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There is a lot of financial engineering that goes into situations like this and you have to look into it on a case by case basis. But often times investing in s
by rvn1045 6y ago
There is a lot of financial engineering that goes into situations like this and you have to look into it on a case by case basis. But often times investing in spinoff companies can be very profitable. In fact spinoff companies outperform the overall stock market - you can checkout the Bloomberg Spinoff Index.
The book How to be a Stock Market Genius covers situations like this and gives some tools to analyze them if you are interested in learning more about it.
- arthurcolle 6y agoYup, that's a solid book on 'special situation investing' - despite the lame title
- sumtechguy 6y agoI think someone said there is two ways to make money. Bundling and unbundling. This sounds like the second way.
- tupputuppu 6y agoLarge conglomerates like IBM usually trade their shares at a discount because they're poorly managed due to the sprawling size. Breaking businesses with little synergies usually makes the separate pieces better managed and thus more valuable.