Claymore’s Spin-Off ETF Making Gains

June 15th at 3:00pm by Tom Lydon

The Claymore/Beacon Spin-Off (NYSEArca: CSD) exchange traded fund (ETF) may be a bit of a mystery, but one thing’s clear: it’s been performing strongly for the last year and year-to-date.

A spin-off is any company resulting from either of the following events: a spin-off distribution of stock of a subsidiary company by its parent company to parent company’s shareholders or equity “carve-outs” or “partial initial public offerings” in which a parent company sells a percentage of the equity of a subsidiary to public shareholders. [More New ETFs From Claymore.]

The Spin-off Index holds approximately 40 stocks selected, based on investment and other criteria, from a broad universe of U.S.-traded stocks, ADRs and MLPs. According to the fact sheet, companies in the index have been spun-off within the past two years, without limitations on market capitalization, but which are primarily small- and mid-cap companies with capitalizations under $10 billion.

The Claymore/Beacon Spin-Off ETF (NYSEArca: CSD) is up 8.5% year-to-date and 46.2% in the last year. Digging deeper into the fund, there are some events that appear to have been driving it higher lately:

  • VMware (NYSE: VMW) and Novell (NASDAQ: NOVL) today announced an expansion to their strategic partnership with an original equipment manufacturer (OEM) agreement through which VMware will distribute and support the SUSE(R) Linux Enterprise Server operating system. Mary Jo for zdnet reports that the deal has Microsoft (NASDAQ: MSFT) a little nervous. VMW is 4.6% of CSD.
  • Lord Abbet & Co. disclosed in an amended SEC filing that it has upped its stake in top CSD component Wabco Holdings (NYSE: WBT), from 9.3% to 11.03%. WBT is 4.6% of CSD.
  • The recent moves by Coca-Cola (NYSE: KO) and PepsiCo (NYSE: PEP) to buy out their biggest U.S. bottling partners triggered negotiations that will likely dump over $1 billion in Dr Pepper Snapple Group’s lap. The two beverage giants want to keep Dr Pepper Snapple’s (NYSE: DPS) brands in their distribution system, as they can drive up sales of the colas with which they share shelf space, says Jeremiah McWilliams for AJC. DPS is 4.4% of CSD.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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