Spinoff activity is picking up

Today, both Pfizer and Honeywell announced potential spinoffs. Investors tend to like this development since the independent companies often outperform the market and the parent as they focus on their core competencies and have better economies of scale. Pfizer is looking for alternatives for its consumer healthcare business, which generated $3.4 billion in revenue in 2016. Honeywell is looking to spinoff its Car Parts and Home Systems Businesses, which have combined sales of about $7.5 billion.

Looking beneath the hood at historic data, it can be seen that increases in spinoff activity can also signal market tops. When equity is fully valued and growth is sluggish, sometimes a spinoff is the best available option for large companies. So far, activity is below that seen in prior years, but these announcements show that interest is definitely picking up.

Article below details spinoff data with major market tops.
https://www.cnbc.com/2017/10/10/there-was-a-flurry-of-spinoff-announcements-tuesday.html