RESTRUCTURING PLAYS, BREAKUPS, AND SPIN-OFFS


Restructuring Plays, Breakups, and Spin-offs

01 | Recent spinoffs can be a rich source of mispriced investments

  • Wall Street analysts often provide little coverage to newly spun-off companies.
  • Shareholders of the parent company may be forced by their investment mandate to sell their shares in the spun-off company.

02 | Companies emerging from bankruptcy can also be a source of undervalued situations

  • Such companies often suffer from a lack of analyst coverage, as well as a general stigma. This can cause them to temporarily sell below their intrinsic value.
  • However, these situations can be quite profitable for patient long-term investors.