ive been listening to Joel Greenblatt and have come across spin off stocks. Does anyone know how to find these stocks on the LSE? Or when they intend to launch the IPOs?
A "spin-off" stock is normally one that is demerged from another company where the existing company "spins off" a division to form a separate company. They don't IPO as such, existing shareholders are issued shares in them and the value of their shares in the original company declines to match the gains in the spin-off.
The value that Greenblatt is talking about has traditionally been in the large cap space where the demerged companies tend to do pretty well, largely because the original parent doesn't want to annoy its existing shareholders. However, whether that's the case or not is dependent on a host of things including how much debt is settled on the spin-off.
At the moment, for instance, Prudential (LON:PRU) is demerging its US insurance division Jackson:
https://www.investegate.co.uk/...
However Jackson will be listed in the US rather than the UK, which is problematic for many existing shareholders and their previous demerger M&g (LON:MNG) hasn't been a rip-roaring success either.
Spin-offs are very much special situations and, as far as I know, there's no easy way of tracking them. Finding spin-offs is a matter of tracking the daily stockmarket news announcements and keeping an eye out for demergers.
I'd also note that there's a trend among smaller companies to do demergers - Ekf Diagnostics Holdings (LON:EKF) and Open Orphan (LON:ORPH) have both done one recently. These may, or may not, have their own attractions but in general small company demergers are of small, pre-profit companies which are definitely not the type of thing Greenblatt is referencing.
timarr
