Phillips 66 (PSX), Fortune Brands Home & Security Inc (FBHS), Howard Hughes Corp (HHC): Performance in Three Recent Spinoffs Offers Insight Into Future Spinoff Successes

Howard Hughes’ Ride

Howard Hughes Corp (NYSE:HHC) was spun off during the tumultuous bankruptcy of former commercial real estate giant General Growth Properties (GGP – defunct). The company controls many of General Growth’s most attractive assets, including much of the real estate in the planned communities of The Woodlands, Texas and Columbia, Maryland. Although it can trace its roots back to its eponymous founder, the company’s current iteration as a real estate investment firm did not take shape until relatively recently. Like other firms in the space, the company looks poised to benefit from a recovering real estate market as well as its presence in affluent areas that escaped the worst effects of the recent recession. Since spinning off from its parent, Howard Hughes Corp (NYSE:HHC) has delivered a return of over 175 percent and looks poised to notch additional gains in the coming months.

Long-Term Outlook and Implications for Future Spin-offs

Each of these companies looks poised to grow in its own way. For its part, Phillips 66 (NYSE:PSX) is a well-capitalized, well-run company that looks to benefit from an existing energy distribution infrastructure. Although falling demand for gasoline could hurt its bottom line, it nevertheless exists in a relatively stable niche. Meanwhile, Fortune Brands Home & Security Inc (NYSE:FBHS) and Howard Hughes Corp (NYSE:HHC) can bet on a recovering housing market to support their bottom lines and may well deliver additional value in the months and years ahead. While these firms do not offer arbitrage opportunities, they do hold out the promise of market-beating performance. More importantly, they offer clear examples of the ways in which successful spin-offs should be structured. Keen-eyed investors would do well to take note and continue to look into new spin-offs coming out every month.

The article Performance in Three Recent Spinoffs Offers Insight Into Future Spinoff Successes originally appeared on Fool.com and is written by Mike Thiessen.

Mike Thiessen has no position in any stocks mentioned. The Motley Fool owns shares of Howard Hughes. Mike is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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