For those who commented that I didn't know what I was talking about in my recent article about the AIG Reverse Stock Split of 20 to one, here's what Jeanine Poggi of Street.com said today of the split action, which has apparently gone through:
Meanwhile, investors are awaiting a reverse stock split that is expected to come into affect (sic) later today. This would mean if you own 1,000 shares you now own 50.
AIG will initially multiply the share value by a like amount, so investors will retain their equity, but it's unlikely they can grow their investment.
Almost verbatim (in context) of what I said in my "unprofessional" analysis published on Saturday. Interestingly, the number of hits on that article increased more than two-fold today, unfortunately too late for investors to vote against this ill-founded move.
David Goldman of CNNMoney.Com said, "Shares of AIG tumbled Tuesday afternoon after shareholders ratified a 20-1 reverse stock split, which will take effect at 5 p.m. ET." I wonder why? I wonder why other business journalists from the New York Times, the Washington Post, the Wall Street Journal, CNN, Fox News, MSNBC, CNBC, NBC, ABC, CBS and reports on Anderson Cooper, Lou Dobbs and The Today Show never highlighted this split as a disastrous move? Where were the notes on Facebook or videos on YouTube?
I stayed with the stock, which is now just a penny more than I bought it in March and will ride it for the time being. I'm just not expecting a big payday, and I'm flabbergasted at why the stock essentially soared since last March until a week or so ago when news of the reverse stock split became public, considering that the "expert" commenters who have been refuting me said that buying and selling stock is solely based on the actual value of the company.
Folks, AIG hadn't won the lottery in March, April and May and the news forthcoming about its actual worth hasn't been alarming the last week or so.
The rule is, I guess, that there are no real rules vis-a-vis the stock market. I'll still wind up with a profit, because I bought my stocks at a very low rate. Pity those who didn't and also those who might have also done so, but freaked out and panicked the last couple of days.
UPDATE: So the split happened and guess what? The stock dropped over five dollars Wednesday (July 1) from its new price of $23.20 -- down more than 22%. What kind of brainiacs come up with these decisions? Is a class action lawsuit in the works? And is Citigroup, which has issued proxies with the intent of permitting its Board of Directors to effect a reverse stock split, paying attention?
Michael Russnow's website is www.ramproductionsinternational.com