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Non-Tech : SPIN-OFFS "secret hiding places of stock market profits" -- Ignore unavailable to you. Want to Upgrade?

To: Bob Rudd who wrote (321)	6/28/1999 9:52:00 PM
From: Stewart Whitman	Read Replies (2) \| Respond to of 1185

Bob, If I were to buy RAL ahead of the spin-off, I'd need a compelling reason why the valuation of pet food separate from bunny is different from pet food with bunny. It's clear pet food is a much better business than bunny but that should be priced into the current valuation. Having "eyeballed" RAL several times in the past, it's not clear how one arrives at a sum of parts that's especially higher than the current valuation. You may know more or simply arrive at a different valuation. I need to examine the company carefully to get a valuation for the parts (RAL is especially hard) - which I have not done in RAL's case. Short of arriving at a better valuation for split-up RAL, I'd wait until after the spin-off. As you suggest, bunny is the most likely sell off, and, as such, is probably the first place I'd start looking for a good bargain. As an example of a case where I think that buying ahead makes sense, take JCP. Drugstore chains are now trading at ~1x sales. JCP is going to put a valuation on it's ~$10 billion drugstore sales by IPOing/spinning-off a tracking stock. When you take $10 billion out of JCP's market cap you have $3 billion in market cap and $20 billion in sales. That seems very compelling so I buy ahead of time. Regards, Stew