By Daniel at 10 July, 2009, 1:56 pm Read this what C said about AIG split. Citi knows the danger of reverse splits can do. I believe C wrote about AIG to leak out some news that they would not do a reverse split. All that state that C will do a reverse split are wrong. read for yourself and make your own conclusion. All in my opinion…Blue "Stock splits generally have been undertaken as a means of increasing liquidity in a stock. Reverse splits are a different animal, usually undertaken out of some measure of desperation, but in the end, even a reverse split is aimed at expanding the pool of possible investors and attracting prospective buyers who might have been disinclined or precluded from purchasing the stock at its low price point. The 20-to-1 reverse split undertaken by American International Group (AIG) last week hasn’t produced any tangible benefits, at least not for the company, and certainly not for shareholders. But it’s done wonders for bears on AIG. In fact, according to a research note from Citigroup, the reverse split has produced entirely antithetical results for AIG. It’s made it easier for shorts to borrow the shares. That’s resulted in a precipitous free fall in a stock that has known from free falls. After converting stock trading at about $1.16 a share into something valued at about $23, AIG has fallen 52%, measured at Thursday’s intraday low below $11 a share, as the stock has declined each day since undertaking the split. The declines aren’t simply some quirk produced by the change in AIG’s liquidity position. There’s legitimate reasons for the shorts to adopt a bearish stance on AIG’s fundamentals. Citi, in its research, said it believed AIG had a 70% chance of a zero valuation, meaning it’s more likely than not that the stock is going to turn out to be worthless. The insurance giant hasn’t been forthcoming about its continuing exposure to credit-default swaps, Citi argued. AIG, which was crushed under the weight of its U.S. derivative exposure in 2008, still has swaps backing some $193 billion in assets for European banks that Citi said could have some material adverse effect on AIG’s results." http://blogs.barrons.com/stockstowatchtoday/2009/...idity-for-shorts/ |