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Superinvestors and Stock Spin-offs

Joel Greenblatt

“You can make a pile of money investing in spin-offs. The facts are overwhelming. Stocks of spin-off companies significantly and consistently outperform the market averages.”

– Joel Greenblatt, Founder of Gotham Capital, Generated 50% returns annually for a decade

Seth Klarman

“Spin-offs often present attractive opportunities for value investors.”

– Seth Klarman, Founder of Baupost Capital, Legendary Value Investor

Charlie Munger

“Carefully study spin-offs.”

– Charlie Munger, Billionaire investors and right hand man to Warren Buffett

Select Stock Spin-off Studies

Study #1

A J.P.Morgan study of 231 spin-offs and carve-outs between 1985 and 1998 found that during the first 18 months of trading, spin-offs outperformed the S&P 500 by 11.3% while carveouts outperformed by 10.1%

Study #2

In 2013, Credit Suisse took a fresh look at the performance of spin-offs. They analyzed spin-offs from 1995 to 2012. The study showed that spin-offs outperformed the S&P 500 by 13.4% in the first 12 months after the spin-off date.

Study #3

Deloitte and the Edge Consulting Group analyzed spin-offs that occurred between 2000 and 2014. They found that spin-offs generated a 22% return in their first 12 months of trading, outperforming the MSCI world index by 21%.

Study #4

In May 2018, we analyzed the returns of the Bloomberg U.S. Spin-off Index vs. the returns of the S&P 500. We found that the Bloomberg U.S. Spin-off Index generated a 511% return from December 2005 to May 2018, outpacing the S&P 500 by 314%.

Additional Spin-off Analysis