News & Press

When it comes to the stock market, are you an investor or a gambler? Most would want to be labeled an investor, of course. Nobody calls themselves a gambler. The latter throws up ideas of addiction and recklessness. The public stigma of gambling disorder includes ideas that those who suffer from it are “greedy” and “irresponsible,” the premise that they are at fault for their difficulties, and a desire to avoid social interaction with them.

Timing the markets is touted as a skill in investing but should never be practiced, and it really is a waste of time. In my 30 years of being in the market, I have never met anyone who can consistently time the market to their benefit. It’s dangerous to try to time the market or engage in speculative trading. Even for seasoned pros, attempting to predict the precise peaks and troughs of the market is extremely difficult and has a huge opportunity cost. Like this, speculative trading prioritizes recent price changes over underlying fundamentals. Instead of concentrating on short-term market timing or speculative trades that depend on luck rather than well-informed decision-making, investors should aim for a long-term strategy that emphasizes the quality of investments. Again, having the mindset of a long-term owner will help a great deal here.

Stock market investing can be profitable, but there are hazards involved. Investors need to be aware of the potential dangers and steer clear of some typical and common mistakes to increase their chances of success.

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Big tech stocks worked fantastically well in the first half of 2023. Can shares of Apple, Amazon. com, Nvidia, and the rest of the magnificent seven keep it up? For Wells Fargo, the answer in the case of Amazon is an unqualified yes.

SOTP valuations look at the value of all the different businesses inside a company, evaluating them separately to see if there is a big difference between the value of the individual units and the overall company. Sometimes investors are more attuned to SOTP math than others. Now is one of those times.

Amazon does a lot more than just e-commerce. It’s a prime candidate (get it) for SOTP math. The Edge Research founder, and special situations analyst, Jim Osman says Amazon stock could be worth up to $200 in a breakup scenario, up about 56% from recent levels.

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A strong trading start for Kenvue Inc. — the unit of Johnson & Johnson that makes brands including Tylenol — is showing similar pharmaceutical giants the benefits of spinning off their consumer health divisions.

The stock’s 23% rally in just two weeks after its $4.4 billion initial public offering on May 3 is a dramatic demonstration of investor demand for profitable businesses amid a dearth of traditional IPOs.

The success could very well drive J&J peers like Sanofi and Bayer AG to separate their consumer businesses. Kenvue’s shares are now valued at a higher earnings multiple that’s more in-line with the makers of popular household products like Colgate-Palmolive Co. and Procter & Gamble Co., indicating that there’s value to be unlocked in these businesses.

It’s a sentiment shared by Jim Osman, founder of special situations research firm The Edge Consulting Group. He considers Kenvue “an ideal example” for the trend of large companies using IPOs as a preferred route “to divest their divisions.”

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“The majority is always wrong; the minority is rarely right.” A lasting quote from Norwegian playwright Henrik Ibsen. A concept I buy very much into. It’s much like the Pareto Principle, also known as the 80/20 rule, which states that roughly 80% of the effects come from 20% of the causes.

The principle frequently serves as a benchmark for planning, prioritization, and decision-making. Individuals and organizations can make more informed and effective decisions and concentrate their efforts in the areas that are most likely to result in meaningful results by identifying the primary elements that account for most of the outcomes. I apply this principle to most of my life, sometimes unsuccessfully, but when I do, I become much more efficient and productive. I also apply this to investing. Of course, I analyze the numbers and projections, and most, like me, can do that to a certain extent. However, what I have found over the years is that having an analytical edge isn’t enough. The market environment, technology, social media, and the availability of systems that know how companies are performing in real time, put us all at a disadvantage. As well as this, focusing on the behavioral aspect of the investment is just as, if not more, important than analytics. Concentrating on this area at the very least can limit your losses.

As the legendary investor Benjamin Graham states, “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.”

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The spinoff of Johnson & Johnson’s consumer health business is the latest example of conglomerates looking to unlock value as investors flock to smaller, more nimble companies in a market environment more focused on profits than revenues.

The company, which will be known as Kenvue Inc., set the price range Monday for an initial public offering that values the business at almost $43 billion based on the top end of $20 to $23.

That valuation is in line with the estimate of Guggenheim analyst Vamil Divan, while special situations research firm The Edge Consulting Group sees room for investors to profit from the offering.

“We like the IPO,” which may offer an example for Bayer AG, Sanofi and other companies looking to split off their consumer-health businesses, said The Edge CEO Jim Osman

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From General Electric and 3M to Novartis and ABB to Alibaba and Vale: The trend is towards outsourcing of corporate divisions. The Market shows how the transactions affect the stock price and provides three examples.

So it’s no wonder spin-off announcements are piling up at the moment. “This has to do with the fact that the appetite for regular public openings has collapsed in the difficult stock market environment,” says Jim Osman of The Edge, an investment advisor focused on special situations.

“”Any company that wants to sell part of its shares with an IPO faces significant difficulties because investors do not want to pay a premium at the moment, as is the case in a bull market,” he adds.

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Please note that this article is in German only.

If you haven’t noticed, recently some of the biggest household companies are getting smaller and some are just about to become smaller. DuPont, United Technologies, IBM, and General Electric are just a few of the multi-billion-dollar corporations that have decided that the sum of their parts is greater than the whole in recent years. Kellogg, 3M Co. and Danaher are scheduled to break up later in the year too. But why this phenomenon?

Before we head down into the rabbit hole, something should be clarified. Spinoffs are the most valuable corporate action when it comes to a break-up. They are not manufactured investments like IPO’s, which are sold to the public at the highest possible price. With a Spinoff, you gain shares of the Spinoff company whether you like it or not, which throws up a range of dynamics. In fact, Spinoffs are the most inefficient way of distributing stock to the wrong people, but that creates opportunity.

Of all sectors, big tech hasn’t succumbed to breaking itself up as it chose to get larger and larger. With size come problems like regulatory scrutiny. Ultimately, several variables, such as public sentiment, political pressure, and legal changes, will determine whether large digital businesses are broken up. It may not take much to get there in the current political and social environment and if the economy takes a downturn, these Big Tech businesses will be under more pressure to act.

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As the three-ring circus of rising interest rates, inflation, and bank failures plays out, investors may be searching for opportunities that are less exposed to the performance of the overall economy. Corporate spinoffs and separations are worthy of consideration. Screening for attractive spins, however, is more involved than just simply eyeballing price-to-earnings ratios.

So Barron’s reached out to Jim Osman, founder of research firm The Edge, which identifies opportunities in special situations, including spinoffs, mergers, management changes, and shareholder activism. Spinoffs, in particular, have been fertile ground in the past. Osman has been tracking them for 20-plus years and found that companies involved in spinoffs beat the market in the one- and two-year periods following the spins.

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Jim Osman, The Edge Group, joins CGTN Europe to discuss the potential value in other tech break-ups following the announcement of segment IPOs from Alibaba.

Jim Osman, The Edge Group, joins CNBC’s “Fast Money” to discuss the fallout from the Alibaba split.