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My uninformed opinion is that Apple will either announce a dividend or a stock split. In theory a stock split/reverse-split has no impact on a stock's price mo
by brisance 15y ago
My uninformed opinion is that Apple will either announce a dividend or a stock split.
In theory a stock split/reverse-split has no impact on a stock's price movement, but those studies were done in the 90s. More recent studies on various stock exchanges have shown that splits/reverse splits have a statistically significant impact on price movement, with splits signaling a bullish move.
Splits may also help in narrowing the bid-ask spread which improves price discovery.
On the other hand, splitting a stock will increase transaction costs of delta-neutral hedged portfolios since strike prices of derivatives are closer and more delta are needed.
- bgentry 15y agoA stock split doesn't really have anything to do with their massive pile of cash, and they said that's all they'll be discussing on this call. A dividend, while not out of the question, has not been something they've acted willing to consider in the past. That would be quite the change in their stance.
- brisance 15y agoYou are right of course. I was thinking a split followed by the announcement of a dividend. In this way hedge funds and index funds can offload some of their AAPL exposure to retail investors who do seek a dividend. I think Apple under Tim Cook is quite different, and is taking shareholders' interests very seriously. Why else would they adopt the resolution to have Apple directors being voted in by majority in the last shareholder meeting?[1] [1] http://www.bloomberg.com/news/2012-02-23/apple-ceo-cook-says-iphone-maker-s-cash-more-than-what-s-needed-to-operate.html http://www.bloomberg.com/news/2012-02-23/apple-ceo-cook-says...