Pioneer Natural Resources (NYSE:PXD) jumped nearly 10% on Wednesday amid speculation that the company will spin off some of its assets in an effort to boost their stock price. The rumors took off after the company announced that it would consider creating a Master Limited Partnership - or MLP - for some of its exploration and production assets. Many analysts believe that a spin off has the potential to unlock significant value and raised their price targets for the company.
Spin offs not only provide the parent company with excess cash, but the new entity also provides a great opportunity as spin offs generally outperform the overall market during their first year. The excess cash at the parent company can then be used for share buybacks, special dividends, or other methods to unlock shareholder value. While no definitive announcement has been made, this is definitely a stock
worth watching as any spin off could mean significant share appreciation for PXD shareholders!
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