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Strategies & Market Trends : Value Investing
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To: Bocor who wrote (48140)5/29/2012 9:16:33 AM
From: Sergio H  Read Replies (1) of 78688
 
Hi Bocor. Yes, I am planning on holding ABT through the spin-off. Van Knapp's concerns about spin offs don't hold up. He does not offer concrete evidence for his conclusions. If you look historically, spin-offs have outperformed the general stock market as well as their peer group.

Barron's had a cover issue a few years ago ....."Spinoffs historically have generated far better returns than the overall stock market, and they continue to shine. "

NY Times article with same opinion:

spinoffadvisors.com

Did you see this article in Seeking Alpha about ABT that argues that the spin off will be in a better position to increase the dividend.

<Abbvie's drivers will be the sales of rheumatoid arthritis therapy Humira, which accounted for one-fifth of the company's sales. After the spin-off this will account for 40% of Abbvie's sales. It is expected to earn $8 billion in net income this year. It still faces competition from cheaper biosimilar versions of the drug by 2016. However, management said that Abbott will diversify its revenue sources for the new company to drive better future profitability. Over the long run, this will yield to more stability in free cash flow and dividend payments.

Given the immediate sell-off from the spin-off, Abbvie's stock price will trade at single multiple valuations with a higher dividend payment compared to its parent, Abbott Laboratories. This is definitely a better deal than buying Abbott at current levels.>

seekingalpha.com
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