https://www.forbes.com/sites/janetnovack/2017/11/21/spin-gold-from-spinoffs-a-portfolio-of-5-castoffs-trounces-the-sp-500/#6bca4fde3e44
"In building The Spinoff Portfolio, we use a few rules to narrow the universe and select spinoffs that are more likely to succeed. Here are some of these common sense rules (a full list of the rules is at the end of this article):
Spinoffs tend to experience their best performance between their 1stand 7th birthdays. So, we only add spinoffs that are at least a year old and hold them in our portfolio until they reach the ripe old age of 7;
A spinoff needs to be fully independent of the parent. We only pick up spinoffs that have at least 70% of their shares floated in the market;
Selection Criteria:
1. Minimum market cap of $100 million
2. Price/Sales Ratio less than 3.
3. The twelve-month net income for all the years must be positive.
4. The free float of shares outstanding of the previous year must be 70% or greater.
5. The spinoff must have been spun-off for more than 1 year but less than 7 years.
6. If the spinoff company is currently less than 5 years old, the company is only eligible to enter the portfolio if its parent company has a credit rating above or equal to BB+ by S&P or Fitch or EJR, or Ba1 by Moody’s. If the company doesn’t have a rating from any of the four rating agencies, it is also eligible to enter our portfolio. If the spinoff company is 5 years or older, the spinoff itself must meet the same credit rating criteria.
7. Select the most recent 5 spinoff companies."
Tweak made later by Mohnish: no companies in the following industries: energy equipment and services, retail, various healthcare industries and media.