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December 2, 2014

Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

5 Spinoff Stocks to Cash In On

By Kathy Kristof





(Kathy Kristof is a Contributing Editor for Kiplinger's Personal Finance)


There are few sure things in picking stocks. But if you want an investment that puts the odds in your favor, consider spinoffs.

When big companies split into pieces, the parts often become more valuable than when they were combined. Studies conducted by a range of researchers, from JPMorgan to Penn State, have found similar results. For instance, a McKinsey study of 300 companies spun off between 1988 and 1998 found that during the two-year period following the separation, stocks of the new firms outpaced the market by an average of ten percentage points. Other studies found that both the parents and the new spin-offs outperformed market averages, although the percentages varied dramatically from study to study.

What makes the returns enviable, and what makes the statistics a little fuzzy, is the same-namely, spin-offs are rare. Roughly 30 companies a year, on average, announce plans to peel off a piece of their business and plunk it into the hands of shareholders in the form of newly minted shares. Once a company announces a spinoff, it can take a year or more to complete.


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The plus side of rarity is that a spinoff, much like an artistic genius, can be misunderstood and neglected. Analysts often stop covering the parent company because a divestiture can change it so much, and it may take years before the spinoff attracts its own following. Moreover, institutional investors often dump the shares of the spinoff for reasons unrelated to the company's value or prospects. Managers of index funds, for instance, can't own shares in companies that are not in their index, and a spinoff is not likely to qualify. That kind of automatic selling can depress a spinoff's shares and create bargains for investors.

A good spinoff can also ignite the sort of entrepreneurial zeal that leads to better-than-average market returns. "If you have an asset that's not being managed or properly valued by the parent, it can make sense to let that piece of the company pursue its own destiny," says Joe Cornell, owner of Spin-Off Research, in Chicago. "The division goes from being a subsidiary, begging its parent for money and attention, to a separate entity with its own management, board and strategy. That cranks up the entrepreneurial feel, and improves the company's performance and stock."

Of course, if every spinoff were a great deal, this corner of the market would not be neglected. Some spinoffs get saddled with so much debt that they have little opportunity to thrive. Others are simply in unprofitable businesses with limited prospects. And even in the best of circumstances, investors need to take the leap of faith that a previously underperforming company will thrive when broken from a parent-or that the parent will thrive without the unit it has cast aside.

Still, you can profit by buying either the parent or the new stock, or both, says John Keeley Jr., chief investment officer at Keeley Asset Management, a Chicago firm that specializes in spinoffs.

We think these five new or soon-to-be-split stocks, divided among three strategies, are attractive. Prices are as of May 4.

Buy the Spinoff

Genie Energy (symbol l GNE emerged from IDT Corp. (IDT), primarily a telecom company, last October. The small, Newark, N.J.-based company sells power to small businesses and develops shale-oil projects in Colorado and Israel. Last year, Genie earned $850,000, or 4 cents a share, on revenues of $206 million. In March, a group of insiders started snapping up Genie shares-a sign, says Cornell, that the people who know the company best think the stock has potential. At a share price of $8, the stock has lost 28% since early February and now carries a market value of only $179 million. But as of the end of 2011, Genie had $102 million in cash, or $4.45 per share, and no debt. Cornell thinks investors are drastically undervaluing Genie's potential. He says the shares are worth $15.75-almost double today's price.

Buy the Spinner

In some instances, a company can become more attractive after unloading divisions. Consider Ralcorp Holdings (RAH), which broke off Post Foods (POST) in February. Post Foods kept the brand-name cereal business (including Raisin Bran, Honey Bunches of Oats and Grape-Nuts), while Ralcorp kept the generic food business, which makes pastas and frozen dough, among other things.

In this case, the "stub" (the parent company minus the spinoff) is the more valuable piece, says Keeley. He says that Ralcorp is likely to grow faster without the weight of heavily marketed name brands. Indeed, in the October-December quarter, Ralcorp's operating profits from "branded cereals"-Post's piece-dropped 30%, while operating profits from "other" cereals climbed 28%. Profits from snacks and sauces showed a 10% gain, and earnings from frozen bakery products soared 47%. Analysts, on average, expect Ralcorp's earnings to advance 8% annually over the next few years. But Keeley thinks the St. Louis firm's growth will accelerate without the drag of Post and that Ralcorp's current share price of $72 will look like a bargain in retrospect.

ConocoPhillips ( COP) split off Phillips 66 (PSX), its refining and chemical operations, on May 1. By doing so, Conoco rids itself of a low-profit business, and it can now concentrate on exploration and production, a segment that has historically accounted for about 80% of its profits. At $53, ConocoPhillips sells for less than 8 times estimated 2012 profits of $6.39 per share. That's too cheap, says Cornell, who expects the Houston-based firm to be leaner and more profitable in the future. He thinks Conoco is worth $73 a share today.

Buy Ahead of the Breakup

If you think the sum of the parts is worth more than the whole, invest after a company has announced a spinoff but before the deal has taken place. One such opportunity lies with Kraft Foods (KFT). Later this year, it plans to jettison its grocery business, which generates $19 billion a year in sales with such products as Kraft cheeses, Maxwell House coffee, Miracle Whip salad dressing and Planters peanuts. The spinoff will keep the Kraft name. The remaining company, which is expected to be called Mondelez International, will concentrate on snack foods, including Oreo cookies, Ritz and Wheat Thins crackers, and Cadbury chocolate. Mondelez will boast some $35 billion in annual sales.

Breaking Kraft in two will allow the grocery company to focus on improving its profit margins, while the snack-food company can devote its attention to growth, particularly in emerging markets. Kraft shares sell for $39, or 16 times estimated 2012 earnings, but S&P Capital IQ analyst Tom Graves believes the Northfield, Ill., company will be worth $44 a share when broken in two.

Covidien PLC ( COV), itself a spinoff of Tyco International, announced in December that it will break in two later this year, dividing the Irish company's drug and medical-device businesses. Terms of the deal are not yet known, but Morningstar analyst Alex Morozov believes that the breakup will unleash the value in both divisions. Morozov thinks medical devices have more growth potential but says the pharmaceutical unit has been neglected and should prosper once allowed to chart its own course. At $54, Covidien sells for 13 times estimated 2012 earnings, which Morozov thinks undervalues the company. He suggests investing in Covidien today and thinks the pieces will be worth a combined $76 a share within a year.

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