Another eventuality that must be considered when following the Formula but is not covered in The Little Book that Beats the Market is a Stock Spin-off. This is when a company divests in some part of the company, “spinning off” a separate company that, in this case is publicly-traded and is represented by a different stock symbol. TEGNA shareholders received shares of spun-off company Cars.com.
A stock spin-off can happen for different reasons. In this case I think TEGNA believed that spinning off Cars.com would allow both parts of the business to better focus on their core strengths. TEGNA is a media company that has a lot of TV stations, and Cars.com is a website dealing with all things Cars.
The spin-off gave me one share of Cars.com for every share of TEGNA owned, which amounts to 31 shares. I’m planning to hold on to the shares until my next sale of a Formula stock and the purchase of my next Formula stock.
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