Of course the auction market decides the trading prices, even the opening price. The reduction of the closing stock price of a company on the day before the ex-date is reduced by the value of the distribution on the ex-date and that reduced price becomes the basis upon which the trading gain or loss on the company is calculated. The dollar amount of a spinoff that will be deducted from the parent company's previous day's closing price is determined by the closing price of the spinoff shares in when-issued trading the day before the ex-date. The rule on repricing of outstanding orders uses the same method of valuing a spinoff.
If you're trying to assert that the distribution of a fixed dollar value has no meaning in where participants in an auction market will value a company, which is certainly what looks like you're doing, then you're welcome to it.
"By the way, using your method, your math is off anyway."
Is it, now?
"The correct way to use the current CSALV price is to say if it is trading at $30.30 ..."
I used $36.00 as an example because CSALV hadn't started trading at the time of that post.
"If you subtract that from the current WIN price of $8.31 ..."
I wasn't using the current price of WIN, I was using the $8 example someone else had offered.
Honestly, jdsomers, are you SO determined to prove me wrong at something that your brain has completely clouded over, or are you always this dense?
The repricing rules you found don't explain how the amount of repricing is arrived at, so you conclude that I was wrong. How is that even logical?
Obviously you are immune to facts, so nothing I may offer as explanation will change your mind.
Hey, Brock. When does the split start the date? That happens after the order trades the transaction, doesn't it?
Sorry I didn't put the question in quotation marks. After all, the text grammars the typing ... or does the split start the punctuation? I'm not real sure on that one.
"According to your theory"
It's not my theory, it is a fact. All spinoffs work this way. FINRA requires it. Companies have no choice in the matter. Take a look at few recent spinoffs, look up their historical prices and see. I detailed an example on this board a few days ago.
"Why would you deduct 20% of the reverse split CSAL from each share of the original WIN? I do not see the correlation."
Because FINRA mandates that before the beginning of trading on the ex-date open orders for a stock be reduced by the dollar value of any distribution of one penny per share or more, and each WIN share represents 20% of a full share of CSAL.
"the higher that CSAL [actually CSALV] trades, the lower the value for the "new" WIN."
"That makes no sense."
It does, for two reasons. First, a dollar value for CSAL has to be established so that the amount can be deducted from the price of WIN on the ex-date, and second, the post-distribution, post-reverse split WIN shares are also trading now (in the ex-distribution market), so any radical discrepancies will be arbitraged out before the end of trading on Friday.
"The higher the price for CSAL, the more the company was correct that the REIT assets locked within WIN were undervalued."
Sure. This weeks' trading of CSALV and WINVV will simply establish the market's opinion of what the final value ratio between the two will be. Because of that, CSALV won't go wildly high. Come Monday it might, or it might not, but until then the two companies remain restrictively linked.
"At what point will CSAL show up in my account?"
That depends on when you bought WIN shares ... and also on how timely your broker is -- many don't post distributions until a day or two after the due date.
If you bought WIN before April 8, you are due the spinoff shares on April 24, the distribution date. If you bought WIN on April 8 or later, you are due the spinoff shares on April 29, which is the due bill redemption date.
"That's the great thing about the internet---you can always find "facts" to support your BS!"
And in your case, you always spout BS in response to real facts.
Funny how that works, isn't it?
That's pretty funny coming from a guy whose only contribution to this board has been to criticize others. Have you ever, maybe even once in your whole life, had a thought with any substance to it?
Of course not.
Yep. The real value of CSAL is what kept WIN from ten bucks. personalizit's belief that he was going to double his money the instant the deal is finalized just went poof.
"At todays pps, CSAL would have to trade at 28.00 and new WIN at 13.60+ to break even."
Yes, exactly right. Just a shade shy of the $43/$43 personalizit is predicting.
For anyone else reading this board whose mind isn't a closed cardboard box, here's an easy example to verify. Go to Yahoo's historical prices for the following two companies and see how spinoff prices really work. In 2014 Ingersoll Rand (IR) spun off Allegion (ALLE). The ratio was one share of Allegion for every three shares of Ingersoll Rand. On November 29, 2013, the day before the ex-date, IR closed at 71.42. That same day, in when-issued trading, ALLE closed at 43.24. On the next trading day, December 2, 2013, which was the ex-date for the spinoff, ALLE opened at 43.08, down 16 cents. IR opened at 56.90, down 11 cents. How could it close at 71.42 on the distribution date and open on the ex-date at 56.90, yet be quoted as being down 11 cents? Because the closing price of IR was reduced by the value of ALLE on the morning of the ex-date, so it was starting the trading day at an adjusted price of 57.01. With the spinoff ratio being one share of ALLE for every share of IR, on the ex-date the price of IR was reduced by one third of the the 11-29 closing price of ALLE.
That's the way spinoff pricing works.
"The whole idea of the R/S was to get WIN trading up in the range of their piers ($40+)."
No, that's not why it's going to reverse split. The price reduction on the ex-date will drop it well below where it is today. You obviously refuse to believe me when I state the facts, but how about the people who handle the legal work of spinoffs? Do you suppose they might know how it all works?
This is from the Wall Street law firm of Wachtell, Lipton, Rosen & Katz, in a publication titled "Spin-Off Guide:
"If the subsidiary being spun off comprises a significant portion of the value of the parent, the spin-off likely will result in a substantial decrease in the stock price of the former parent. A parent may implement a reverse stock split to move the per-share trading price of its stock back towards the pre-spin level."
"I guess you need to educate WIN and some of the investment houses that don't agree with you."
Your guess is entirely wrong because I did not state an opinion, I stated a fact. It is the way the market works, not a speculation or the kind of uninformed guess you're obviously making. And make no mistake: I have not ventured any statement of how the two companies' stock prices will perform once they begin to trade separately; I have stated the fact that the share price of WIN will adjust down on the ex-date to account for the value of CSAL no longer being included in WIN. That you don't know the difference is telling.
"You're saying there is no value in WIN having less debt and being more profitable."
I said nothing of the kind. I said that there will be no difference in value of the two companies between Friday night and Monday morning. After the two companies split, of course the potential for increasing value is there. It simply doesn't happen between the close of trading one day and the opening of trading the next day.
Your naivete is startling.