By Tara Lachapelle, Senior Staff M&A Writer, Bloomberg: Investors hungry for undiscovered opportunities with stocks near record highs have already piled in to many of the remaining spinoff candidates. Increased shareholder activism has also accelerated the flow of money into companies seen as ripe for breakups. That’s left little to be made after the spinoffs and is even spurring losses in some cases.

It’s become an overcrowded market, according to Jim Osman, who analyzes these types of transactions as chief executive officer of The Edge.

“People are greedy again, and they get greedy at tops,” he said in a phone interview. “Many of the spinoffs coming out are fully valued.”

“The perception that all spinoffs make money is an absolute fallacy,” Osman of The Edge said.

PayPal may be the next indicator that the market has topped. Osman predicts shares of the payment processor may decline when it begins trading separately from its parent EBay Inc. later this year. Takeover speculation has also contributed to frothiness around some spinoffs, including PayPal. Investors are already betting the business will get acquired by Google Inc. or Inc. soon after it becomes independent.

Plus, there are still opportunities in the spinoff market, you just have to look harder, Osman said. One idea from him: Blackstone Group LP’s spinoff of its M&A and restructuring advisory business. “Very few people know about it. Everyone’s heard of Blackstone but there’s no coverage” of the spinoff, he said. “That’s the sort of stuff we’re looking at.”

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