> As someone who used to do a bit of recreational "special situations" investing, I can say with some confidence that counterintuitively the worse part is often the better part, and the "dead weight" often soars after it is jettisoned vs the "good part" flatlining.
Often, the “good” part is actually the high-risk, high-growth potential part and the “bad” part is the low-risk, solid returns part.
Exactly. And if investors have already priced in the high growth potential, sometimes even if the "good part" grows a lot it can be that it doesn't grow enough to justify the valuation.
Fair to add that this doesn't refute the structural logic of seperating the parts - if your business has two halves that are that different, a split can make total sense.
Often, the “good” part is actually the high-risk, high-growth potential part and the “bad” part is the low-risk, solid returns part.