Spin-off is a known secret in the value investing community Part 1 | Value Investor Chatter | #62

Spin-off investing is a strategy that can lead to outsized returns. Joel Greenblatt and Charlie Munger, two well-known value investors, have both spoken about the potential of spin-offs. So what is a spin-off? And what should you look for if you're interested in this strategy? A spin-off is a type of corporate restructuring where a company splits off a portion of its business into a new, independently-operated company. There are a few different reasons why a company might do this, but usually, it's to unlock value that was hidden within the parent company. For example, a company might have a division that is significantly underperforming the rest of the business. By spinning that division off into a separate company, the parent company can focus on its core business and the new company can try to turn things around.

Episode Outline

(00:00) Exploring Spin-Offs: A Value Investor's Guide to Special Situations and Outsized Returns

(02:36) Exploring the Benefits of Investing in Spinoffs

(09:31) Exploring Spinoffs as an Investment Opportunity for Institutional Investors

(11:51) Discussion on Spinoff Investing Strategies

(12:53) Analysis of Spin-Off Companies: Examining the Impact of Parent Companies on Child Companies

(15:40) Discussion on Reasons for Spinoffs and Their Impact on Institutional Investors

(16:50) Discussion of Downward Pressure on Price of Spinoff Companies

(18:56) Understanding the Impact of Spinoffs on Stock Prices

(19:47) Exploring the Benefits of Spinoffs in Investing

(23:04) Analysis of LaQuinta Hotel Chain's Spinoff and Corepoint's Performance

(25:37) Exploring Spinoffs: Unlocking Value and Potential Returns

(27:48) Discussion on Spinoffs and Value Investing

Value Investor Chatter

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