In this latest video episode of Avoiding the Crowd, Maj sits down with full-time investor, Richard Howe of Spinoff Investing (@stockspinoffss) Richard performs deep dive research for his subscribers on spinoffs at his website, stockspinoffinvesting. Joel Greenblat is a big advocate of investing in spinoffs and defines a spinoff as:
“A corporation takes a subsidiary, division or part of its business and separates it from the parent company by creating a new, independent, freestanding company.”
Peter Lynch was also a big fan of spinoffs:
“Spinoffs often result in astoundingly lucrative investments.”
We have not invested in a lot of spinoffs, however it’s a special situation area we have wanted to explore due to some of the favorable return statistics:
“According to a study by Deloitte and The Edge, since January of 2000, the worldwide asset class of Spinoffs has generated over 10x times the average gains of the MSCI World Index during their first 12 months independent of the parent. The study also found when a parent company takes longer than six months to prepare, an average 50% greater return is produced after one year for the spinoff.”
Richard talks about how he got into investing, why he likes spinoffs, the good and bad sides of spinoffs, and how to spot the best spinoff scenario set-ups. He also offers a stock pitch idea.
Some stocks discussed include:
- Synnex Corporation (NYSE:SNX)
- Ann Inc. Common Stock (NYSE:ANN)
- Kontoor Brands, Inc. (NYSE:KTB)
- Liberated Syndication Inc (OOTC:LSYN)
- V.f. Corporation (NYSE:VFC)
- BBX Capital, Inc. (OTC:BBXIA)
- Bluegreen Vacations Corporation (NYSE:BXG)
- Match Group, Inc. (NASDAQ:MTCH)
- Iac/interactivecorp (NASDAQ:IAC)
If you are a special situation investor or looking for special investing edges, you are going to love this discussion.