Citigroup Reverse Split

May 10, 2011
J. Webster
Comments Off on Citigroup Reverse Split

The big ‘C’ went from $4 to $40, but not for any good reason related to the state of the company. No, they just did a reverse stock split.

If you’d been away for some time and all of a sudden looked at your C shares trading a $40 you might have thought something good happened. Dream on. All that happened was your 10 shares now equal just 1 share. The common stock for Citi went from to 29 billion to 2.9 billion. What interesting is the big C, usually the most widely traded stock in the market, won’t be as liquid. What the spilt does do is allow some mutual funds to buy the stock, as many can’t own stocks that are under $5.

Vikram Pandit did put a little spin on the stock split though, adding that this was all part of plan to reinstate their dividend in the coming years:

“Executing the reverse stock split and our intention to reinstate a quarterly common stock dividend are important steps as we anticipate returning capital to shareholders starting next year,” said Vikram Pandit, Chief Executive Officer of Citigroup. “Taken together, we believe these actions will reduce volatility while broadening the base of potential investors. Now that we have established consistent profitability, we are working towards our next goal of responsible growth.”

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