Another year has come and gone which means that we have all been inundated with a million ‘Look Back’ and ‘Best Of/Worst Of’ pieces for the past few weeks. I always found this to be an interesting and immensely boring phenomenon as we just lived through it. Should be pretty fresh in our memories. We are nothing but followers here though, so I thought it might be interesting to take a look at how this past year’s spinoffs have fared.
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)