Spinoffs — they’re hot right now.
Companies from all kinds of industries are divesting subsidiaries that don’t fit by spinning them out into independent, separately run businesses. Generally, spinoffs outperform the S&P 500 in their first 12 months of trading, making them very attractive to investors. Especially interested are existing shareholders of the parent company. They’re wondering whether they should sell the new shares they receive, keep them, or sell their shares in the parent and reinvest the proceeds in the new company.
It’s not a slam-dunk decision.
Let me make it a little easier. Here are my three choices of spinoffs that will outperform their parent over the next 12 to 18 months.