Verizon’s (VZ) upcoming stock spin-off of Frontier, its landlines unit, is getting typical responses to the spin-off stock (dump it!) which can provide an opportunity for followers of spin-offs, but does it always?  Surely there are times when the contrarian idea that if everyone is doing, there must be money to be made by playing it in the other direction, is just plain wrong.

Still, even if they are exactly right given that their actions are predictable, is there an advantage to be gained from the odds that their correct actions are likely to be overdone?

Just asking.

Sounds like there may be a short term opportunity for the nimble.  What do you think?  How would you trade it?

7/2/2010  Oops!  Belated disclosure:  I got an electronic confirmation from an IRA that I rarely look at informing me that I have received shares in Frontier Communications as a result of the spin-off from Verizon which I had forgotten I owned.   For the record, I intend to keep the Frontier and may add to the position after other people who got notified that they now own a landline company that they never wanted sell it.

Tags: Frontier, spin-off stock, stock spin-off, Verizon, VZ

The  Vishay and Sunoco stock spin-offs have been written up on Philly.com.

When Joel Greenblatt noted that often the best information on a spin-off could be found in your local newspaper he wasn’t thinking about the effect of the internet, but the basic principle remains.

Though the first announcement and the conclusion will be found in the national news, it is on the local scene where people are directly affected by the jobs, the investments, and the personalities that the spin-off is more likely to stay news along the way.

Fortunately, it is easier than ever to get this point of view, even if you have no idea where Malvern is and aren’t even sure how to spell it.

As for me, I am still trying to figure out whether I want to be a silent partner of the Zandmans or not.

And, when it comes to coke, it has interested me ever since I learned that you don’t drink it from my best friend’s grandfather who still had scars on his face 40 years after he quit tending a coke oven.  But, is coke a good thing to be making and selling now?  We’ve got to figure that out before Sunoco sets Suncoke free.

As ever, we have plenty of time.  In fact, one of the hardest things about spin-off stock investing for me is to not have dozed off and missed the entry when everything finally lines up.  Maybe it’s a new model — stock spin-off investing as ADD therapy!?  No?  I guess not.

Tags: Suncoke, SUNOCO, Vishay Intertechnology, vishay precision group, VPS

Motorola, MOT, has been going to do a stock spin-off of its cell phone business for a long time.  Just do an internet search on  Motorola spin off and you’ll get an idea of how many sources have written about this.  Sometimes it’s the “money losing cellphone unit” and sometimes it isn’t money losing in the stories, but it has always sounded at least a bit questionable from a shareholder perspective.  Sure, Motorola may be stronger without its cellphone business, but if I own MOT now and they split it apart giving me both pieces, the deal is a wash.

But that’s all different now.   According to Daily Finance author Dawn Kawamota, it is going to be structured so that the deal makes sense from both sides.

Sounds OK.  Fortunately for me and you, these things play out at what could be described at a grand pace.  Stock spin-offs are not for those with a short attention span, (at least if you have a good system of electronic alerts set up to wake you at opportune moments.)

There will be plenty of press releases, news articles, and SEC filings before you have to decide what you may want to do.

It could be a great opportunity for all involved . . . or not.  We’ll see.

Tags: MOT, Motorola, stock spin-off, stock spin-off investing

“When Do Analysts Add Value? Evidence From Corporate Spinoffs” , an academic paper, was the result of viewing 1739 analyst reports on corporate stock spinoffs.

My first response was to think just how thankful I am that the authors of the paper read all those analyst reports and not me!  They did it and I don’t have to.  They deserve another step toward tenure.  Seriously.  Whew!

Their observation that even though analysts could add a lot of information about the prospects of the spun off company, they usually don’t was not much of a surprise.  Even with all of the SEC documents that are filed on pro forma financials and the information in previous filings on the part the new entity played in the whole company in the past, it is common for it to seem like it is a pretty empty corner of analysis and prediction.

Actually, I sort of hope they don’t spur the analysts to get into this area more, since that lack of interest and information has always seemed to be a source of the mis-pricing that can create value in a stock spin-off.  There are precious few of those now that computers and the internet are flooding us with more information than most of us can deal with anyway.

In any event, the online synopsis of the paper reads easily for an academic piece and is worth a look.

Tags: analysts reports on spin-offs, spin-off stock, stock spin-off, stock spin-off investing

Vishay,VSH, has finally given us specifics of what the Vishay Precision Group, VPG, spin-off is going to look like if things go as they hope.

It will -

• result in the complete separation of the two companies
• be accomplished through a pro rata dividend of the outstanding shares of VPG owned by Vishay
• have a target date of July 6, 2010, if all requirements are met in time
• provide 1 share of VPG for each 14 shares of VSH held
• have a holder of record date of 5:00 pm, June 25, 2010
• start trading of VPG WI (when issued) June 23, 2010.

The company’s press release described the two components of the spinoff as follows:

“About Vishay Precision Group

Vishay Precision Group is a leading designer, manufacturer and marketer of Foil Technology Products (strain gages, ultra-precision foil resistors, and current sensors) and Weighing Modules and Control Systems (transducers/load cells, instruments, weigh modules, and control systems) for a wide variety of applications.”

“About Vishay Intertechnology

Vishay Intertechnology, Inc., a Fortune 1,000 Company listed on the NYSE (VSH), is one of the world’s largest manufacturers of discrete semiconductors (diodes, rectifiers, transistors, and optoelectronics and selected ICs) and passive electronic components (resistors, capacitors, inductors, sensors, and transducers). These components are used in virtually all types of electronic devices and equipment, in the industrial, computing, automotive, consumer, telecommunications, military, aerospace, and medical markets. Its product innovations, successful acquisition strategy, and ability to provide “one-stop shop” service have made Vishay a global industry leader. Vishay can be found on the Internet at http://www.vishay.com.”

There are still plenty of questions about whether this will be a good deal for investors or not.  At this point all I know is that it is a complete spin off, the two parts do seem to do different things, and the price/volume action after the stock spin-off will be there for everyone to see.  Right now my bias is positive, but I am going to be waiting for confirmation of that belief, both fundamental and technical.

People, with more knowledge of the industry and the company than I,  have voiced concerns that I take seriously.  I just don’t know what to do with the information other than to stay cautiously optimistic and be very alert for the issues in question affecting the deal and the companies’ performance going forward.

Tags: spin-off stock, stock spin-off, Vishay Intertechnology, vishay precision group, VPG, VSH