If institutional investors want to buy a company because it's about to spin off an undesirable part of the business, they'll usually wait until after the spinoff occurs before buying, in order to avoid having to sell the spinoff and to avoid the risk that the deal doesn't go through. This often causes shares in the parent company to rise right after the spinoff, for a short time. So if you like the parent company, on average it's better to buy it before the spinoff.

Tags: spinoffs

  

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