This is valuable work. The spin-off thesis always had an elegant logic—forced selling creates opportunity. But as you've shown, elegant logic doesn't always translate to edge.
What's particularly interesting is that the underperformance emerged in 2025, not immediately. This suggests the issue isn't the spin-off mechanism itself, but how these companies navigate the current environment. Small-cap value has been out of favor, and many spin-offs land squarely in that category.
Your conclusion feels right: spin-offs are a hunting ground, not a strategy. The announcement is a signal to look closer, not a reason to buy blindly. And that 3 out of 16 delivered 100%+ returns supports this—there were winners in the cohort, they just required selection.
Appreciate the rigor here. Too much investing advice relies on outdated theses that no one bothers to test anymore.
Thank you! You’re absolutely right — so many outdated and conflicting theses out there. We really need to go back to the original data to make sense of it all.
KVUE specifically caught my attention in this cohort because it had the brand portfolio and distribution but got hammered in the consumer staples selloff. The J&J spinoff thesis made sense on paper, but the timing put it right into a sector rotation away from defensive names. Your data confirms what the market showed us, that even quality consumer brands can't escape macro headwinds when they hit. The 16% averge performance really drives home that spin-offs need individual analysis, not blanket assumptions.
KVUE is an excellent example of how reality differs from theory. The process of its creation was long and complicated. The parent company retained about a 9.5% stake for a year; and selling it added pressure to the price. KVUE was even included in the S&P 500, but the sector headwind was too strong, indeed.
This is valuable work. The spin-off thesis always had an elegant logic—forced selling creates opportunity. But as you've shown, elegant logic doesn't always translate to edge.
What's particularly interesting is that the underperformance emerged in 2025, not immediately. This suggests the issue isn't the spin-off mechanism itself, but how these companies navigate the current environment. Small-cap value has been out of favor, and many spin-offs land squarely in that category.
Your conclusion feels right: spin-offs are a hunting ground, not a strategy. The announcement is a signal to look closer, not a reason to buy blindly. And that 3 out of 16 delivered 100%+ returns supports this—there were winners in the cohort, they just required selection.
Appreciate the rigor here. Too much investing advice relies on outdated theses that no one bothers to test anymore.
Thank you! You’re absolutely right — so many outdated and conflicting theses out there. We really need to go back to the original data to make sense of it all.
KVUE specifically caught my attention in this cohort because it had the brand portfolio and distribution but got hammered in the consumer staples selloff. The J&J spinoff thesis made sense on paper, but the timing put it right into a sector rotation away from defensive names. Your data confirms what the market showed us, that even quality consumer brands can't escape macro headwinds when they hit. The 16% averge performance really drives home that spin-offs need individual analysis, not blanket assumptions.
KVUE is an excellent example of how reality differs from theory. The process of its creation was long and complicated. The parent company retained about a 9.5% stake for a year; and selling it added pressure to the price. KVUE was even included in the S&P 500, but the sector headwind was too strong, indeed.
Blanket buying all spin-offs was not the the method described in his book, so your analysis appears flawed.
I didn't test the book itself, just the general principle. More targeted approach surely can bring better results, that's my actual conclusion.