Overall, it looks like another year of strong performance for the spinoff world. The stocks from our ‘Recent Spinoff’ table did quite well in 2012 and the vast majority of spins outperformed the S&P 500 index during their respective trading periods. Here is a look at the Top 5 performing CY 2012 spinoff companies (parents and spins) from our ‘Recent Spinoff’ table (only spins executed from January-September were examined, not total return nor annualized return):
| Completion Date | 1st Trading Day Post Spin | Company Name | Open Price Day 1 (Post) | 12/31 Close | Performance |
| 4/30/2012 | 5/1/2012 | Phillips 66 | $ 33.74 | $ 53.10 | 57.4% |
| 1/12/2012 | 1/13/2012 | Rouse Properties, Inc | $ 11.03 | $ 16.92 | 53.4% |
| 9/28/2012 | 10/1/2012 | Nacco Industries Inc. | $ 41.50 | $ 60.69 | 46.2% |
| 1/12/2012 | 1/13/2012 | General Growth Properties Inc. | $ 14.50 | $ 19.85 | 36.9% |
| 5/7/2012 | 5/8/2012 | Fiesta Restaurant Group, Inc. | $ 11.20 | $ 15.32 | 36.8% |
Somewhat of an unexpected list. A mix of high profile names like Phillips 66 (PSX) and General Growth (GGP) along with some relative unknowns like Nacco (NC) and Fiesta (FRGI). Rouse (RSE) – the so-called ‘B’ mall portfolio – and its parent General Growth were the only father/son pair to make it on the list and further proof that ‘hated’ companies can fare quite well (it was from last year, but check out what VAC did in ’12, +140%!). Nacco is definitely a case where people were much more focused on the spinco and ignored the potential in the parent.
Of course, not every spin was a winner this past year. Both NovaGold (NG) and its spinco NovaCopper (NCQ) were amongst the worst performers of the year at -32.8% and -54.8% respectively. Mining is a volatile business and material prices had an impact here, but NG was mainly sunk by bad news from its partner Barrack Gold. Other losers from our list include RxII Pharmaceutical (RXII) and Matson (MATX). Overall, very few losers though.
It was interesting to see how the lists changed when adjusting the purchase date to as little as one week out. There is a lot we can learn from analyzing past performance and we will continue to play around with the data. Let us know if you find anything interesting.
Personally, I am really looking forward to the opportunities 2013 will bring. Wishing all of our readers a healthy and a successful new year filled with lots of spinoffs!
Disclosure: Author is currently long Fiesta Restaurant Group (FRGI)
Curious what an equal weighted basked of all the spinoffs returned in 2012? Also do you think these returns on spinoffs in 2012 was average, above average, etc?
Both excellent questions and with some more time I plan to dig into the data much, much further. Objectively, the performance was strong, but I am not sure how it compares historically. Additionally, while I used the S&P 500 as a benchmark, it’s probably not the best one to use for every name.
For now, unfortunately, the answer to both of your questions is ‘I don’t know’. Would be interesting to hear what other data readers are interested in seeing (post comments here). Maybe if enough people display interest in something, we will write an article on it.
I still can’t believe VAC. I think 2013 will be the year of KRFT and Starz.
Yes, VAC definitely surprised some people. Not the first spin to do so.
Picking winners for 2013 spins is a tough (fool’s?) game considering the unknown valuations, but why not? Always fun to prognosticate. Given John Malone’s track record in these transactions, I agree Starz looks like a good bet. The highest ‘profile’ name in the list seems to be News Corp, but that doesn’t guarantee success. There are a couple of similar transactions to SAIC’s planned government services spinoff that have achieved decent returns. Also, I wouldn’t be surprised if some of the small cap names like Marchex/Archeo ended up strong.
This probably deserves some more thought and probably its own topic/discussion page.
I’m glad you mentioned News Corp. That’s one I’m certainly taking a long look at, especially the non-newspaper side.