Last week ConocoPhillips completed the spinoff of Phillips 66 — its refining, marketing, chemicals and transportation arm — creating the newest independent U.S. refiner.
Naturally, several “Mad Money” viewers have asked whether host Jim Cramer prefers ConocoPhillips, the exploration and production company, or Phillips 66, the refining business. Avid viewers know he likes when companies break themselves up in order to unlock value for shareholders. If an impending break-up makes sense, Cramer thinks it’s likely worth owning the stock. ConocoPhillips is no longer part of that group, though, because it broke itself up last week.
A similar break-up occurred with Marathon Oil in July 2011. For those who owned the stock from the time of the announcement in January 2011 through the date of the break-up some seven months later, the stock posted a 30 percent gain. After the split-up, though, the stock is down 18 percent. Marathon Petroleum, its refining business, is also down by 2 percent.
“Once the actual break-up occurs, the break-up trade is over and you have to analyze the separate components on their own merits,” Cramer said, noting investors should analyze both ConocoPhillips and Phillips 66 now that they are standing on their own.Page 1 of 3 | Next Page