Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Profit From These Special Situations

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

In his book You Can Be a Stock Market Genius, author and investor Joel Greenblatt highlighted the opportunity hidden in mergers and acquisitions, spinoffs, and restructurings. Some deals are so complex that the true value of a stock won't be unlocked until well after the fact, giving savvy investors a chance to get in early and grab hold of shares at a discount. Huge profits are possible, and he achieved 50% annualized returns for a decade investing in them.

We'll look at some announcements presenting an opportunity for profit and pair that with the views of the 180,000 members of Motley Fool CAPS to see what they think of the businesses involved. If the best and brightest in the investment community like these stocks, it may be worth your time to dive in further.

But not every deal is worth your money. It takes diving into the filings to understand the nuances, so don't use the stocks below as a buy list -- more due diligence is needed on your part.


CAPS Rating (out of 5)

Type of Situation


Hillshire Brands (NYSE: HSH  ) * Company split Sara Lee split into Hillshire and D.E. Master Blenders 1753.
News Corp. (NYSE: NWS  ) * Spinoff Publishing business distributed to shareholders on 1:1 basis.

Again, this is just a starting point for further research. Do your homework before committing real money to these special situations.

It plumps when you cook it
Apparently it is true that nobody doesn't like Sara Lee. After the split and renaming of the company into its meats business and beverage brands last month, investors are scarfing up the resulting companies. The CEO of cosmetics company Coty has already established a near-13% stake in D.E. Master Blenders coffee and tea operations, and there's speculation Hillshire Brands -- which got Sara Lee's Ball Park hot dogs and Jimmy Dean sausages business -- will make a tempting morsel for Kraft (NYSE: KFT  ) , Hormel, or Tyson Foods (NYSE: TSN  ) to swallow. Indeed, it's seen as a foregone conclusion that investors won't have long to enjoy snacking on its shares.

Investors should hope so, since the analysts at Goldman Sachs don't see much upside potential absent an "M&A event," since management offered up some sober guidance last month. That's likely part of the reason behind the muddled outlook of the CAPS All-Stars weighing in on the consumer goods company, more than a quarter of whom think it will have a tough time beating the broad market averages.

Keep an eye on the spinoff's developments and let us know in the comments section below or on the Hillshire Brands CAPS page what company you think might gobble up the hot dog vendor.

Read all about it!
A better bet might be the owner of The Wall Street Journal, Dow Jones, HarperCollins, and the Fox media empire -- News Corp. Although it's been something investors have wanted for years, Rupert Murdoch's decision to split the publishing business from the entertainment side got renewed impetus after the hacking scandal in Britain that still dogs the company.

Still, the spinoff is looking to be a gift to shareholders, who will get a publishing business that is infused with $2 billion in cash and no debt, counter to how most such spinoffs are crafted. According to Murdoch, it will be cash flow positive from the get-go. It will need that helping hand since it's become obvious that newspapers are a dying industry. Warren Buffett might be buying them up, but The New York Times' (NYSE: NYT  ) struggles, the bankruptcy of the publisher of The Los Angeles Times, and the demise of Lee Enterprises show it's all a downhill race.

Which is why some analysts are focusing on the legacy entertainment units that will be left behind. According to a Bloomberg report, one analyst said it's "the only things anyone buys News Corp. for" and is what generates the most revenues and profits for the company. Sounds to me like both resulting businesses will make for an interesting investment.

Let us know in the comments section below or on the News Corp. CAPS page whether you think this is big news.

Checking the mercury
It's obvious that Facebook is still the stick that stirs the social media drink these days, but The Motley Fool has created a new report, "Forget Facebook -- Here's the Tech IPO You Should Be Buying," which details a much better social media stock that has a longer runway for growth than Facebook. The report won't be available forever, so click here to get access today -- it's totally free.

Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Goldman Sachs Group. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1945341, ~/Articles/ArticleHandler.aspx, 10/26/2016 1:43:23 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 4 hours ago Sponsored by:
DOW 18,169.27 -53.76 -0.30%
S&P 500 2,143.16 -8.17 -0.38%
NASD 5,283.40 -26.43 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
HSH.DL $0.00 Down +0.00 +0.00%
Hillshire Brands CAPS Rating: **
NYT $11.45 Down -0.05 -0.43%
The New York Times CAPS Rating: **
TSN $69.04 Down -0.79 -1.13%
Tyson Foods CAPS Rating: ****