Stock Spinoff Performance By Market Cap

by: Stock Spinoff Investing Guy

Summary

Micro-cap spinoffs (market cap of less than $50M) generated a 55% total return in year 1 on average.

Over longer time periods, micro-cap spinoff outperformance fades.

Over 5 years, stock spinoffs with a market cap of $1B or less generated a 170% total return on average.

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:

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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.