#57: Asif Suria On The Virtues Of Event-Driven Investing
Superinvestors and the Art of Worldly Wisdom
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How to Buy a Spinoff Stock
Spinoffs in the stock market can be a great opportunity for investors. They allow you to invest in either the spinoff company or the parent company. Sometimes the parent company will load up the spinoff with debt, making the parent company more attractive. One example is Biohaven, where insiders bought shares before the merger and made a significant profit after the spinoff. Spinoffs can be confusing, which deters many investors, but this confusion creates opportunities for those willing to do the work. Institutional managers often sell the spinoff, causing the stock to drop initially, but this can be a buying opportunity. Different strategies exist for when to buy, ranging from a few weeks to one to two years after the spinoff occurs.
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