A stock spin-off is the formation of a new, independent company via the distribution of shares from the parent company. Corporations execute these transactions for many different reasons, including improving strategic focus, closing a valuation discount, removing conflicts of interest, evolving capital allocation priorities, and better-aligning investor bases. As a result, spin-offs have historically performed quite well and frequently represent some of the most compelling opportunities available for active investors.
May was a busy month for spin-offs. Two new transactions were announced (The Ensign Group and TiVo) and one spin-off closed (Kontoor Brands).