Hypothetical reverse stock split ratio
Approximate number of shares of common
stock outstanding plus shares of common
stock reserved for issuance (as of January 31,
2010) following the Reverse Stock Split
(millions of shares)
1 for 2 15,660
1 for 5 6,246
1 for 10 3,132
1 for 15 2,088
1 for 20 1,566
1 for 25 1,253
1 for 30 1,044
The actual number of shares outstanding after
giving effect to the REVERSE STOCK SPLIT, if
implemented, will depend on the reverse stock
split ratio that is ultimately determined by the board
As of this date: We would guess the 1 for 5 ratio to be inline with BAC.
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Thursday, April 22, 2010
Wednesday, April 21, 2010
A look @ Citi
Edit: May 13, 2010: On April 27, We sold our shares of Citigroup (C) at a stop-loss of $4.50. We place this stock on WATCH until next earnings.
At the Annual meeting the idea of a possible Reverse Stock Split was said to be one option on the table. Let’s take a quick look at Citi’s outstanding shares vs. other banks.
The Market Caps are in the same ballpark:
Shares Outstanding for the Large Banks are:
C: 28.5 Billion with approx. 7.7 Billion owned by the US Treasury. Current Stock Price: $4.97
BAC: 10 Billion - $18.57
WFC: 5.19 Billion - $33.69
JPM: 3.98 Billion - $45.88
One can see by looking at these numbers there is quite a difference; however, Citi is only at 35% institutional ownership, versus between 60% - 75% for the other 3.
Actually, this is a good lesson/example of Dilution. Most notably, compare the shares outstanding with the price of the stock.
Unless there is a lot of buying or a share buyback there is a good chance of a reverse split happening. It will be interesting to see how this plays out.
Personally, we like Citi shares at this point ($5.00-Range) and may start building a larger position.
Anyway, this is all conjecture at the moment and may not happen.
Dilution definition
A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities.
Investopedia Commentary
Adding to the number of shares outstanding reduces the value of holdings of existing shareholders.
At the Annual meeting the idea of a possible Reverse Stock Split was said to be one option on the table. Let’s take a quick look at Citi’s outstanding shares vs. other banks.
The Market Caps are in the same ballpark:
Shares Outstanding for the Large Banks are:
C: 28.5 Billion with approx. 7.7 Billion owned by the US Treasury. Current Stock Price: $4.97
BAC: 10 Billion - $18.57
WFC: 5.19 Billion - $33.69
JPM: 3.98 Billion - $45.88
One can see by looking at these numbers there is quite a difference; however, Citi is only at 35% institutional ownership, versus between 60% - 75% for the other 3.
Actually, this is a good lesson/example of Dilution. Most notably, compare the shares outstanding with the price of the stock.
Unless there is a lot of buying or a share buyback there is a good chance of a reverse split happening. It will be interesting to see how this plays out.
Personally, we like Citi shares at this point ($5.00-Range) and may start building a larger position.
Anyway, this is all conjecture at the moment and may not happen.
Dilution definition
A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities.
Investopedia Commentary
Adding to the number of shares outstanding reduces the value of holdings of existing shareholders.
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