Leading advisory firms Deloitte TSR have revealed that the misunderstood and hard to track asset class of corporate break-ups (Spinoffs) significantly outperforms the major global indices and peer groups in twelve months post the first day of trading (stock listing). What isn't known is a vast number of Parents rally in share price prior to separating the Spinoff business. So what should investors consider when investing in an upcoming Spinoff given the next year will see a record 50+ parents breaking in to two companies?
Speaking to Ryan Mendy, COO of TSR who via their subscription service advise over one hundred of the world's most recognized hedge, mutual and family office funds with research on future Spinoffs, he described a few of the major focus points that they deeply research to pre-event recommend and ultimately define which next break-up is the most valuable?
- Fundamentals: What is the killer reason behind the Spinoff? Where and how (if any) is value being created? Can you forecast the future financials with little to zero broker coverage?
- Technicals: How will the split affect the movement of each stock? How do you quantify it?
- Who are the insiders? What is their history of buying or selling their own stock?
- Valuation /Forecast Target Prices: What price will or should each new stock open at? Bull to bear case, what is the stock worth 1 to 3 years from now?
- Investment Timing: What price should you enter the stock? Will either sell-off post listing? Can you quantify whether to buy more now or sell?
"With a money management background and being used by many private equity style funds, our bottom-up research stands out because we think differently, asking different questions of our analysis. What management changes are happening? Will any member be a catalyst for the stock based on past experience? Will new incentives (remuneration) be positive for the share price?," commented Mendy.
There's been surging interest by asset managers in quality research on upcoming demergers and this year will see the likes of: Agilent Technologies (A), General Electric (GE), Kimberly-Clark Corp (KMB), Pioneer Foods (PFG) and Westfield Group (WDC) break-up valuable segments.
Contacts:
The Spinoff Report®
Jim Osman, +1 212-714-7046
CEO
jo@spinoffreport.com
