I wanted to share a quick stock spinoff analysis.
I downloaded all the stock spinoff data that was available on Bloomberg and then analyzed total 1-year returns, 3-year returns and 5-year returns by market capitalization.
Here is what I found: micro-cap spinoffs outperform in year 1.
Specifically, "Less than $500M Market Cap Spinoffs," "Less than $100M Market Cap Spinoffs," and "Less than $50M Market Cap Spinoffs" generated total 1-year returns of 29%, 37%, and 55%, respectively.
However, over longer time periods, the outperformance of micro-cap performance fades. Over longer time periods, the best-performing spinoff market cap cohort is "Less than $1B" which generated 3-year and 5-year total returns of +69% and 170%, respectively.
Here are the charts:
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.