Oct 1, 2015

Investors love stock splits—at least investors who pay attention to them and study them. Since October 2000, when the Hulbert Financial Digest began monitoring one particular stock split strategy’s performance, it has doubled the Wilshire 5000 index’s annualized return, 10.5% to 5.3%. This 15-year market-beating return matches up with studies conducted by David Ikenberry, Dean of the University of Colorado’s Leeds School of Business. He and two co-researchers found that the average stock that underwent a stock split between 1975 and 1990 outperformed the market by 7.9% over the year following the split’s announcement, and by 12.2% over the three years following that announcement (equivalent to 3.9% per year on an annualized basis).

Stock splits are maneuvers where a company increases the number of shares outstanding – as a way to lower the per-share stock price. Steve and Sinclair review and explore a number of stocks that have split and their performance after the split. In the Q & A session stock split strategist Neil MacNeale joins the A-Team to review principles he has used to outperform the S & P significantly over time.