Spinoffs haven’t been an easy sell for investors

Some companies are looking again to spinoffs as a way to unlock value for investors — but it’s been a tough sell.

Hewlett-Packard Enterprise, the business services arm of the former tech giant, last week was the latest big company to say it’s spinning off a piece of a business as a way to make itself more valuable. Medical device maker Varian Medical also last week announced plans to spin off its imaging business.

The number of companies making this move has dropped, with 13 companies in the Standard & Poor’s 1500 index announcing spinoffs so far this year, well off the pace of 58 in 2015, according to a USA TODAY analysis of data from S&P Global Market Intelligence. Earlier this year, Honeywell, Hilton Worldwide and Xerox all announced spinoffs,

Spin-Off Research says. Shares of spun-off companies hit a rough patch the past year. The S&P Guggenheim Spin- Off exchange-traded fund, which tracks these stocks, is down 17% the past 12 months.

But there’s been a bit of a change of heart this year. Shares of HPE soared 11% following the news last week of its enterprise service spinoff. “The strategic combination of HPE and CSC will proffer benefits to both IT giants, with the new company gaining from scale, technological proficiency, versatility, and skilled management,” according to a report from Spin-Off Research to clients. Beyond just HPE, spinoff shares have been at least keeping up with the market so far this year as the S&P Guggenheim Spin- Off ETF is up 4%, roughly in line with the rest of the S&P 500.

While the spinoff market has been difficult, spinoffs are still a good long-term play, says Joe Cornell, publisher of Spin-Off Re

search. Spinoff companies can focus resources on a specific niche and tie the compensation of executives to their performance, not to that of a larger organization.