Why Spin-Off Companies Are A Great Investment

Stock spin-offs are often great value investments that provide market-beating returns over the long-run.

In fact, buying spin-offs is a favorite strategy for many top investors.

Joel Greenblatt (a legendary fund manager who achieved 50% annual returns for more than a decade) once said:

You can make a pile of money investing in spin-offs. The facts are overwhelming. Stocks of spin-off companies significantly and consistently outperform the market averages.

Peter Lynch, Charlie Munger, Seth Klarman, and Mohnish Pabrai share these beliefs — all recommending spin-off companies for their value investment potential.

This article explains why spin-off companies are often great investments, and why they’re potentially good additions to your own portfolio.

Why Spin-Offs Offer Deep Value

Generally speaking, established companies will spin-off a department that differs from their core businesses model.

For example, GlaxoSmithKline focuses on developing cutting-edge vaccines and pharmaceutical products.