The deal turns Computer Science Corporation’s late 2015 spinoff (via Reverse Morris Trust) into another spinoff success and a big win for the Spinoff Portfolio. With only five names in the portfolio the deal will have a significant impact on results.
So what does this mean for the Spinoff Portfolio? Here are the portfolio rules for rebalancing after a takeover:
If there is an involuntary removal through acquisition/delisting/bankruptcy, then the cash is distributed equally among the remaining companies in the portfolio.
As a result, when the deal closes (or I guess now, if you prefer to avoid closing risk) the remaining holdings of Synchrony (SYF), Adient, Lamb Weston (LW) and GCP Applied Technologies (GCP) will all increase.
Anyone going along for the ride?
Disclosure: Author holds no position in any stock mentioned.
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