I love the payments industry.
I love corporate spin-offs.
And I love the buyouts that so often follow spin-offs.
Getting all three of these in one deal would be a grand slam that really juices your profits.
For the deal I'm bringing to you today, we're guaranteed the first two.
And if that spin-off gets bought out, we'd have a really big winner on our hands.
Here's how I think this "grand slam" will come together…
When Divorce Is Profitable
Here we have a "legacy" tech firm that plans to spin off its much faster-moving payments unit later this year.
In this transaction, you'll buy shares in one company now. And after the larger firm separates that payments business into an independent, publicly traded company – a "spin-off" – you'll end up with investments in two great companies.
And that second stock will be free – you won't have to lift a finger or pay another dollar to get it.
Years of research shows us that new spin-offs usually beat the market by double digits for up to three years – so we already have a pretty good deal going here.
However, I believe this separated company will be very attractive to several suitors within the $1.6 trillion payments industry, which is rapidly changing and growing due to near-daily innovations in mobile technology and e-commerce.
A corporate breakup is almost always a rallying point for the new company's stock.
The reason is simple. As companies bulk up over the years, their sheer size and complexity often serve as a brake on their fastest-growing units.
In fact, the more disruptive the technology, the more likely the spun-off firm will outperform both its parent and smash the overall market.
If you're not convinced, just look at that research.
Lehman Bros. studied 85 spin-offs between 2000 and 2005 and found that they beat the Standard & Poor's 500 Index by as much as 45% in their first two years as independent companies.
Moreover, the further you look back, the brighter the picture.
Two professors at Penn State University examined 30 years of market data covering 174 spin-offs. Their study revealed that in the first three years of operations these new companies showed price appreciations of 76%, beating the S&P 500 by 31%.
The corporate spin-off I want to share with you today, I believe, will do even better.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.