Why ONEOK's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of natural gas company ONEOK (NYSE: OKE  ) jumped 21% today after announcing a spin-off.

So what: The company is spinning off its natural gas distribution business in an effort to build more focused companies. Investors will maintain their shares in ONEOK and get a stake in the new company through a stock dividend. The exact dividend distribution has not yet been determined and management expects to close the deal in the first quarter of next year.  

Now what: The move is expected to allow ONEOK to pay a higher payout after the deal is complete, which may attract dividend investors. This is essentially a move to unlock value in the stock, which has traded to a discount to rivals. This doesn't change the fundamental investment thesis but, for investors looking into either the pipeline or the utility side, it gives the option for a focused investment instead of the diverse company ONEOK had become.  

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