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A legendary value investor, Joel Greenblatt, explains why value investors should pay special attention to spin-off stocks. This episode covers the four points that make the spin-offs very attractive investments for individual value investors.
The shares of the new spin-off stock are distributed to the existing shareholders of the parent company who usually don’t want the shares.
The spin-off companies are usually small in size, and are not worth for institutional investors.
The spin-off event unleashes entrepreneurial forces and creates a better incentive and reward system
The very act of the spin-off decision by the executive team is a good indication that the executive team is shareholder-oriented
The future episodes will cover the details of what factors you need to look at to identify great spin-off stocks.
More details could be found from this book (You Can Be a Stock Market GENIUS).
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