Shares in iQIYI, a Chinese Netflix-style video streaming service controlled by search giant Baidu Inc., fell during its trading debut on March 29. The Beijing-based iQIYI sold 125 million U.S. depositary shares at $18 per share, which was in the middle of its range. The company raised $2.25 billion in its IPO, which was the largest of the year.
Spin-offs provide fertile ground for a variety of investment disciplines. Growth opportunities arise when a mature company divests a subsidiary whose prospects have been masked by the slow growth of the parent. Value investors benefit when the price of a seasoned business — new to the public market — is beat down to attractive levels due to indiscriminate selling.
Altice USA Inc. (ATUS) is engaged in the telecommunications, media and entertainment business. The company operates in two segments: Cablevision and Cequel. The company provides residential and business services across 20 states, digital cable television, high-speed Internet, voice and data products and services. It also provides hyper-local news and programming created specifically for the communities. Its brands include Suddenlink, Optimum, Lightpath, Altice Media Solutions and News 12 Networks.
Numerous studies have demonstrated that spin-offs outperform the overall market by a large margin. Spin-offs, as a group, tend to outperform the broader stock market. During the past 15 years, (through 2017) the Bloomberg U.S. Spin-Off Index returned 999.4%, while the S&P 500 Index returned 203.9%.
Delphi Automotive recently split its stock into Aptiv (APTV) and Delphi Technologies. Delphi Technologies represents the firm’s spun-off powertrain segment while Aptiv encompasses its electrical architecture and electronic lines. Former parent, Delphi Automotive PLC is one of the world’s largest automotive parts makers, churning out a vast array of parts for the auto and commercial vehicle industries.

In November La Quinta Holdings (LQ),  trading at $17.05 for a market cap $2 billion, announced  plans to separate its real estate business—to be named CorePoint Lodg

NACCO Industries (NC) with a stock price of $73 and market cap of $454 million (as of mid-September) recently announced a plan to spin-off its housewares-related business to NACCO

You can beat the Street.

The spin-off investment strategy has beaten the S&P by an average of 10% per year over the last decade. Timely tips from our spin doctor...
Certainly, not all spin-offs prove to be attractive investments, but a fair amount of research has shown that investors should not be quick to dump the spin. One reason for the strength of these businesses is the power of independence.