Spinoffs are back. It has been established for some time that there is a ‘conglomerate discount.’ The stock market values highly diversified companies at less than the sum of their parts. Companies are embracing this view with a surge in spinoff activity. Compliant debt markets and activist investors are helping to push this trend along as well. Diversified large cap stocks are a place to hunt for these opportunities. Investors should note that trading the spun off entity is tricky. For example AMC Networks tumbled from its when-issued price. In today’s screencast a look the spinoff trend.
Items mentioned in the above screencast:
Corporate America has embraced the spinoff. (FT)
Look to large caps for spinoff opportunities. (Breakingviews)
Heed the lesson of AMC Networks ($AMCX). (Dealbook)