A parent company is a company that holds sufficient voting stock to have control over another corporation. This can occur through the creation of a now publicly traded subsidiary or through the purchase of stock in another company.
Parent companies are also formed via corporate spin offs. The parent company typically starts by selling a portion of the new company to the public, to establish a market and a following among investors. That way, by the time of the spin-off, stock in the new company is liquid enough to be sold relatively easily, and held with some confidence as a worthwhile investment.
In our experience, and in most academic studies of the subject, this helps the parent and the spin-off. Both generally do better than comparable companies for at least several years after the spin-off takes place. We would never invest purely because of a spin-off, of course, because there is no guarantee of this “spin-off bonus”. However, it’s certainly a plus.
Parent companies and spinoffs are just one example of the stocks we look to recommend for investors. Overall, though, for a sound long term investing strategy we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Value seekers target stock spinoff investments because they recognize the potential long-term gain
Seekers of undervalued stocks are most likely to read the voluminous material that companies hand out as part of the stock spinoff process. They’re also most likely to buy a stock spinoff… Read More
ROCKWELL AUTOMATION INC., $309.05, symbol ROK on New York, provides industrial automation hardware and software products.
The company’s Intelligent Devices segment accounts for 45% of sales, with its Software and Control business generating 28%, and its Lifecycle Services business contributing the remaining 27%.
Rockwell has customers in… Read More
New stock issues can be in the form of a spinoff or an IPO. One option is a much better investment than the other
We can say without reservation that, in investing, spinoffs are the closest thing you can find to a sure thing. It all… Read More
With share splits, a company is simply cutting itself up into a number of pieces, without changing its fundamental value. It wants its stock to trade in a price-per-share range that seems reasonable to investors. This can affect stock market trading in more ways than… Read More
A few years ago, supermarket operator Loblaw and its parent company George Weston re-organized their various businesses. That left Loblaw to focus on its main retail operations and to better compete with rivals Walmart and Costco.
Investors tend to prefer “pure-play” businesses that operate in a.. Read More
SERVICENOW INC., $797.76, symbol NOW on New York, is a cloud-based software provider that aims to help companies manage their digital workflows. ServiceNow went public in 2012 at $18 a share.
On March 10, 2025, ServiceNow announced that it would acquire Moveworks, a California-based company that… Read More
This week, we spotlight a company that has unlocked value for investors with several successful spinoffs. We think it’s likely to do so again.
Specifically, since 2016, conglomerate Danaher has completed three separate spinoffs.
As we often remind investors, spinoffs are the closest thing you can… Read More
Forget relying on a market timing strategy to boost returns. Focus instead on these proven tips for successful investing.
Market timing is the practice of trying to predict future trends and turning points in stock prices. For most people, this is a wasted, if not harmful,… Read More
An expanding customer base couples well with strategic acquisitions to position Gen Digital for continued earnings growth in a high-potential sector. The company’s focus on AI-driven security solutions and identity protection services aligns well with emerging cybersecurity trends, including the rise of AI-powered threats and… Read More
You Can See Our Spinoff Stock Portfolio For March 2025 Here.
Why we like spinoffs so much
We think that spinoffs are the closest thing you can find to a sure thing for two main reasons:
1) The management of a parent company will only hand out shares… Read More
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