4 thoughts on “Splitsville”

  1. I am having a hard time understanding how a split goes with their charter of buying back all the stock. They are down to 8 million shares now. They go 5 for 1 and now there are 40 million shares. I understand that it would increase volume and (presumably) make their buy backs easier but it still seems like 1 step forward, 5 steps back. How am I thinking about this wrong?

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    • I agree for the most part. A higher equivalent stock price (that may come with a split) does not let the trust back shares more efficiently. I am concerned around the bid/ask of the stock as the listed two sided market often $20 (2.3%) wide. Also, I need to do more digging here but I do recall some NYSE liquidity minimums that need to be met to remain listed. If I was a betting man, I’d guess that is why the splits in the past occurred.

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      • I believe the NYSE minimum share requirement is something like 1 million shares, so we are not even close. More shares at a cheaper price just makes for more liquidity which is a good thing. We buy back based on earnings, so a $30MM buyback is the same no matter what the price

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  2. The other factor that could influence a decision for a stock split is that higher trade volume could land TPL in the S&P 500 and result in it being added to the portfolios of various index funds. I would see this as a positive, although others may disagree.

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