Spin-offs with Insider Buying (March 2022) I recently scanned my spin-off / special sits watch list for insider buying and found 7 stocks that are worth highlighting. Let’s go in alphabetical order… Altisource (ASPS) Altisource is an old 2009 spin-off. For a period of time, it was one of the best performing spin-offs of [...]
Talking Spin-offs with Value Investor Chatter Last week, I had the opportunity to talk spin-offs with Beko Jang on the Value Investor Chatter Podcast. Here's what we covered: 5:01: Exploring the Benefits of Spin-off Investing 8:10: Forced Selling in Spin-offs 16:07: Analyzing Management Incentives 19:20: The Most Important Factors to Consider When Considering Investing [...]
How to Invest in Biotech (without being a specialist) I know many investors who don’t invest in certain sectors because they require specialized expertise. A few of the most common examples: Financials Energy Biotech And there is definitely something to be said for staying within your circle of competence. But for better or worse, [...]
Spin-off Links - February 2023 Lot’s going on in the spin-off world. Let’s get right into it… Recently Announced Spin-offs Baxter (BAX) announced on January 6 that it plans to spin off its Renal Care and Acute Therapies global business units into an independent company within 12-18 months. Here’s Baxter’s slide deck with additional [...]
The Strategy John Malone Uses to Generate Income John Malone is one of the best operators and investors in the world. He is profiled in value investing cult favorite The Outsiders. Malone is best known today for running the Liberty Media complex, but he started his career in the cable industry at TCI. Here’s [...]
[Podcast] Stock Spin-off Investing for Beginners I recently had the opportunity to talk with the guys from The Investing for Beginners Podcast. It was a blast! Here's what we covered: · How would Rich explain what a spinoff is, and how they work? · Are there certain cycles or market cycles better for spinoffs? · How do companies [...]
2seventy bio: A Double with Downside Protection The biotech market is in a bear market and it’s been that way for a while. XBI, the leading biotech ETF, is down 53% from its peak in 2020. What is even more interesting is that a record number of biotechs are trading at negative enterprise values. In [...]
Spin-offs with Insider Buying (November 2022) I recently scanned my spin-off watch list for insider buying and found 4 stocks that are worth highlighting. Let’s go in alphabetical order… Conduent (CNDT) Conduent is a business processes outsourcing company that was spun off from Xerox in 2016. It hasn’t had much success as a public company… [...]
Spin-off Links - October 2022 There has been a TON of spin-off activity. And valuations generally look quite attractive. I don’t know when the bear market will end, but I do know I’m seeing a ton of value from a bottom up perspective. Before we get into the spin-off news, I want to share some [...]
Market Champions Podcast I recently had the opportunity to speak with Srivatsan Prakash on his podcast. Fun fact about Srivatsan: He's been podcasting since 2019 but is only 18!! Fun fact #2: He convinced Jim Rogers (as in the business partner to George Soros) to come on his podcast. It was a ton [...]
How Long Will the Bear Market Last The U.S stock market has been brutal in 2022. Through the first two quarters of the year, the S&P 500 is down 20%. While the market is up slightly in July, it’s not much of a consolation. We are in a bear market, and it doesn’t feel good. [...]
10 Rules for Spin-off Success I've been investing in spin-offs for the past 15 years and have learned many lessons. How'd I learn them? Mainly, the hard way! But today I'm sharing those lessons so you don't have to make the same mistakes. #1. Forget that “spin-offs outperform” In aggregate, they generally will but [...]
Buffett On Inflation Over The Last 50 Years There have been four key times when Warren Buffett has given his insights on inflation in Berkshire Hathaway's annual reports since the 70s. 1979 - After explaining that Berkshire’s book value compounded 20.5% annually for the previous 15 years, Buffett comments: “But before we drown in [...]
Buy NexPoint Diversified (NXDT) NexPoint Diversified REIT Investment Case June 15, 2022 Ticker: NXDT Price: $15.23 Market Cap: $565MM Price Target: $25 Upside: +64% Summary: NexPoint (NXDT) is a closed end fund that is transitioning into a real estate investment trust (REIT). It trades at a 40% discount to NAV and is significantly below where [...]
There has been a lot of spin-off news since my last “spin-off links” article… But before we dive into it I just want to highlight that I just published a new idea. Usually I look for obscure, hidden opportunities, but my latest recommendation is a large cap that is too cheap to ignore. It’s a [...]
Value Investing Q&A Series - Brown University Earlier this year, I had the opportunity to talk about spin-offs (and answer questions) with members of the Value Investing community at Brown University. It was a lot of fun! What we covered: My background (0:57) Why I focus on spin-offs (1:49) What resources would I recommend [...]
How Peter Lynch Beat The Market Peter Lynch is known as one of the best stock pickers of all time. At Fidelity’s Magellan Fund, he averaged an astonishing 27.9% return over the course of 13 years. He also was a notorious fan of spin-offs. Here's what Lynch looked for when picking stocks. Look for [...]
3 Biggest Takeaways From Joel Greenblatt‘s Special Situation Class Joel Greenblatt‘s Special Situation Classes at Columbia University are a great source for practical investment advice. Today, we‘ll take a look at what he learned from different Spin-Off situations he discussed in his class. 1. Complicated, Messy, Obscure Joel Greenblatt focuses on situations that seem to [...]
Capitalizing On Volatility In Recent Spin-Offs Volatility is always high for recent spin-offs. You can take advantage of that by "selling volatility" in the options market. First, let's step back and cover how options are priced. Here's Joel Greenblatt: In general, professionals and academics calculate an option’s “correct” or theoretical price by first measuring the [...]
Dividend As A Catalyst One of my favorite spin-off strategies is the "dividend as a catalyst" trade. Here's how it works: Identify a spin-off that will be indiscriminately sold, determine the expected dividend yield, wait to buy until 30% of shares out have traded and the stock is trading at attractive implied dividend yield, sell [...]
Tax Rate Arbitrage One of my favorite new categories of special situations is "tax rate" arbitrage. Here's an example. Let's assume company XYZ is trading at $10 and will be paying a special dividend of $6. Buy XYZ for $10 and you must hold for 61 days (including date of div) for div to be [...]
Spin-off Links - March 2022 2022 spin-off activity is off to a strong start. But before we get into it, I just wanted to highlight that I published a deep dive of ZimmerBiomet (ZBH)’s recent spinal/dental spin-off, ZimVie (ZIMV) for premium subscribers. ZimVie Deep Dive In the coming weeks, I will publish deep dives on [...]
Spin-off Links - December 2021 There has been a TON of spin-off activity. New spin-off announcements, recent spin-offs trading, upcoming spin-offs - you name it, we got it.. Let’s get into it. New Spin-off Announcements On November 12, 2021, Johnson & Johnson (JNJ) announced that it will spin-off its consumer business ($15BN of revenue) within [...]
How I Grew My Paid Newsletter to Over $114K of Recurring Revenue 3 years after quitting my job and launching a paid newsletter, I can say, this is for real. 330 paying members +65% y/y revenue growth $114,000 annual recurring revenue Here are some reflections on my first 3 years as an entrepreneur. Focusing [...]
Spin-offs with Insider Buying (October 2021) This week, we have a couple new names popping up on our list. Let’s dig right into them…. Apartment Investment & Management (AIV) I know I promised some new names, but we are going to start with AIV which has seen even more insider buying. Apartment Investment & Management [...]
How to Short a Spin-off Before It Begins Trading I love spin-offs (shocker, I know). The main reason is that the indiscriminate selling pressure associated with spin-offs allows me to buy bargains. Why do spin-offs sell off when they begin trading? Seth Klarman of the Baupost Group explains why this dynamic exists in Margin [...]
Spin-off Links - October 2021 Before we get into this month’s spin-off news I just wanted to highlight that I will be raising prices on my premium newsletter at the end of the month (October 31 at midnight). The annual subscription will increase by 51% from $419/year to $635/year. The monthly subscription will increase by [...]
Spin-offs with Insider Buying (September 2021) In One Up on Wall Street, Peter Lynch wrote: [Spin-offs] are a fertile area for amateur investors…….A month or two after the spinoff is completed, you can check to see if there is heavy insider buying among the new officers and directors. This will confirm that they, too, believe [...]
Spin-off Links - August 2021 Before we get into this month’s spin-off news I just wanted to highlight some research I did on Thungela Resources. It is a spin-off from Anglo American, and at first blush, looks unappealing. However, if you dig beneath the surface, it gets a lot more interesting. In short, it’s crazy [...]
Thungela Resources: Buy the Toxic Waste About a month ago, I recommended that my premium subscribers buy Thungela Resources, a coal spin-off from Algo American. Since then, I’ve made it my largest personal investment, and it’s currently my highest conviction idea. The stock is up about 36% since my recommendation, but there is a lot [...]