several years after a spinoff.) The above-average performance of spinoffs makes sense for a couple of reasons.

First, company managers naturally prefer to acquire or expand their assets, not get rid of them. Getting rid of assets reduces a company’s total potential profit. The management of a parent company will only hand out a subsidiary to its own investors if it’s nearly certain that the subsidiary, and the parent, will be better off after the spinoff than before.

Second, spinoffs involve a lot of work and legal fees. Companies only have an incentive to do spinoffs under two sets of favourable conditions: When they feel it isn’t a good time to sell (which often means it’s a good time to buy); or, when they feel the assets they plan to spin off will be worth substantially more in the future, possibly within a few years.

Quite often, a big company will spin off a small subsidiary because it feels the subsidiary is a tiny gem, but that it’s too small to make an impact on the much larger financial statements and market capitalization of the parent.

At TSI Network we’ve had great success with a number of spun off stocks over the years. That’s especially true of the many spinoffs we have recommended that have gone up after they began trading, and have later attracted a takeover bid at a substantial premium over the market price.

Needless to say, things don’t always work out this well. Spinoffs and their parents do sometimes run into unforeseeable woes. But on the whole, in investing, spinoffs are the closest thing you can find to a sure thing.

See how you can make the most of these special investment opportunities by reading our special free report Spinoff Stock Investigator: All You Need to Know about Reaping the Rewards of Spinoffs.

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Spinoffs Library Archives
You Can See Our Spinoff Stock Portfolio For February 2026 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. The parent will only spin off the unwanted subsidiary if it can’t sell the stock for what it feels it’s worth.
AKTIS ONCOLOGY INC. $20 is a hold. The company (Nasdaq symbol AKTS; Manufacturing sector; Shares outstanding: 52.5 million; Market cap: $1.05 billion; No dividends paid; Takeover Target Rating: Medium; www.aktisoncology.com) is a Boston-based biotech firm developing drugs for several forms of cancer, including bladder, breast and colorectal cancers. Its main drug is currently in Phase I clinical trials.


On January 14, 2026, Aktis completed an initial public offering of 20.3 million common shares at $18.00 each.
MINTO APARTMENT REAL ESTATE INVESTMENT TRUST $17 is a hold. The REIT (Toronto symbol MI.UN; Manufacturing sector; Units outstanding: 36.6 million; Market cap: $622.2 billion; Distribution yield: 3.0%; Takeover Target Rating: Highest; www.mintoapartmentreit.com) owns and operates 28 multi-residential properties in Ottawa, Toronto, Montreal, Calgary and Vancouver.

The REIT recently accepted an $18.00-a-unit takeover offer from Crestpoint Real Estate Investments Limited Partnership.
On November 1, 2015, the old Hewlett-Packard Co. split into two firms—HP Inc. and Hewlett-Packard Enterprise. For every share they held in the old HP, shareholders received one share in each of the new companies. HP is up over 40% since the split, while HP Enterprise has gained 25%.

Both firms are now using artificial intelligence (AI) software to cut costs and launch new products. Even so, we see better opportunities for investors interested in AI.
VERSANT MEDIA GROUP INC. $32 is a hold. The company (Nasdaq symbol VSNT; Consumer sector; Shares outstanding: 145.8 million; Market cap: $4.7 billion; No dividend paid; Takeover Target Rating: Lowest; www.versant.com) operates a variety of cable TV channels, including MSNOW (formerly MSNBC), CNBC, USA Network and Golf Channel. It also owns several popular websites including Fandango (movie tickets) and Rotten Tomatoes (movie reviews)


Versant took its current form on January 2, 2026, when media firm Comcast Corp. (Nasdaq symbol CMCSA) spun it off as a separate firm. Investors received one share of Versant for every 25 shares of Comcast they held.
In some cases, companies will sell a business instead of spinning it off. That gives them cash for new investments, dividends and buybacks. Here are two recent examples.
BLACKLINE INC. $52 is a hold. The company (Nasdaq symbol BL; Manufacturing sector; Shares outstanding: 54.5 million; Market cap: $2.8 billion; No dividend paid; Takeover Target Rating: Medium; www.blackline.com) makes cloud-based accounting software for over 4,400 businesses.


BlackLine has reportedly rejected a $66.00-a-share takeover offer from German software giant SAP SE (New York symbol SAP).
Activists are now targeting these two retailers, both of which continue to face challenges. We feel any increased pressure will help each firm attract more shoppers to its stores and spur its earnings. However, we see better opportunities to add to your Consumer stock holdings.
Engineering and industrial services firm KBR—spun off from Halliburton Co. in November 2006—now plans to break itself into two separate, pure-play companies.

The split should help draw more investor attention to these businesses. The solid order backlog and high-quality clientele of each company could also make them attractive takeover targets. Note, however, that a class-action lawsuit adds risk.
VICTORIA’S SECRET & CO. $65 is a hold. The company (New York symbol VSCO; Consumer sector; Shares outstanding: 80.2 million; Market cap: $5.2 billion; No dividend paid; Takeover Target Rating: Medium; www.victoriassecretandco.com) took its current form in August 2021 when the old L Brands (New York symbol LB) became two separate firms: Victoria’s Secret (lingerie) and Bath & Body Works (personal care products). Investors received one new share of Victoria’s Secret for every three shares of L Brands they held at the time. L Brands then changed its name to Bath & Body Works.


Victoria’s Secret saw sales for the fiscal 2026 third quarter, ended November 1, 2025, rise 9.2%, to $1.47 billion from $1.35 billion a year earlier. The gain reflects a turnaround plan that focuses on improved marketing and cost cutting. Excluding unusual items, the company lost $0.27 a share (or a total of $21.6 million). Even so, that’s a big improvement over the year-earlier loss of $0.50 a share (or $39.5 million). (Note—the company typically loses money in that quarter.)