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Doral Financial Corporation Message Board

  • xwallstcfo xwallstcfo Jun 25, 2013 2:07 PM Flag

    A lesson in reverse splits

    Before some of you start shorting take a close look what happened to FBC(Flagstar Bank).......I bought this stock in the .87-.90 range knowing full well that they were going to have to do a reversal....The stock shot up as high 1.25 and then then corrected to allmost a dollar.......after the reversal (1 for 10) the stock went to over 20 and has now corrected..
    The main point is a a split reversal works only if the company is a turnaround story...
    Do you see the similiarities with Doral ....
    It also works with tech stocks.....NTWK presplit .45 1 for 10 post split high $14

    Beware of shorting.....a low float company.........and a possible takeover!!!!

    Sentiment: Strong Buy

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    • Prior to their last reverse split in August 2007, the number of authorized common shares was 1.95 *BILLION*! After this split on Friday, that number falls to a mere 15 million shares . Besides being an unbelievable reduction from pre-split 2007, with such a tiny float of only 6.7 million shares outstanding/issued comes an enormous volatility that with any positive news whatsoever could potentially send this thing skyrocketing through the roof overnight or within a matter of seconds on an open market day. And so you'll have to be in it already in order to play along. We cannot overlook the fact that the last reverse was prior to "the great recession" caused by the real estate & banking crisis of 2008/9 that nearly sent the global economy and all banking systems off a cliff & into an abyss for possibly decades to crawl out from. There was no way DRL could improve in such a climate over the past 7 years. Just today we saw a big jump in home prices (+12.1% - the largest increase in 7 years) as the mortgage business and the other banks/brokerages are firming up slowly, but very nicely. I suspect there will be shorting right after the split, but I intend to scoop me up a bunch because I'm betting that staying long will eventually reward me very handsomely. DYODD.

      Sentiment: Buy

    • Nine out of ten times a reverse split is terrible for a company. Doral already had a reverse split prior to this. The chart will show you what happened. The fact is you will always get inexperienced investors trying to put lipstick on a pig but in the end it's just a pig. Math trumps inexperience one hundred percent of the time. Ignore the fact that reverse splits spell doom for a company 90 percent of the time and you will be broke fast. Ignore the fact that they already had a reverse split once and it didn't work before.
      Reverse splits are terrible. It just opens up more room to short a company. More brokers will now allow shorting of Doral because the share price will be higher. People can now short on margin.
      Only one thing will make Doral go up without a buy out offer and that is good earnings numbers. That is what drives stocks higher! Good numbers! Not reverse splits!
      Doral needs good numbers first!

    • PCBC. But in that case new owner and pending buy-out was obvious based on his history. After RS the pps was very stable until the buyout when it jumped.

      • 1 Reply to montecker
      • Did you trade PCBC montecker? This one, PCBC, brings out wonderful memories. I accumulated it in $0.28 to $0.30 before the split and anytime it went below $28.00 after the split because I was confident about Ford and prospects of the company once he got involved. And BANG what a fantastic reward after the buyout. There are many other examples of price going up after the reverse split. Some of these which I traded before and after the split were SQNM, PFSW, CRBC, AFOP, and HAFC.

 
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