As the three-ring circus of rising interest rates, inflation, and bank failures plays out, investors may be searching for opportunities that are less exposed to the performance of the overall economy. Corporate spinoffs and separations are worthy of consideration. Screening for attractive spins, however, is more involved than just simply eyeballing price-to-earnings ratios.
So Barron’s reached out to Jim Osman, founder of research firm The Edge, which identifies opportunities in special situations, including spinoffs, mergers, management changes, and shareholder activism. Spinoffs, in particular, have been fertile ground in the past. Osman has been tracking them for 20-plus years and found that companies involved in spinoffs beat the market in the one- and two-year periods following the spins.