Spinoffs Are Outperforming Parent Companies

In a recent tweet, CNBC Senior Markets Commentator Michael Santoli pointed out how WhiteWave Foods Co WWAV stock is now up 215.8 percent since its May 2013 spinoff from parent company Dean Foods Co DF, which is down 5.9 percent over the same period.

But, WhiteWave is not the only recent spinoff that has left its parent company in the dust.

A Few Others

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The Advantages Of Spinning Off

While spinoffs are far from a guarantee, they do tend to outperform the market as a group. According to Cantor Fitzgerald, spinoffs completed between 2009 and 2013 outperformed the S&P 500 in their first year of trading by an average of more than 17 percent.

Goldman Sachs analyst David Kostin believes even more spinoffs are likely on the way in the second half of 2016.

“We believe the prospect of modest top-line growth and flat margins in 2016 will spur management to pursue corporate spinoffs as a means of boosting shareholder returns,” he said earlier this year.

In the past decade, the Guggenheim Spin-Off (ETF) CSD had delivered a 58.1 percent return, topping the 46.4 percent return of the SPDR S&P 500 ETF Trust SPY.

Disclosure: The author holds no position in the stocks mentioned.