10 Best Spin Off Stocks to Buy According to Hedge Funds

8. PHINIA Inc. (NYSE:PHIN)

Number of Hedge Fund Holders: 30

PHINIA Inc. (NYSE:PHIN) is a technology company involved in the design and manufacture of complex components for combustion and hybrid propulsion. The company serves both the automotive and industrial industries, with an emphasis on increasing fuel efficiency and lowering emissions. Phinia was formed back in July 2023 when BorgWarner Inc. split out its fuel systems and aftermarket operations into a separate entity.

PHINIA Inc. (NYSE:PHIN) recently released its fourth quarter earnings report, prompting mixed reactions from investors and experts. The company revealed a notable adjusted FCF of $72 million during the quarter alongside $253 million for the full year 2024. That said, Phinia also reported net sales of $833 million in the quarter, a 5.6% decrease from the previous year. When contract manufacturing sales were excluded, the reduction was a more modest 2.9% year on year.

On January 30, Northland launched coverage on PHINIA Inc. (NYSE:PHIN), rating it Outperform and setting a price target of $61. As electric vehicle adoption has fallen short of expectations and ICE and hybrid vehicles appear to have “far more staying power,” the firm believes this will be a significant benefit to PHINIA and that investors “still have yet to realize the growth opportunities and robust shareholder returns” in its future.

Voss Capital stated the following regarding PHINIA Inc. (NYSE:PHIN) in its Q3 2024 investor letter:

“We are long shares of PHINIA Inc. (NYSE:PHIN). A recent spin-off from Borg Warner (BWA), the company is an auto parts supplier that operates two distinct businesses – 1) Fuel Systems (original equipment manufacturer supplier) and 2) Aftermarket automotive products supplier.

The Fuels Systems business is uniquely positioned to capitalize on attractive competitive dynamics that we believe will allow the company to take gobs of market share in its niche markets over the coming years. As an internal combustion engine (ICE) parts supplier pure play, overly hyped expectations of electric vehicle (EV) penetration created an especially good long-term buying opportunity in PHIN earlier in the year…” (Click here to read the full text)