“Reverse splits”, or the mergings of many shares of a company into a single share, are happening all the time. Right now, in fact, the last announcement of a reverse split took place XX days ago. They typically happen because the share’s price has fallen under $1, the minimum price set by the NYSE and Nasdaq to stay listed. So, a company can use a reverse split to put their share price back over $1 because its value is thereby divided among fewer shares.
It’s often possible for a retail investor to profit from this event! Reverse splits are typically announced as a 1-for-X ratio, meaning every X shares are merged into a single share. Then comes the big-money question: what if an investor still has less than X shares left over? This situation is called the “fractional share”. Companies typically take one of four options:
- pay cash for this fractional share,
- round it down to zero,
- round it up to one whole share, or
- round it to whichever is closer.
Almost always, whichever route a company takes can be found in the announcement of the reverse split, and almost always, this announcement is in the form of a public press release on or before the day it happens. If they’ll round up, anyone can buy one single share beforehand, get rounded up, and sell after—in theory, anyway.
In practice, returns on investments are never guaranteed, even with this. A key variable in this is brokers. Some brokers charge fees for processing reverse splits, others have fractional share programs that jump in before the company can round you up, and others sometimes just miss the memo and pay cash instead. Still, most brokers are getting it right enough of the time that I’ve gotten returns myself for a while, and it’s all just by knowing that they’ll round up!
This website exists to spread the knowledge of reverse split round-ups, forever free of charge. That’s when they’ll happen, but also anything else I know about them. My only caveats is that this information is not to be construed as personal financial advice and that you remember that, again and as always, investments always involve risk of loss.
With that said, click through RSS > Newswires for an RSS feed of every reverse split announcement as soon as they happen. For the other information to know, click through Blog or instead click through RSS > Blog for an RSS feed of it.
Here’s a couple featured blog posts: how to get push notifications, which brokers I’ve used, and what language signals which route.
Brokers are a key variable in whether a reverse split round-up will turn out profitable. No two brokers process them in the same way. So, I can’t possibly cover every broker, but I can mention the ones I avoid and why. I can also mention the ones I do use.... [Read More]
How to get push notifications from revRSSThis website reports via an RSS feed instead of a mailing list. This is just because an RSS feed is easier to run than an email server, but furthermore, no information—not even an email address—is collected by revRSS. On the other hand, there’s no obvious way to get push notifications... [Read More]
How to read press releases on reverse splits for round-up opportunitiesTo deal with the fractional share caused by a reverse split, companies have four options: [Read More]