With a spin-off date of October 6, 2008, what I first found was a stock in a downtrend that kept downtrending after the spin-off.  This is what smart money does with insider trading?  Well, actually, no they didn’t.

First, they were investing in the parent company, AMD.  They bought well before the rest of us knew whether the spin-off would get funded or not and actually saw about a 25% increase in share price at one point.  Then the market and the stock rolled over and started down.  By the time the actual spinoff occurred it was no secret which way things were heading.

The prosecutors were credited with saying that though they didn’t make money on the trade because the whole market headed south, they were definitely trading on illegally obtained information.   I could not tell whether they were saying that the alleged insider information traders would have made money had the market played along or that it didn’t matter whether they made money or not.

The question about all this that I have is whether it is giving us any new information about what our trading plan for stock spin-offs should be or not.  At this point my conclusion is that I will stick with seeking out spin-offs that are likely to lead to an initial drop in the price of the spun-off stock that creates a value situation and then entering when it turns up.  This one never really fit that bill, no matter what an interesting story it has provided. 

(Are those people crazy?  Seems like they were making more than enough money honestly than to feel they had to risk jail for some more.)