Reverse Stock Splits Are Usually Good for Investors: Report
By: 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% |
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