In this article, we will take a look at 10 Recent Spin-off Companies That Hedge Funds Are Piling Into.
Spin-offs enable businesses to reduce operational burdens and focus on their most strategic options. However, the justification for a spinoff is far more complex, ranging from financial or legal constraints to conflicting strategic interests. Historically, spin-offs provided significant chances for outperformance. While the average spin-off yields moderate excess returns, studies repeatedly demonstrate that the best-managed spin-offs beat the overall market.
While spin-offs may underperform their “parent” firms for the first five days after the split, they outperform them by an average of 12% during the first 400 trading days. According to a long-term analysis conducted by The Edge Group, spin-offs have typically outperformed market returns by more than 10% annually for the past 25 years.
General Electric is a solid representation of how spin-offs can reveal untapped value. GE stated in 2021 that it would split into three independent companies, aiming to offer clearer strategic focus, better operational oversight, and greater transparency for investors. Prior to the split, GE shares were hovering around $67, translating to a market cap of roughly $290 billion. After the separation, the three resulting companies were collectively valued at $474 billion. This breakup effectively added $184 billion in value, a boost of about 64%.
Our Methodology
For this list, we scoured Insider Monkey’s database and selected the top ten firms spun out in the previous five years that were popular among hedge fund investors. These stocks are also popular among analysts.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10. Amrize Ltd (NYSE:AMRZ)
Amrize Ltd (NYSE:AMRZ) ranks among the recent spin-off companies that hedge funds are piling into. On March 16, Truist Securities reaffirmed its Buy rating on Amrize Ltd with a $75 price target. The firm stated that Amrize has gained prominence since its spinoff, especially for its cement revenues and margins.
Truist believes Amrize Ltd is one of the few names that do not require a residential cycle to expand, citing price increases in aggregates as well as cost-cutting efforts. The firm also noted increased industry concerns about a potential cement tariff, which might favor local players like Amrize Ltd with volume and pricing increases over the summer.
In a separate vein, Amrize Ltd confirmed the conclusion of its acquisition of PB Materials Holdings, Inc., which expands its operations in West Texas with 26 new locations. This acquisition increases Amrize’s foothold in a region with a growing infrastructure and energy project pipeline.
Amrize Ltd provides building solutions for infrastructure, commercial, and residential construction markets in North America through its Building Materials and Building Envelope segments.
9. Amentum Holdings Inc. (NYSE:AMTM)
Amentum Holdings Inc. (NYSE:AMTM) ranks among the recent spin-off companies that hedge funds are piling into. On March 12, Truist Securities reiterated its Buy rating for Amentum Holdings Inc., with a $42 price target. The firm underlined the company’s long-term growth direction, which is supported by its main revenue streams.
Amentum’s $4 billion growth portfolio, separated into three segments: new nuclear, critical digital infrastructure, and space systems and technologies, accounts for roughly 30% of the company’s revenue.
Truist stated that the company looks to be well protected from possible artificial intelligence risks due to its lack of IT services and emphasis on mission-critical tasks. The firm suggested that investors should largely ignore potential near-term dangers such as the private equity backlog and the Iran war.
In addition, S&P Global Ratings raised Amentum Holdings Inc. to ‘BB’ from ‘BB-‘ due to solid operating performance and significant debt repayments, with the forecast remaining steady. Amentum Holdings Inc. proactively repaid $750 million of term loan debt in fiscal 2025, thereby accelerating its deleveraging efforts.
Amentum Holdings Inc. provides mission-critical, technology-driven services to government and commercial markets.
8. Everus Construction Group Inc. (NYSE:ECG)
Amrize Ltd ranks among the recent spin-off companies that hedge funds are piling into. On February 26, Freedom Capital Markets boosted its price target for Everus Construction Group Inc. (NYSE:ECG) to $138 from $110, while maintaining a Buy rating on the company’s shares. The firm reported earnings and revenue that exceeded forecasts, as well as a record backlog, indicating strong insight and capacity efficiency in 2026.
Everus Construction Group Inc. reported earnings per share of $1.08, which was 56.52% greater than the expected $0.69. Meanwhile, revenue for the quarter came in at $1.01 billion, a 33% increase from the prior year.
The same day, Cantor Fitzgerald raised its price target on Everus Construction Group Inc. to $115 from $97 while retaining a Neutral rating on the company’s shares. The adjustment came after the firm’s conversations with Everus CEO and CFO. Management stated that underlying end-market conditions remain favorable, notably in the data center, transmission, and distribution areas.
Everus Construction Group Inc. provides contracting services in the US. It operates through two segments: Electrical & Mechanical (E&M) and Transmission & Distribution (T&D). It serves utilities, manufacturing, transportation, commercial, industrial, institutional, renewables, and governmental customers.
7. South Bow Corporation (NYSE:SOBO)
South Bow Corporation (NYSE:SOBO) ranks among the recent spin-off companies that hedge funds are piling into. On March 9, Wolfe Research boosted South Bow Corporation’s price target to $27 from $24, despite retaining an Underperform rating on the company’s stock. The price target hike comes after the company rallied in response to news of the Keystone XL reboot, which has been verified as the Prairie Connector project.
Meanwhile, Scotiabank increased its price target for South Bow Corporation to $34 from $30 on March 6, retaining a Sector Perform rating on the stock. The revision came after South Bow’s fourth-quarter earnings report.
South Bow Corporation reported fourth-quarter adjusted EBITDA of $252 million, which was marginally higher than Scotiabank’s estimate of $250 million and the consensus of $250 million. The company reiterated its EBITDA guidance for 2026 and put the Blackrod project into operation.
South Bow Corporation owns and operates critical crude oil pipelines and facilities spanning Canada and the United States, primarily connecting Alberta’s oil production to US refining markets in the Midwest and Gulf Coast.
6. Versant Media Group, Inc. (NASDAQ:VSNT)
Versant Media Group, Inc. (NASDAQ:VSNT) ranks among the recent spin-off companies that hedge funds are piling into. Versant Media Group, Inc. posted full-year 2025 revenues of $6.69 billion, a 5.3% decrease from $7.06 billion in 2024, as the company declared its first quarterly dividend and authorized a $1 billion share buyback.
The company’s attributable net income in 2025 came in at $930 million, a decrease of 31.8% from $1.36 billion in the previous year. Adjusted EBITDA also plummeted 14.5% to $2.43 billion, while Standalone Adjusted EBITDA, which includes costs for running independently, fell 9.1% to $2.18 billion.
Looking forward, Versant Media Group, Inc. intends to launch several significant projects in 2026, including a direct-to-consumer subscription service and an advertising-supported streaming platform. The company plans to boost its income mix from non-pay TV channels to 33% over three to five years, eventually reaching 50%.
Versant Media Group, Inc. is an American global media company that was spun off from Comcast on January 5, 2026. It is headquartered in New York City and operates a portfolio of cable networks and digital platforms.
5. Solventum Corporation (NYSE:SOLV)
Solventum Corporation (NYSE:SOLV) ranks among the recent spin-off companies that hedge funds are piling into. On March 20, CIBC reiterated its Outperformer rating on Solventum Corporation and its $37 price target. The firm believes the company’s 2026 forecast, which is slightly higher than consensus estimates, includes some caution, notably on gross margins.
CIBC stated that management might use increased balance sheet capacity for mergers and acquisitions to increase scale, footprint, and service offerings, with deals potentially occurring in 2026.
Meanwhile, following the company’s full-year results, Jefferies reiterated its Buy rating and $32 price target for Solventum Corporation. The company slightly surpassed top-line expectations for its fiscal year earnings, while adjusted EBITDA came in slightly below Jefferies’ forecast, though above consensus.
The firm said the fiscal 2026 forecast is prudent but fair, generally in line with consensus, even though it assumes a lower gross margin than Jefferies estimates.
Solventum Corporation is a healthcare company that develops, manufactures, and commercializes a portfolio of solutions to address critical customer and patient needs in the US and internationally. It has three segments: Medsurg, Dental Solutions, and Health Information Systems.
4. Grail Inc. (NASDAQ:GRAL)
Grail Inc. (NASDAQ:GRAL) ranks among the recent spin-off companies that hedge funds are piling into. Following investor meetings with company management, Guggenheim reiterated its Buy rating and $130 price target for Grail Inc. on March 23. The firm believes Galleri has long-term value as a broad-based multi-cancer early detection test, especially now that a legislative avenue for Medicare funding of an FDA-approved test has been established.
Guggenheim said it is optimistic that the FDA will approve Galleri, making it the first FDA-approved multi-cancer early detection test. The firm anticipates that future releases of more detailed data from the NHS trial will resolve the concerns raised by the trial’s primary endpoint miss and show that Galleri’s performance, safety, and efficacy remain comparable with the PATHFINDER 2 ESMO data reading.
This came after the company suffered a setback when its NHS-Galleri study failed to fulfill its primary target of lowering Stage III-IV cancer diagnoses.
Grail Inc. is a commercial-stage healthcare company that develops a technology for the early detection of cancer. The company employs software, machine learning, and automation to identify and detect multiple deadly cancer types at earlier stages.
3. Qnity Electronics, Inc. (NYSE:Q)
Qnity Electronics, Inc. (NYSE:Q) ranks among the recent spin-off companies that hedge funds are piling into. On March 18, Qnity Electronics, Inc. announced a partnership with NVIDIA to advance materials research and development for semiconductors. The partnership aims to support studies on materials for next-generation AI, high-performance computing, and sophisticated packaging systems.
According to Randy King, Qnity’s Chief Technology and Sustainability Officer, using accelerated modeling enables the company to shorten development times and bring new tech to the market faster, while improving performance.
Moreover, on March 11, Qnity Electronics, Inc. established a 385,000-square-foot manufacturing plant in Newark, Delaware. The facility features a new production line that manufactures components for chemical mechanical planarization (CMP) pads. The development is part of the company’s multi-year initiative to boost semiconductor manufacturing capacity.
Qnity Electronics, Inc. manufactures electronic materials for the semiconductor and electronics industries, with its brands including Acuplane, Circuposit, Duroptix, EPIC, Ikonic, Kalrez, Kapton, Laird, Microfill, Pyralux, Riston, Solderon Tin, and Silveron Silver.
2. Waters Corporation (NYSE:WAT)
Waters Corporation (NYSE:WAT) ranks among the recent spin-off companies that hedge funds are piling into. Waters Corporation discussed its strategy at the TD Cowen 46th Annual Health Care Conference on March 2, with CEO Udit Batra emphasizing development ambitions and integration efforts following the acquisition of BD Diagnostic Solutions.
The company anticipates 6.25% organic growth in its core business in 2026, fueled by strong performance in chemistry and services. That said, near-term uncertainties persist, notably DRG-related headwinds in China, which are expected to result in a 2.5%-3% decrease in Q1 and weaker growth through mid-year before a healthier Q4 rebound.
According to Batra, Waters’ operational priorities include integrating the BD business, strengthening pricing techniques, and investing extensively in bioseparations, which now account for more than 70% of R&D spending.
Looking ahead, the company hopes to drive EPS growth and margin expansion through cost management and tariffs, and to profit from a normalized LC-MS replacement cycle by 2027.
Waters Corporation is a global leader in life sciences and diagnostics, specializing in analytical technologies.
1. GE Vernova Inc. (NYSE:GEV)
GE Vernova Inc. (NYSE:GEV) ranks among the recent spin-off companies that hedge funds are piling into. On March 23, Evercore ISI boosted its price target for GE Vernova Inc. from $905 to $940 while retaining an Outperform rating on the company’s shares. The firm noted recent non-deal tour discussions with the energy sector and GE Vernova Inc. executives as evidence that Q1 is gearing up to be another robust period for contracts and free cash flow.
Evercore ISI also increased its EBITDA projections for fiscal years 2026 through 2028 by 3% to 7%, citing GE Vernova’s earnings growth and visibility in today’s high geopolitical-risk environment.
In addition, on March 10, GE Vernova Inc. stated that its Global Nuclear Fuel partnership has gained a contract extension with Entergy to deliver fuel to the Grand Gulf and River Bend Station nuclear power facilities until 2035. The deal expands the existing supply contract for four batches of the new GNF4 fuel design.
GE Vernova Inc. is an energy company that provides various products and services that generate, transfer, orchestrate, convert, and store electricity in the US, Europe, Asia, the Middle East, and Africa. The company operates through three segments: Power, Wind, and Electrification.
Hedge Fund Resource Center