When iGate did its stock spinoff of Mastech (MHH) it certainly had all the markings of a successful spinoff.  The new entity brought good earnings with it.  The parent’s shareholders hadn’t necessarily bought iGate for the staffing division.  And, it was small enough and unknown enough to be under the radar of most investors and analysts. 

It did have one worrisome characteristic however.  It is in a business that does better when the economy is strong and adding jobs.  When there is lots of unemployment,  staffing companies are expected to not do as well … and that is exactly the economy that Mastech was born into.  Oh yes,  and there was another problem that is spoken to in the blog post referenced below.

The “Logical Stock Market Investing Blog” has shared some excellent information on the Mastech stock spinoff.   It is well worth looking at as it fills in a back story that would not be easy for most of us to find ourselves.

On the other hand, good story or not, it was a stock spin-off and perhaps by taking that as reason enough we might have done very well had we waited some reasonable period of time and then entered on a breakout on a weekly chart.

What’s a “reasonable” waiting period?  It’s best to pick your own.  Just look at a number of charts of spin-offs and see what you think.  Whatever you pick, stick with it long enough to tell how you like it without trying to outguess your system.

Disclosure:  I was aware of the MHH spin-off and did not follow my own advice given above, resulting in leaving some money on the table.  Hopefully the lesson will be worth more over time than what I didn’t make by my  “yes, but . . . .” response.

Tags: Mastech, MHH, spin-off stock, stock spin-off

The stock spin-off of the IT staffing and consulting company Mastech, symbol MHH, from i-Gate, symbol IGTE, occurred about ten months ago and so far its chart pattern seems to be true to form for a spin-off. 

The first half of the expected (hoped for?) spin-off stock cycle, the initial drop in price for reasons unrelated to the inherent value of the company, appears to have occurred. 

To this point we have just been observors.  Now we need to have a plan that determines if and under what conditions we will start buying the stock.  We do have a wealth of information in the SEC filings and from looking at the stock’s chart. 

You will have to decide what facts are most relevant to you, but some things that caught my eye were

•  the ownership of 57% of MHH shares by the majority owners of IGTE
•  the top two clients account for over 25% of the total revenue
•  the business is described by management as highly correlated with general economic conditions
•  immigration laws have a great effect on abililty to get staff
•  the stock is traded very thinly
•  most recent earnings will be reported August 6, 2009
•  there are no options available presently

This is an interesting situation to me because of Mastech stock’s low volume that makes it just about impossible for most professionals to buy and of little or no interest by analysts to follow.  If and when it “jumps” onto the screens of the professionals, it could be very rewarding for those who go onboard early.

Tags: iGate, IGTE, Mastech, MHH, spin-off stock, stock spin-off