Highlights from WSJ piece (chopped and screwed),
Activist shareholders typically push companies to split-ups. But now companies created by spinoffs are finding other activists quickly swarming to their stock.
Of 39 spinoffs that have begun trading over the past two years, about half count an investor with a history of activism among their 10 largest stockholders.
Funds are finding there's a much greater opportunity to influence a company's strategy early on. The cement's still wet.
Many spinoff businesses weren't a priority of their old parent or of Wall Street, meaning they might be poorly understood or undervalued by the market.
But activists may find their traditional playbook harder to play at spinoffs. Urging a sale of the company can be complicated by tax laws, which generally require a "cooling off" period between a spinoff and a sale to take advantage of certain tax benefits. Plus, the usual metrics of underperformance-lagging peers, slowing growth, depressed valuations-don't exist yet at brand-new companies. It's tough to say, 'This company hasn't performed well,' when there's been no history of performance.