MRV Communications Inc. (NDAQ:MRVC) shares rose more than 20 percent earlier this week after the company finally made good on its promise to spin-off Source Photonics via an initial public offering. The number of shares to be offered and the price range of the proposed offering have not yet been determined, but the IPO is planned to net up to $130 million for the optical communication products maker. Shareholders are hoping that the move will unlock value through the separation.

Source Photonics makes optical subsystems used to transmit high-bandwidth video, voice and data. Its customers include Alcatel-Lucent, Motorola, and Tellabs. The division posted a loss of around $1.4 million for the nine months ended September 30th compared to a $311,000 loss for the same period a year earlier. Revenue during that period increased 40 percent to $93 million. Meanwhile, the company expanded its employee base to 1,486 employees and full-time contractors worldwide.

Spin-offs in general often prove to be great investments for a variety of reasons; however, this spin-off is slightly different for a number of reasons. First, MRV is only selling the company’s Class A shares while retaining all Class B shares for itself (although they may be spun-off later). Secondly, Source Photonics is a company that is losing money operating at a loss. And finally, this offering is more of an IPO than a spin-off in that new shares are being issued.

In the end, this spin-off may not be worth investing in immediately, but any divesture of Class B shares by MRV would definitely be worth watching. Also, MRV itself will be able to save money and realize IPO proceeds and profits as a result of this spin-off. Therefore, it may be worth watching the parent company itself.

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Bear Stearns (NYSE:BSC) shares rose marginally after a British billionaire disclosed a 9.57 percent stake in the firm even as shares continue to fall. Joseph Lewis, the 486th richest person in the world, has acquired almost two million more shares of the investment bank as a part of an option strategy that appears to be backfiring. Shareholders are hoping that the billionaire investor will hold on to the stock and take some action to unlock value in the company’s shares.

Lewis became the Bear Stearn’s largest shareholder in September after the firm’s two hedge fund collapsed due to bad bets on mortgage-backed securities. The billionaire spent nearly $860 million to buy 7% of the company when the stock was trading at more than $100 a share, which means he was already sitting on a paper-loss of more than $100 million. Now, Lewis appears to have been forced to acquire $1.19 billion in additional shares at an average price of $107.31 a piece, which will likely further extend his losses.

Bear Stearns has been hit particularly hard by the mortgage downturn with a fourth quarter net loss of $854 million on write-downs of $1.9 billion on its portfolio of residential mortgages and related assets. Meanwhile, many analysts are not even sure that the pain is over in the mortgage markets. Many prime mortgages are due to reset to higher rates and default rates among those borrowers are also expected to rise. The economy is also on uncertain ground, and any general slowdown could affect investment banking business.

In the end, shareholders are hoping that the billionaire will do something to help the company turn itself around. Bear Stearns is in a world of hurt now and it appears that this billionaire is too. Combined, these factors make BSC a stock worth watching closely!

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There’s a lot of talk about a recession these days from both politicians and economists, making many investors very nervous about the future. Recession is defined as two consecutive quarters of negative gross domestic product (GDP) growth. Currently, there is no consensus on whether we are in a recession, going into a recession, or simply in a bad market, but it never hurts to learn how to protect your stock portfolio.

Most people sell stocks from their portfolio going into a recession, but they should be buying. After all, “buy low, sell high” is the fundamental definition of how to make a profit. Those who have a long time until they plan on withdrawing money from their portfolio should look at increasing contributions to their 401(k) and IRA accounts. Meanwhile, those who are retiring soon should consider staying the course and riding out the downturn.

The most important thing you can do to protect your portfolio is to diversify your investments. This means not only buying different stocks within the United States, but also buying ETFs or mutual funds that track indexes in foreign countries. After all, countries like China and Brazil are soaring while U.S. markets are faltering. Meanwhile, diversification itself is statistical proven to not only increase returns but reduce volatility, which means you will realize more profits from your portfolio!

Recessions also produce many opportunities to profit substantially. Stock pickers who are able to sort through fundamentals will be able to find many bargains during a recession. Particularly, companies that export the majority of their products may be in a great position with a weak dollar and weak domestic economy. Meanwhile, companies providing products that people need everyday – such as energy – may also be companies that are unnecessarily beaten down.

On a related note, it is important to keep a healthy savings account since unemployment tends to rise as economic growth slows. Typically, it is important to keep three to six months worth of living expenses in an emergency fund. This money should be kept in a liquid account like a money-market account that makes more than a standard savings account but does not carry the risk of an investment account.

In the end, be sure to keep purchasing stock during the downturn and maintain a diversified portfolio that fits your risk profile. Also be sure to keep money on the side in case you are affected in other ways by a recession. Combined, these things can help you recession-proof your portfolio!