It Pays to Go Small
It took months of delays and lawsuits... But on Tuesday, Skydance became one of the largest media conglomerates in the world.
Skydance is the name of the newly merged Paramount Skydance and Warner Bros. Discovery. Their new $111 billion deal is one of the most valuable mergers we've seen in the past decade. (The largest happened in 2020: the merger of United Technologies and Raytheon, which was completed in April for $135 billion.)
Despite these massive mergers, history shows us that companies are often stronger in separate pieces.
And many other conglomerates are splitting up... in a big way.
Our favorite way for a conglomerate to do so is by spinning off parts of its business.
When a company has a spinoff, it simply splits into two. If you hold shares of its stock worth, say, $100, you would end up with shares of two different stocks worth, say, $70 and $30.
But it's not the split that creates the magic. It's what happens afterward.
Spinoffs are proven to create value in a way that drives share prices up faster than the broad market.
Decades of studies have shown that the stock of the spun-off firm tends to outperform. One of the first studies came out in 1983 and looked at the period from 1963 to 1981. It found that spinoffs outperform by 2.84%. Later researchers have come to similar conclusions.
Perhaps Joel Greenblatt of Gotham Asset Management said it best in his excellent 1997 book, You Can Be a Stock Market Genius...
There are plenty of reasons why a company might choose to unload or otherwise separate itself from the fortunes of the business to be spun off. There is really only one reason to pay attention when they do: you can make a pile of money investing in spinoffs. The facts are overwhelming.
He quotes, among others, a Penn State study that showed spinoffs outperformed the S&P 500 Index by about 10% per year in their first three years of independence.
And even though investors discovered this idea in the 1980s, and in Greenblatt's bestseller, spinoffs continue to outperform. Take a look at Bloomberg's U.S. Spin-Off Index versus the S&P 500 since it started tracking such businesses in 2003...
When a profitable strategy remains so persistent over decades, it means something serious is happening. It's not just an investing trick. Spinoffs create real value.
And if you can figure out why, you can pick the best spinoffs.
My colleague Gabe Marshank believes a coming wave of corporate spinoffs could create one of the strongest investment environments he has seen for what he calls "ISOs," or investable spinoffs.
Gabe uses a five-part ISO Scorecard to identify the strongest opportunities within this group. Gabe says this process grew out of decades of professional experience and the strategy behind a single ISO investment that generated more than $100 million for his former firm.
To find out why 2027 is likely to deliver the biggest profit catalyst in 25 years for spinoffs, and how to position your portfolio for it, click here to hear Gabe's analysis.
Now, let's get to this week's Q&A... And as always, keep sending your comments, questions, and topic suggestions to feedback@healthandwealthbulletin.com. My team and I read every e-mail.
Vertigo or Lightheadedness?
Q: You did a very good job discussing vertigo, but as an otolaryngologist the most common problem I have seen was not true vertigo, but lightheadedness when moving from a more supine to upright position or medications given for vertigo as this elderly patient was given. It is something missed by many primary care doctors so I hope you have an opportunity to mention this somewhere. – J.S.
A: Thanks for writing in, J.S. This is a great point, and we wanted to make sure to share it with the rest of our readers.
Plenty of people experience short moments of vertigo, particularly when they sit up after lying down or stand up from a sitting position. We know that millions of Americans have orthostatic hypotension – where blood pressure can plummet upon standing. It's especially prevalent in people over 65.
The trick here is to move slowly. When you first get up in bed, give your body a minute a two to adjust to the new position before you fully get out of bed.
Side effects from plenty of medications include lightheadedness, such as statins, diabetes medication, antianxiety medication, and antidepressants (to name a few). Even common pain relievers can lead to that dizzy feeling.
Not eating or drinking enough can also lead to lightheadedness. Hypoglycemia (low blood sugar) hurts your brain's ability to function properly, which can trigger lightheadedness. Some medications make hypoglycemia more likely, especially if someone isn't eating enough (a common issue in the elderly). And if you're not getting enough fluid, your blood pressure drops, making it harder for your body to pump your blood. That means your brain might not get enough oxygen, causing dizziness.
Trouble with your inner ear – like an infection, excess fluid, or benign paroxysmal positional vertigo – commonly causes dizziness and lightheadedness.
If you think you have vertigo, take stock of when it occurs, review your medicines for side effects, and be honest about whether you're eating or drinking enough.
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Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
October 9, 2026