Spin Offs: What it Means?

Spin offs is usually referred to as an area of discarded corporate refuse. Spin offs can take many forms but the end result is usually the same. A corporation takes a subsidiary, division, or part of its business and separates it from the parent company by creating a new, independent, free-standing company. In most cases, shares of the new "spin off" company are distributed or sold to the parent company's existing shareholders.

There are plenty of reasons why a company might choose to unload or otherwise separate itself from the fortunes of the business to be spun off. There is really only one reason to pay attention when they do: you can make a pile of money investing in spin offs. The facts are overwhelming. Stocks of spin off companies, and even shares of the parent companies that do the spinning off, significantly and consistently out perform the market averages.

Spin off is defined in investopedia as the creation of an independent company through the sale or distribution of new shares of an existing business/division of a parent company. A spin off is a type of divestiture.