Can anyone explain to me why RES has had so many stock splits (the up coming one will be 6). There was 3 in a relatively short time between 2005 and 2006. It's always been 3for 2 except the 1st one. I'm just curious. Is this an easier method in introducing more shares? Does it mask dilution? Or does it raise more capital while minimally causing dilution?
splits offer no dilution. Just a number of shares outstanding changes, but everyone has the same % ownership. The 3 for 2 split is a GREAT way to open up more float, keep the price affordable for more investors, add a spotlight to the growth of the company with this positive psychology.
Not sure I understand the affordability argument. If you invest $300 it doesn't really matter if you have 20 shares or 30 shares - it still has the same value. I'd understand if using BRK-A as an example at over $100,000/share, but this is a $15 stock going down to $10 post-split. If you can't scrape together $15, you probably have more to worry about than investing in stocks.
I believe the primary reason for the split is to increase liquidity, and specifically increase the amount of retail holders. The splits have no effect on the value of the shares, other than any psychological effects. IMO it implies management bullishness (they believe share price will be going up in the near future).
Dukebaily is correct, the main reason is to increase the # of retail holders, and more importantly interested buyers such as myself.My father bought a ton of mcdnlds in 1962 I bet it split 18 times each time within 6-8 months price was back up to pre-split price.Splits create interested new stock owners my father never sold 1 of those mcdnlds shares.