Market Overview

Cantor Sees 24 Spinoffs Coming In 2016

Cantor Sees 24 Spinoffs Coming In 2016
  • Cantor Fitzgerald predicts up to 24 spin-off deals on Wall Street in 2016.
  • The chemical industry is leading the surge with several major deals in the works.
  • In addition, merge-spin deals have been on the rise.

Cantor Fitzgerald analyst Steve Ferazani sees 2016 as the year of the spin-off on Wall Street. In a new report, Ferazani discusses the current spin-off frenzy and Cantor Fitzgerald’s top spin-off stocks to buy.

The Numbers

Cantor Fitzgerald expects as many as 24 spin-offs in 2016, with seven transactions possible by the end of Q1. According to Ferazini, all of this spin-off activity provides opportunity for traders. “We found stocks modestly outperform the broader market in the month before spin-offs are completed,” he explained.

The Year Of The Chemical Spin-Off

While the spin-offs associated with the E I Du Pont De Nemours And Co (NYSE: DD) and Dow Chemical Co (NYSE: DOW) mega-merger are not expected until 2017 at the earliest, there will be plenty of other spin-off activity in the chemical industry in 2016. Cantor Fitzgerald expects spin-offs by W. R. Grace & Co (NYSE: GRA), WestRock Co (NYSE: WRK) and Ashland Inc (NYSE: ASH) by the end of the year.

Related Link: CES 2016 Expected To Be Huge For Drones, Virtual Reality And Wearables

Merge-Spin Mania

The Dow/DuPont deal is also part of the growing merge-spin trend. Gaming and Leisure Properties Inc (NASDAQ: GLPI)/Pinnacle Entertainment, Inc (NASDAQ: PNK) is one such deal on the 2016 slate. Starwood Hotels & Resorts Worldwide Inc (NYSE: HOT) and Marriott International Inc (NASDAQ: MAR) also have a merge-spin deal in place for 2016.

Top Picks

Not all spin-offs create a buying opportunity for shareholders, but Cantor Fitzgerald analyzed all of the potential upcoming deals to pick out the best spin-off stocks to buy now. The firm names Barnes & Noble, Inc. (NYSE: BKS), Gannett Co Inc (NYSE: GCI), KLX Inc (NASDAQ: KLXI), Madison Square Garden Co (NYSE: MSG) and WestRock as its top spin-off stock picks.

Disclosure: the author holds no position in the stocks mentioned.

Latest Ratings for ASH

Mar 2020UBSMaintainsBuy
Feb 2020BMO CapitalMaintainsMarket Perform
Jan 2020Wells FargoMaintainsOverweight

View More Analyst Ratings for ASH
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