Spinoffs are currently back in vogue. In the past year or two, a number of large and familiar companies have decided to break up into two or more smaller entities. Kraft Foods, for example, decided to separate its fast-growing snacks business from its steadier, but slower moving, grocery operation. ConocoPhilips separated its downstream assets, which include refining, marketing and chemicals, from its exploration and production business. Recently, News Corp decided to divide its publishing arm from its entertainment businesses. Wise investors will take a long look at these - and similar - opportunities. After all, a number of prominent and successful investors have found opportunity in spin-offs, including Peter Lynch, Joel Greenblatt and Warren Buffett.
I wrote an earlier book review of Warren Buffett and the Art of Stock Arbitrage.
Sources: (1) Buffett, Mary and Clark, David. Warren Buffett and the Art of Stock Arbitrage: Proven Strategies for Arbitrage and Other Special Investment Situations. New York: Simon & Schuster, 2010.
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