BHP & South32: Buy, Hold or Sell?

Assuming BHP Billiton shareholders give their blessing over the proposed transaction at today's EGM, investors are going to ask the question: what to do with shares in soon-to-be-separated South32? Apart from differing views on the outlook for base metals and other commodities, history suggests the correct answer depends on what is the investment/trading horizon? Research into prior corporate demergers in Australia reveals a surprising consistency in share price movements post listing for both parent and spin-off shares. Those with a two year investment horizon can draw confidence from the fact that combined shares' performance is likely to beat the index by a considerable margin between 12 and 24 months post separation. But not everybody is in it for the medium term. Plus there are consequences for BHP's standing, perception and index weight. My Weekly Insights this week sums up the issues that might be of interest to investors asking the question: Buy, Hold or Sell? And when exactly? (VIEW LINK)

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