Getting a Better Handle Mastech Stock Spinoff

| About: Mastech Holdings, (MHH)

When iGate did its stock spinoff of Mastech (NYSEMKT:MHH) it certainly had all the markings of a successful spinoff. The new entity brought good earnings with it. The parent’s shareholders hadn’t necessarily bought iGate for the staffing division. And, it was small enough and unknown enough to be under the radar of most investors and analysts.

It did have one worrisome characteristic however. It is in a business that does better when the economy is strong and adding jobs. When there is lots of unemployment, staffing companies are expected to not do as well … and that is exactly the economy that Mastech was born into. Oh yes, and there was another problem that is spoken to in the blog post referenced below.

The “Logical Stock Market Investing Blog” has shared some excellent information on the Mastech stock spinoff. It is well worth looking at as it fills in a back story that would not be easy for most of us to find ourselves.

On the other hand, good story or not, it was a stock spin-off and perhaps by taking that as reason enough we might have done very well had we waited some reasonable period of time and then entered on a breakout on a weekly chart.

What’s a “reasonable” waiting period? It’s best to pick your own. Just look at a number of charts of spin-offs and see what you think. Whatever you pick, stick with it long enough to tell how you like it without trying to outguess your system.

Disclosure: I was aware of the MHH spin-off and did not follow my own advice given above, resulting in leaving some money on the table. Hopefully the lesson will be worth more over time than what I didn’t make by my “yes, but . . . .” response.