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

It has been about a year since we looked at Brinks Home Security Holdings, ticker CFL.    At that time it had been around for about 90 days and had its price had gone pretty much sideways.  How’s it doing now?

Well, the above chart from Yahoo Finance that shows CFL compared to the parent company, Brinks,  BCO pretty much tells the story for this one so far.

The two charts underscore the importance of – -

• knowing when you will decide that a trade isn’t doing what you’d expected going and then sticking to it, in the case of BCO
• and,  following your plan when things aren’t happening quite as quickly as you had hoped, in the case of CFL

Whether you had picked the parent or the spin-off stock, it is likely that some emotional self-management would have been called for in order to exhibit the kind of trade discipline that make for a long term ascending equity curve.

Now some including the Motley Fool are suggesting that it is time for the parent to shine.  For the sake of those who held onto BCO after the stock spin-off of the home security business, let’s hope they are right.

Tags: BCO, Brinks Co., Brinks Home Security, CFL, emotional self-management, spin-off stock, stock spin-off, trading discipline

Entergy’s (ETR) spin-off of nuclear power plants looks to be dead in the water according to a recent article from Reuters after the New York Public Services Commission rejected their most recent plan.

No one knows what the ETR board will decide to do next of course, but at some point managers as well as investors need to say . . . “Next!”  .  .  . and move on.

Stock spin-offs can make grand theater as this attempt illustrates, but entertainment should be,  at best,  a very very minor reason that you put attention on any stock or group of stocks.

An obvious part of trading discipline is keeping your attention focussed on what you are doing, but deciding when it is time to direct your attention elsewhere and doing that quickly and completely is just as important . . . and much harder for most people to master.

Tags: Entergy, ETR, focus, New York Public Service Commission, nuclear power, stock spin-off

In a recent article on CSD, the stock spin-off exchange traded fund, Claymore/Clear Spin-Off, Michael Johnston has given a very concise and complete look at the ETF.

CSD,  can serve the value investor seeking better than average returns in serveral ways.

• Of course, you can simply buy the fund.
• You can also use its portfolio as one source for building your watch list.
• And, the content of its quarterly and annual reports is a good source of educational information on spin-off stocks.

Depending on when you got into CSD it has been a very rough or a very rewarding ride for investors so far as shown by the chart below.

Splits:none

Tags: Claymore/Beacon ETF, CSD, ETF, spin-off stock, stock spin-off

The concept of seeking value is familiar to anyone who shops for groceries, but when it comes to value investing, carrying those learnings over can be deadly.

The grocery store makes it easy because it’s all right there.  From toilet paper to apples if you want to take the time you can calculate, prod, read, and decide which product has the best value for you.  And anyway, if that new brand that seemed to be such a deal isn’t, you’ll be going back to restock soon anyway.

Now turning to stocks, we want to buy low and sell high.  We want  to find stocks that are likely to go higher than they are now so that we can sell them and make money.   One way to do that is to find a stock that is a bargain, one that has good value.

The thing is, it can be very difficult to tell the difference between true value,  a stock whose price is low by the usual backward looking measures, but is actually priced just right going forward,( in other words one that is down there for good reason), and one that is irrationally, mistakenly, or unfairly undervalued.

Of course it is the latter that we value investors are looking for and spin-off stocks are a great place for find real value;  stocks whose price is depressed for reasons unrelated to the company’s prospects.  In Joel Greenblatt’s language, this is a pond into which we want  to throw our bait in hopes of hooking a big one.

Tags: spin-off stock, stock spin-off, value, Value Investing

McDermott International announced in December 2009 that intended to do a stock spin-off of its Babcock & Wilcox Power Generation unit.  Yesterday they said that the spin-off is on track .

Their financials also showed that the offshore oil & gas services did very well while power generation lagged, so it would appear that casting off the power generation unit promises to a positive for the parent as well as the spin-off stock.

The pacing of this process illustrates what is a real positive in spin-offs for me in that it doesn’t happen fast.  There is time to read the filings and figure out what you want to do.  Being front run by a computer that has made its decision before you can read the title of the press release seems unlikely and with any luck the guys with those fancy computers will go somewhere else.

As for Babcock & Wilcox, this looks like a classic case where they are being given a chance to show what they can do on their own.  Let’s just hope the structure of the stock spinoff gives them a fighting chance to succeed and prosper.  You may want to look at the B & W website to make up your own mind, but these people look to be in the right place at the right time on several fronts to me.

Tags: Babcock & Wilcox, McDermott International, MDR, spin-off stock, stock spin-off