Stock spin-offs are supposed to be part of what is called value investing, but what the heck is that really?

I know, I know, it’s finding stocks that are actually worth more than the market thinks they are and buying them before everyone else finds out. Then we sit back and pray that we don’t find out that everyone else knew all along that in fact the market had it right all along, but rather is going to find out just in time for us to sell our stake to them.

Fair enough and these situations do happen, but we are talking money here and to other participants in the marketplace aren’t dummies.

It is a pretty tall order to find mis-priced merchandise when you are up against the stockpicking equivalents of Michael Jordan, Peyton Manning, and Joe DiMaggio every day, but we are trying to do exactly that. And, as the old cartoon character Snagglepuss used to say “And don’t you forgit it!”

I think that a better definition of value investing ought to include finding corners of the marketplace where the very smart, very savvy, very tough superstars either aren’t allowed to work or where it is not worth their time to work and, hopefully, where we actually have an edge.

Everyone, including short sellers, is trying to buy low and sell high.

Tags: stock spin-off investing, Value Investing

If you want to see a very focused, well done analysis of a stock spin-off,  take a look at what WDiJohns has written at www.updown.com.

It is a model of how to get everything you need in the assessment without putting so much information in that the reader is nodding off, wondering what the point is before he or she gets to the end.  I particularly appreciated how he not only showed us the data and his conclusions, but  also explained why he focused on what he did.  Thanks to the author of this one.

In a nutshell, this one has all the signs of a spin-off that the insiders have set up with the intention that it will succeed and make them money.  Not only that, we can get in for less than its liquidation value right now.

From here they may have gotten it right or not, (only price and volume will tell us that,) and heaven knows there are things going on in the world right now that are overpowering some very smart people, but this one goes to the top of my watchlist.

Tags: spin-off stock