Spin City

Investors sidetracked by the consolidation craze shouldn't ignore spin- offs in 1998. Last year, more than 40 companies were spun off-that is, a subsidiary or division of an existing company became an independent company-and over 20 spin-offs have already been announced for 1998, according to equity analyst Joseph Cornell of Chicago investment firm High Yield Analytics. New management gets the chance to sharpen the spun-off company's focus and improve operating performance: Cornell notes that spin-offs typically outperform the market by 13 percent in their first 18 months. Cornell recommends watching Ameritech, Ford, and Philip Morris as candidates for spinning off a portion of their operations.

Foreign Receipts

A recent Citibank study shows that foreign companies offering American depositary receipts (shares in foreign companies sold on U.S. equity markets) tend to outperform their local market by more than three percentage points, returning an average of 12.56 percent a year versus 9.14 percent for companies that don't offer ADRs. "The demand for the more accessible ADR companies will drive the value of the local shares higher than those local companies without the larger pool of investors," says Citibank global managing director James Donovan.

Money

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