“An SEP… is something that we can’t see, or don’t see or our brain doesn’t let us see, because we think it’s somebody else’s problem. That’s what SEP means. Somebody else’s problem. The brain just edits it out.”
— Ford Prefect in Douglas Adams’ Life, the Universe and Everything
In a scene from Douglas Adams’ Life, the Universe and Everything, Arthur Dent and his alien friend Ford Prefect end up at a cricket match in modern-day England. A crowd of spectators is enjoying the game when a giant spaceship descends from the sky and hovers directly over the field. But only Arthur and Ford notice the ship.
Ford explains that the ship is using a “Somebody Else’s Problem field generator.” Essentially, the device makes people think the spaceship isn’t their concern — effectively rendering it invisible. Ford and Arthur can see it because they know what they’re looking for… while the crowd remains completely oblivious.
That’s how I feel sometimes when sifting through the big financial news sources. The pages and airwaves have stories loaded with opportunities, but few people seem to be paying attention. Investors see headlines but assume they’re someone else’s problem… letting thousands — even millions — of dollars in potential profits slip by.
Take, for instance, stories about stock spinoffs. A spinoff is simply when a business creates a separate company from one of its existing divisions. It’s like a new company without an IPO. Shares get distributed to insiders and shareholders.
Spinoffs usually don’t make the front-page news. They’re usually sidebar items — where people looking for stock ideas are most likely to pass right over them. The lack of coverage is intentional — companies usually don’t like to announce spinoffs because, historically, the stocks of both companies take a dive.
The parent company is literally extracting a portion of its value, so the price takes a hit. Meanwhile, investors in the parent company suddenly find themselves holding shares in a company they didn’t ask for. If they don’t want the shares — or, in the case of mutual funds or ETFs — can’t hold them, the shares are immediately sold back into the market… thus lowering the price.
But to people who know what they’re looking for, this is the best time to strike. That’s because while the funds and old shareholders are shedding the spinoff stock, the new company formed by the spinoff is reinventing itself. Managers start getting stock options and incentives they didn't have in the parent company. Business gets focused. Costs get cut. Marketing and products get fixed. Value gets "unlocked."
— Ford Prefect in Douglas Adams’ Life, the Universe and Everything
In a scene from Douglas Adams’ Life, the Universe and Everything, Arthur Dent and his alien friend Ford Prefect end up at a cricket match in modern-day England. A crowd of spectators is enjoying the game when a giant spaceship descends from the sky and hovers directly over the field. But only Arthur and Ford notice the ship.
Ford explains that the ship is using a “Somebody Else’s Problem field generator.” Essentially, the device makes people think the spaceship isn’t their concern — effectively rendering it invisible. Ford and Arthur can see it because they know what they’re looking for… while the crowd remains completely oblivious.
That’s how I feel sometimes when sifting through the big financial news sources. The pages and airwaves have stories loaded with opportunities, but few people seem to be paying attention. Investors see headlines but assume they’re someone else’s problem… letting thousands — even millions — of dollars in potential profits slip by.
Take, for instance, stories about stock spinoffs. A spinoff is simply when a business creates a separate company from one of its existing divisions. It’s like a new company without an IPO. Shares get distributed to insiders and shareholders.
Spinoffs usually don’t make the front-page news. They’re usually sidebar items — where people looking for stock ideas are most likely to pass right over them. The lack of coverage is intentional — companies usually don’t like to announce spinoffs because, historically, the stocks of both companies take a dive.
The parent company is literally extracting a portion of its value, so the price takes a hit. Meanwhile, investors in the parent company suddenly find themselves holding shares in a company they didn’t ask for. If they don’t want the shares — or, in the case of mutual funds or ETFs — can’t hold them, the shares are immediately sold back into the market… thus lowering the price.
But to people who know what they’re looking for, this is the best time to strike. That’s because while the funds and old shareholders are shedding the spinoff stock, the new company formed by the spinoff is reinventing itself. Managers start getting stock options and incentives they didn't have in the parent company. Business gets focused. Costs get cut. Marketing and products get fixed. Value gets "unlocked."
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