Spin-Off Stocks Surprise to Start Q2 - Reviewing Recent Market-Newcomers

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S&P 500 News

3M Company,General Electric Company,Kellanova

Stocks Analysis by Christine Short covering: S&P 500, 3M Company, General Electric Company, Kellanova. Read Christine Short's latest article on Investing.com

As stock splits sour and IPO activity remains light, executives might continue to seek to add value through crafting spin-offs.

Spin-offs are potentially attractive from a strategic point of view because they can unlock value without being detrimental to existing shareholders of a parent company. It’s a rather efficient way for executives to shed nonessential or even underperforming businesses through the creation of a smaller, more agile fresh entity. Spin-offs might also be looked at to thwart would-be outside firms from coming in and breaking up a stand-alone conglomerate.

It’s also quiet on the stock-split front. Recall it was two years ago now when high-growth companies were eager to reduce their share prices to attract buyers. Our data show that while there have been splits here and there, such as Walmart’s 3-for-1 split back in February, there is certainly no imminent sign of a sharp pickup there. Instead, it may be that the rise of activist investors and dry powder in the private equity space could be fuel for spin-offs.

 

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