Profiting From Special Situations

  • December 11, 2006

A subscriber recently asked me if I was aware of any websites that have an email notification system or an RSS feed for special events like stock splits, spinoffs and special dividends. Academic research has shown that companies declaring stock splits and special dividends tend to do well for a period of time after the announcement of these events. The stock split theory discussed in the academic paper “Underreaction to Self-Selected News Events: The Case of Stock Splits” by professors David Ikenberry and Sundaresh Ramnath formed the basis for selecting Logitech (LOGI) and Infosys (INFY) in the June 2006 edition of InsideArbitrage.

Logitech is up more than 44% and Infosys is up an impressive 54% since June. Another recent example is the asset management company U.S. Global Investors (GROW) that has almost doubled since it announced a stock split on November 8, 2006. Yes, a gain of over 92% in little over a month. I am still kicking myself for not taking a closer look at U.S. Global, especially since I had a drink with one of its directors less than two months ago.

Spinoffs are also interesting events, as more often than not, companies that are spun off as independent entities tend to do better than their corporate parents. An example of a spinoff that has done exceedingly well is Chipotle Mexican Grill (CMG), which was spun off from McDonald’s (MCD) through an IPO earlier this year. Chipotle went public at $22 a share and is now up more than 145% at $54.85. In this particular instance, the parent company also proved to be a good investment. For analysis of a recent spinoff, check out this article by George of Fat Pitch Financials about Sally Beauty Holdings (SBH).

Given that these special situations could help one outperform the indices, I can see why a service that notifies investors about special events could be very beneficial. Here is a list of websites that I am aware of and if you are familiar with other resources please feel free to share them by leaving a comment.

  1. Stock split calendar on
  2. Stock split notification from (email)
  3. Spinoff newsletter ($)
  4. Spin-Off Advisors ($$$$$ – Annual subscriptions are $20,000. Yikes!)
  5. IPO calendar on
  6. IPO analysis on SeekingAlpha (email and RSS)
  7. Blog (RSS)
  8. IPO Buzz on (RSS)
  9. Academic Study on Special Dividends (PDF)
  10. Academic Study on Stock Splits ($)
  11. Fat Pitch Financials Contributor’s Corner ($)
  12. List of Stock Buybacks on
  13. Stock Buyback News on MSN Money

Clearly not every company that splits its stock, declares a special dividend or is a spinoff of a larger company is going to do well. However these special events do provide fertile hunting grounds for investors.