Reverse Stock Splits Are Usually Good for Investors: Report
New research indicates that reverse stock splits are usually good for investors.
According to a new report by Cleve Rueckert, Birinyi Associates senior equity strategist, there have been 14 stocks in the S&P 500 since 2000 that have undergone a reverse stock split. Of those fourteen stocks, twelve were higher one year after the effective date of the reverse split, two were lower. The average gain was a gigantic 62.55 percent.
The best performer: Titanium Metals . Titanium Metals rallied 350% in the year following the effective date of its 1:10 reverse stock split on February 18th, 2003.
The worst performer: Tyco . Tyco lost 25% in the year following the effective date of its 1:4 reverse stock split on July 2, 2007.
Citigroup announced a 1:10 reverse stock split Monday, effective after the close of trade May 6, 2011.
Here is the full list:
Reverse Stock Splits
|Company||Stock Split||Effective Date||Pct. Change 1yr|
|Lab Corp. of America (LH)||1 for 10||5/4/00||121.49%|
|Raytheon (RTN)||1 for 20||5/15/01||51.64%|
|Titanium Metals (TIE)||1 for 10||2/18/03||350.95%|
|Priceline.com (PCLN)||1 for 6||6/16/03||9.71%|
|Intuitive Surgical (ISRG)||1 for 2||7/1/03||29.78%|
|CBS Corp. (CBS)||1 for 2||1/3/06||20.61%|
|JDS Uniphase (JDSU)||1 for 8||10/17/06||-5.48%|
|Tyco (TYC)||1 for 4||7/2/07||-25.00%|
|Discovery Comm (DISCA)||1 for 2||9/18/08||114.34%|
|Time Warner Cable (TWC)||1 for 3||3/13/09||90.32%|
|Time Warner Inc. (TWX)||1 for 3||3/30/09||84.87%|
|American Intl. Group (AIG)||1 for 20||7/1/09||87.39%|
|E*Trade Financial (ETFC)||1 for 10||6/2/10||2.80%|
|Motorola Solutions (MSI)||1 for 7||1/4/11||4.83%|