In 'You Can be a Stock Market Genius,' Joel Greenblatt says that spin-offs are a special situation that can lead to extraordinary returns. So I've been trying to keep my eyes open. ACV has a well-publicized spin-off coming up, of their Sally Beauty section. It's currently trading at ~$48. At the spin-off, there will be a special dividend of $25. A private equity firm will acquire 47.5% of Sally Beauty for $575M, so they've valued the spin-off at $1.2B. With 92M shares, they are valuing Sally at $13.05 per share. So then Alberto should be valued at $10. How can I find out how this valuation compares to the actual value of the company? I have a suspicion that this undervalues the new companies, but I'm really not sure. The spin-off is expected to occur sometime in Q4. Not long before then, there will need to be at least one SEC filing that will give more details regarding the spin-off. I'll be sure to keep track.
And, to keep my eyes open for more spin-offs.
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