Finding Treasure in Corporate America's Trash

Spin-offs remain a great hunting ground for under-the-radar stock ideas

DALL-E via Bing

Early last year, I almost fell into a spin-off trap...

I was looking for a new idea, and a friend had seen that medical technology company Becton Dickinson (BDX) was spinning off its diabetes business Embecta (EMBC).

As I learned early in my career, spin-offs can be a source of great investment ideas.

On the surface, Embecta seemed like it might be one...

Not only was it a pure play on diabetes, but it was the biggest manufacturer of insulin syringes and pen needles. And it gushed cash.

What's more, unencumbered by Becton Dickinson – which had milked Embecta for its own good – the setup was enticing.

But the more worked I did on it, including talking with the company and checking in with David Kliff of the Diabetic Investor, the more I decided to give it a pass.

And I'm glad I did... because Embecta has collapsed since the spin-off. Take a look...