Stock spin-offs are akin to amicable divorces. Two parties,
previously linked at the hip, can now go their separate ways to
blaze their own trails. In some cases, investors, like divorce
lawyers, win as the shares acquired via the spin-off become stellar
Companies have different reasons for spinning off businesses.
Some do so to raise cash. Others part with business units to boost
shareholder value while others are forced down
Spin Off Avenue by activist investors
Whatever the reasons may be for a spin-off, the bottom line is
some spin-off stocks perform well. Very well. Look at the following
quartet. Some are even outpacing the companies from which they were
Phillips 66 (NYSE:
) Last year, ConocoPhillips (NYSE:
) followed the lead of Marathon Oil (NYSE:
) and announced a plan to spin-off its refining business. This may
not be a bad idea because refiners usually feel a pinch when oil
prices are high. In addition, downstream operations often represent
a drag on an integrated oil company's earnings.
Spinning off Phillips 66 made ConocoPhillips the largest U.S.
independent oil and gas producer. That is a nice feather in the
company's hat. However, Phillips 66 has an even nicer feather.
Since the company debuted as a separate entity on May 2, the stock
has surged almost 15 percent while shares of ConocoPhillips have
given up almost four percent. Phillips 66 has outpaced rival Valero
), but has lagged Tesoro (NYSE: ).
Beam (NYSE: ) Just as he might do with Procter & Gamble
(NYSE: ), Pershing Square founder Bill Ackman pushed Fortune Brands
(NYSE: ) to spin-off spirits maker Beam (NYSE: ). Beam makes not
only the eponymous Jim Beam bourbon, but also several other
recognizable spirits, including Sauza tequila, Courvoisier and the
Skinnygirl line made famous by Bethenny Frankel. Investors can
toast to the fact that Beam shares have jumped nearly 23 percent
TripAdvisor (NASDAQ: ) With its stock up 96.4 percent
year-to-date, travel reservations giant Expedia (NASDAQ: ) has
certainly done well for its investors. The cherry on the sundae
came in the form of the TripAdvisor spin-off, which took place in
TripAdvisor is akin to a travel equivalent of online reviews
site Yelp (NYSE: ). The comparison may not be fair. Shares of
TripAdvisor are up 48.4 percent year-to-date, while Yelp is down
almost 19 percent.
Guggenheim Spin-Off ETF (NYSE: ) The Guggenheim Spin-Off ETF
holds 25 spin off stocks, but not all are recently spun off. "The
universe of companies eligible for inclusion in the Index includes
companies that have been spun-off within the past 30 months but not
more recently than six months prior to the applicable rebalancing
date), without limitations on market capitalization," according to
While CSD does not have a market value limitation, it does focus
on small- and mid-cap names. Marathon Petroleum (NYSE: ) is the
fund's largest holding with a weight of 5.25 percent. The $35.5
million ETF charges 0.6 percent per year and has risen 12.4 percent
For more on spin-off stocks, click
(c) 2012 Benzinga.com. Benzinga does not provide investment advice.
All rights reserved.