Playing the Split
Spin-off investing is one of the most important weapons in the arsenal of Value Investors, as spin-offs afford investors the opportunity to profit through several mechanisms. The first is that investors are able to act on insight about a profitable business segment, as it is being separated from what would be deemed to be a classic and typically average "commodity" business. The second is that companies operating in a diverse range of businesses are often subjected to what is known as the "conglomerate discount," something which is typically resolved as the market values both parts of the previous whole more accurately.
Another way to profit from these situations, which is not related to the intrinsic nature of...
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