My journey of becoming financial independence by 35 years old
What history says about spin off?
A 2008 piece by Investopedia highlights, among other things, a 2000-05 Lehman Brothers study that shows both spun-off companies (45%) and their parents (40%) beat the market by quite a sizable margin during the first two years after breaking off, as well as an older study published in the Journal of Financial Economics that determined that spinoffs and parents beat the S&P 500 by a 30% and 18% margin, respectively, during the first three years after breaking apart.
This purchase will not add any dividend into my stock profile, but traditionally all financial stocks will pay a small amount of dividends. PayPal might follow the same suit to attract dividend investors after it’s done making acquisitions once the split is completed.
I purchased 20 shares of eBay, because I want to own PayPal prior to it splitting with eBay, so I can buy it at cost. I personally use eBay many times and choose to pay with PayPal for simplicity and I can get my money back if something were going to happen with the transaction. So, after getting pressure from Icann, the activist investor, eBay agreed to split itself up.
I own a 4-plex and a triplex, so I have many appliances that need to be fixed. Many times, I just do research online to see what part need to be replaced and I just use eBay to buy the parts. It is quite simple to fix, as many of the fix only require a few screws, as long as I get the right diagnosis. I can’t see myself stop using eBay as the prices are a lot cheaper fixing the appliances rather than buying new ones or hire someone who would blow up the prices.
What you you think? Have you taken advantage of the recent stock pullback?