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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Sean Collett who wrote (73866)	10/5/2023 8:52:20 AM
From: E_K_S	1 Recommendation Recommended By Spekulatius Respond to of 78667

Spin offs - watch the debt Speculative has always pointed out to look at the debt off loaded on the spin offs. I had always looked at many of the other possible benefits but in hindsight 'DEBT' is the over riding thing. Just look at the spin off of KD from IBM. If you waited a few months, that is/was the time to buy. They still have tons of debt to manage. KD spun off at $27 in 11/2021 and hit $8/share 10/2022. It has finally worked back to $15/share. I started buying too soon but now have my avg cost down to $12/share. However, lesson learned on the off loading of all that IBM debt.

To: Sean Collett who wrote (73866)	10/5/2023 1:53:38 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78667

The issue is that the last few years, spinoffs have underperformed as a group. Check out this study: twitter.com focusedcompounding.com So I think the market inefficiency that Greenblatt observed has disappeared or even reversed (meaning that spinoffs as a group now underperform). Interesting enough, even the mother company tends to underperform now. This means that people either try to front run spinoffs (which means there are too many people investing in them) or that they are an indication of management pushing boundaries with optimistic assumptions that fail to materialize.