Aug. 29 at 5:55 PM
Keurig Dr Pepper (
$KDP) plans to spin off into two companies after acquiring JDE Peet's (
$JDEPY). After hearing about this move, I became curious about whether spin-offs actually create good opportunities for investors.
Turns out, the data I found suggests they're more likely to fizzle than provide refreshment to portfolios:
๐ The Invesco Spin-Off ETF (
$CSD) has underperformed the broader market over 10 years (7.7% vs 12.8% annually)
๐ A comprehensive review of 89 studies spanning 45 years found "inconclusiveness" on long-term spin-off performance
๐ธ Analysis of 350+ major spin-offs showed the average separation delivered just a 5% market cap increase after two years
โ ๏ธ Here's the kicker: 25% of spin-offs actually destroyed significant shareholder value
๐ The bright spot? Top-performing spin-offs (top 25%) saw 75% market cap increases - but only when they had clear, robust separation strategies
https://www.aaii.com/investor-update/article/337692-history-cautions-that-keurig-dr-pepper-spin-off-returns-could-fizzle