Spin-offs In The 1950s
Maurece Schiller was one of the first investors to write about special situations investing. In 1959, he wrote the book “How to Profit from Special Situations in the Stock Market”.
After leaving Dartmouth, Schiller went to Wall Street to work as an investment advisor. He began studying the way corporate actions affect stock prices. He called them special situations and was drawn to their “safety of principal” and “assured profits”. He went on to invest in special situations for the next few decades. Then he decided to write books about them, saying, “since special situations were in a sense created by myself, they were my life’s work and I knew all about them, so I decided to write about them.” He describes spinoffs a “hybrid corporate action having characteristics common to dividends, liquidation, and reorganizations.” A “distribution of an asset … in the form of securities.”
He then covers a case study:
1957 Transamerica Corporation Spin-off
The story of this spinoff began in 1956 when Congress passed the Bank Holding Company Act of 1956. The Bank Holding Company Act gave the Federal Reserve the power to define and regulate a new phenomenon: bank holding companies. Bank holding companies were corporations which owned shares in multiple banks across the country. These holding companies began to spring up in the early 1900s as a loophole that avoided banking regulations that prevented branching. The existing regulation primarily prevented state and na