Because spin-offs create new firms with characteristics markedly different from the original firm, institutional investors pre-committed to certain investment styles and/or subject to fiduciary restrictions have incentives to rebalance their portfolios at the time of the spin-off. Prior articles in the business press and academic journals claim that the large volume of trading related to this rebalancing creates short-term price pressure in stocks of the entities emerging from the spin-off. In this paper, we examine whether corporate spin-offs lead to significant changes in the holdings of institutional investors and whether these changes do create temporary price pressure. We find strong evidence that investment strategy and fiduciary restrictions affect institutional investor demand for the stocks after spin-offs. However, our results indicate that matching of institutional buying and selling is sufficiently complete in most cases to allow for large volumes of shares to change hands without prices deviating from fundamentals.