The freed-up assets do well. A Lehman Brothers study found that since 1990 shares of the average spinoff division returned 18.2% above the S&P 500 during its first two years as a stand-alone company. But you can make even more money by buying shares of the parent company before it announces its plans for a spinoff. Lehman looked at total returns over a three-year period (the year before a spinoff was completed and the two years that followed) and found that the parents beat the S&P by 25 percentage points.

"Businesses are run better once they are out in the sunshine by themselves," says Joseph Cornell of Spin-Off Advisors. They also attract buyout offers: A spinoff is four times as likely to be bought out as a typical S&P company, according to Spin-Off Advisors.

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