What is Stock Split?

Stock split:
An issue of new shares in a company to existing shareholders in proportion to their current holdings.
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In case of publicly traded company, whose shares are traded in stock market, a stock split increases the number of  outstanding shares of the company by issuing new shares to the current share holders. In this corporate decision a company divides its existing shares into multiple shares. The total monetary value of the shares remains same compared to pre-split amount. This happens because the split did not add any real value no matter how much is the ratio of stock split is. Here stock split ratio means the ratio by which current stock is given addition more stock. If 'S' share holder has 10 stocks of 'X' company then if the board members of the X company make a decision to split stocks by 1:2, then after the split 'S' has 20 stocks.

There are so many companies that makes the decision of stock split. Here a list from msn:

JUNE 2014

COMPANY	SYMBOL	SPLIT EFFECTIVE	RATIO	ANNOUNCED	OPTIONABLE
Splits Payable: Jun 2
FIRST FINANCIAL BANKSHARES INC	FFIN	Jun 3	2-1	Apr 22	No
Splits Payable: Jun 5
INOVIO PHARMACEUTICALS Inc	INO	Jun 6	1-4	May 23	No
Splits Payable: Jun 6
APPLE Inc	AAPL	Jun 9	7-1	Apr 23	No
UNION PACIFIC Corp	UNP	Jun 9	2-1	May 15	No
Splits Payable: Jun 12
SUNOCO LOGISTICS PARTNERS L.P. COMMON UNITS REP Ltd PARTNER INT.	SXL	Jun 13	2-1	May 6	No
Splits Payable: Jun 16
ALLIANCE RESOURCE PARTNERS LP	ARLP	Jun 17	2-1	Apr 28	No
Splits Payable: Jun 17
DOMTAR CORPORATION (NEW)	UFS	Jun 18	2-1	Apr 30	No
Splits Payable: Jun 19
TRINITY INDUSTRIES Inc	TRN	Jun 20	2-1	May 5	No
Splits Payable: Jun 23
BANK OF THE OZARKS INC	OZRK	Jun 24	2-1	May 19	No
Splits Payable: Jun 25
CELGENE CORP	CELG	Jun 26	2-1	Jun 19	No
Splits Payable: Jun 26
CORE MARK HOLDING CO. Inc	CORE	Jun 27	2-1	May 21	No
MIDDLEBY CORP	MIDD	Jun 27	3-1	May 30	No

 All of these splits has been executed already. After the number of shares that changes due to stock split lets talk about price. For example, lets say a price of a stock of 'X' company is $10 and stock split is 2:1. The price changes by $10* 1/2= $5 per share. This means the total value of the stock remains same as the number of stock after split will be 2x10=20 and price before split will be $100 and price after split will be $5x20 =$100.

This does not effect the overall value of the company and still the decision is carried out. Board of directors are responsible for making such decision and they represent groups of shareholders. This decision of the BOD allows the shareholder an easy way to liquidate their shares as the price goes down. Shareholders put forward the proposal for stock split if it's necessary, i.e. in situations when the prices are too high resulting in scarcity of low quantity purchasing buyers. So, it's decision of the shareholder more then the decision of the company. This is what we refer to as liquidity.

Further more, people associate stock split with psychological effect too. The stock split announcement draws attention to a company's success. This results in increased buying and higher prices. Now behavioral finance is trying to explain it with rationality.

In addition to that he recent split of Apple has given a significant effect of stock split. “We’re taking this action to make Apple stock more accessible to a larger number of investors,” Apple CEO Tim Cook said in April. The split was announced on April 23 and executed on June 9. The ratio was 7 for 1 and it was highlighted as  Apple’s 7-for-1 Stock Split Is ‘Very Unusual’ by THE WALL STREET JOURNAL. In April 23 Apple stock closed at $74.9643. Then something amazing happened. It started to rise. On June 27, it closed at $91.98 in NASDAQ

Click to enlarge.

Many companies routinely exceed the price level at which they had previously split their stock and this will again introduce stock split. Wal-Mart has split its shares as many as 11 times on a 2-for-1 basis from the time it went public in October 1970 to March 1999. Google also had stock split early in April.

However, there are companies that has no stock split. Berkshire Hathaway has never had a stock split. Its bid spread can often be over $100, its class A shares were trading at $190,559 each.

Latest news: iGo, Inc. Announces Reverse/Forward Stock Split. There are possibilities for traders by purchasing low and selling high. Hope you find your luck. Please your view in the comments.

BlackBerry after new CEO

It was the month of march, new CEO of smartphone manufacturer BlackBerry is facing hard time taking control of financial situation of the company. BlackBerry's Q4 financial results were not good as expected.There was a $4.4 billion loss. In total, BlackBerry reported losses of $0.67 cents per share on revenue of $1.2 billion, lower than $1.6 billion in the previous quarter.

Now, BlackBerry has reported total investment of US$3.1-billion at the end of the fiscal first quarter.
Mr. Chen has done a remarkable job in this regard. He has focused on cost reduction and as it's been predicted by Mr. Chen, company is starting to have positive cash flow.

BlackBerry's shares are up by 56% since the arrival of new CEO.

click to enlarge

“It’s really not about how good a hand you’ve been dealt,” he said. “It’s about how you do the best with the hand you have. It’s an interesting parallel with life, and it’s an interesting parallel with work for sure.” -bloomberg

Mr. Chen brought additional $1.25 billion for funding this change for Blackberry. Then a plan that will raise $500 million by selling the Canadian real estate. Now the hope of all stock holders are increasing day by day. Back then when the company's market value in 2008 was almost $82 billion, Chen has managed to cheer up some shareholder optimism even though there are competitors like Apple and Samsung. According to IDC, BlackBerry claimed 19 percent of the global smartphone market in 2010. By December of last year, it had slipped to 0.6 percent. Now after failed buyout, and additional funds for turnaround Blackberry is introducing new smartphone called Passport phone, a cross between a phone and tablet internally codenamed Windermere.

Mr. Chen displaying new BlackBerry smartphone, Passport Phone.

Since there are remark able changes going on inside as well as outside the company, new CEO's next move definitely has effects on the share price of BlackBerry. What do you feel about that? Please leave comments.

How to Overcome large trading losses?

Every trader has to face loss at some point in their lives. The only thing that matters is the teachings it leaves when others take your money. It's a teacher for a trader which teaches about how to trade in future. This even causes stress for traders. They should learn to handle stress. Sometimes we feel so bad about the loss and we might decide to give up. Many people are out because they feared that they might again lose. The challenge will always be there, who will win and who will lose depends on who has done better homework about the trade and understood the market better. However, overcoming the losses while trading is always harder to do than to talk about it. It's always complicated when feelings are involved. So, here's few things to consider while overcoming large trading losses:

1.Understand the market: 

Acceptance of what has happened is the first step to overcoming the consequences of any misfortune.

                                                                                           -William James

Understanding what actually happened and caused you loss will provide you the scenario and also points out what you can possibly do to avoid it from happening again in future. After that your knowledge about what's going on broadens. Markets have trends, patterns and sometimes predictable flux. When a trader understand the loss that is made, it acts as a pivotal point. The ability to be a successful trader lies in a trader's reaction to the circumstances from that point.

Grief is itself a medicine.  
                                           ~William Cowper, Charity

Traders should consider all possible factors that might have played role during the trade. It's always important to analyze market  and also to analyze trader's self-condition like: money in the account, money needed for transaction, etc. After analyzing them refocusing to do successful trade is always emphasized. This very act of losing could be the motivation for succeeding.

2. Vivid Goal.

Goals always work as a motivational factor. When a trader is some points down, he or she can always see the goal, what's the current status and make necessary changes. If the goal is to make $1000 a week, $200 loss could still be covered. But clearly remember that greed is good when it's anchored to certain limit. While you are trying to make more from your loss, it's important to use what you have learnt. If similar situation arises while trading in which you had losses previously, then this time, it's an opportunity to meet the goal.

3. Experts and Friends:

Social circles shapes all trader. It's not that you are the only one person in this entire world who did not profit from the trader. There are millions of them. It's not a big deal. Finding a friend and getting emotional help is always beneficial. It helps to find similarities and understand that it's normal to have loss. A loss in a trade won't end up your career.

Experts are there to assist you when you need help. Find them. If  you think that you do not get why you have loss, don't hesitate to ask. They always have information you need. People are always eager to help those people who are willing to learn all by themselves rather than by someone's force.

4.Habits:

Habits defines a person. If you make a habit of learning about the market before you go for trading then it will make you informed. The habit of seeing positive things around you will make you optimistic about the situation. Loss and profits are the part of the business. Accepting anyone of them should be normal.

"Chaos often breeds life, when order breeds habit." 

                                                                                             — Henry Adams

Traders are more likely to succeed when they focus on creating habits that support trading. These habits assist them to act in optimistic way.

5. Results and Consistency:

The only thing that you have at the end of the day is result. If you lose consistently then it might hamper your career. So, do, understand, learn and succeed. Be careful with the result you produce. They somehow show where you are heading. 

“It's not what we do once in a while that shapes our lives. It's what we do consistently.” 

- Anthony Robbins

Five Traits of a Successful Trader

Traders make the whole market move. The make it go up or go down.

"I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms." - Paul Tudor Jones.

Success is not always luck, it could be sometimes but becoming successful in every trade a trader makes is a beautiful art and art always needs mastery. Here's a list of traits that a successful traders have. They are:

1. Emotionless:Trade and act like a doctor does in an operation room.(Handle their motions)

Emotions makes us alive. They help us to show with others how to feel and perceive certain happenings. Emotions makes the communication with people around us. In addition to that it changes how we feel. If we feel that others are worried about a particular stock we are holding and if we start to worry too, then it's certain that we might be missing something in it. The logic.

  "The markets are unforgiving, and emotional trading always results in losses." - Alexander Elder

2. Willingness To learn:

 A person who never made a mistake never tried anything new: Albert Einstein
Learn from the mistakes. This even applies to life's other aspects too. Mistakes are always good teachers. Successful traders always learn, they learn from mistakes, they learn from books, they learn from news papers. They are always updated about the market. They read, listen, talk and learn about the market before they step in and apply what they have learnt.

Being ignorant is not so much a shame, as being unwilling to learn: Benjamin Franklin

3. Discipline:
"No profession requires more hard work, intelligence, patience, and mental discipline than successful speculation." - Robert Rhea

Discipline provides balance in any area. That could be the main reason successful people are not losing discipline no matter which field they are involved in. Trading demands discipline because being slow or being aggressive will guarantee you loses. A trader may earn large amount of money in a particular trade, but if the trader loses his/her discipline then it's certain that the trader will lose all of it. They even balance work and family life.

4.Appropriate Decision Maker:

Most of the millionaires are excellent decision maker. They know when to hold on and when to loose. They are the players in the game. They know when to procrastinate the decision so that they could gather information about the deal. If there is possible situation of loss then they decision to choose the strategy that will minimize their loss and optimize it.

Successful Traders are decisive and they are carefully decide where to focus their energy. They are aware about their state and body conditions. They decide what will happen to them. They have high locus of control.

5.Successful Trader are like other successful people, They find Mentors, ALWAYS: 

It's not that mentors come to start ups, but start ups find their mentor. When people are willing to learn they all are about to find someone who could teach them. This happens in trading too. There are successful traders out there who always have someone whom they could talk if there is any doubt. Successful traders always search for their mentors.

Apple Stock and Steve Job's death.

"Apple's stock price has risen more than 9,000% since Jobs returned in 1997. The shares have more than doubled in the past two years."-Julia Kollewe, Theguardian.com, Thursday 6 October 2011 09.37 BST

 After Job's death, news of Steve Jobs's death drove the Apple share price down more than 5%. Now after more than two and a half year, Apple's stock price is up now but not as expected. It even reached $750 and above.

Innovation:

Some investors even question the firm's ability to do something that's never been done before. Apple is also perceived to lack innovation now. It's the only thing that created the value for the company. The change in the pattern of how people use various products in their lives are always influenced by new  innovation. 

There is still hope in the because recently it announced that it will be launching new product in the market.

Stock Split:

Apple announced that there will be stock split with the split ratio of seven-for-one( 1:7). This will reduce per share price of the company by seven time while the trading starts again. Apple’s split is scheduled for June 9, benefiting all who own the shares as of June 2. 

There are various aspect of the company that has changed though. See More

Tim Cook is up with a strategy to sustain the company when large companies like Samsung, Google, Microsoft are increasing their market share. The recent acquisition: 

"As part of the acquisition, Beats co-founders Jimmy Iovine and Dr. Dre will join Apple. Apple is acquiring the two companies for a total of $3 billion, consisting of a purchase price of approximately $2.6 billion and approximately $400 million that will vest over time." -Apple Press Info.

Cook has even proposed a robust stock buyback program but Apple shares are down 10% this year.

What investors and general public is demanding is the product that revitalize what Apple is all about. The company's future rest upon it and if it happens then only the company will be able to see it's golden period that it used to have when Jobs was the CEO of Apple.

Chilime Hydro power: An analysis.

In the latest analysis from Sharesansar.com CHCL has been ranked highly by many advisors for the portfolio you might want to consider. So, we thought we are going to do a detail analysis on what CHCL is all about. Here the report:
About:
Chilime Hydro Power: Estimated time of completion: 2020 A.D.
Capacity: 500 MW
Company: Blue-chip Company
RTS:Civilian Investment Trust
Listed Shares: 22,713,600
Paid up Value:100
Total Paid up value: Rs. 2,271,360,000

January 5: Chilime had endorsed 10 percent cash and 30 percent bonus shares to the shareholders from the net profit it earned in the last fiscal year 2069/70.

The net profit was Rs 963.75 million (Rs 96 crore, 37 lakh and 50 thousand) during the fiscal year 2069/70 where as previious year it was Rs 945.32 million (Rs 94 crore, 32 lakh) and at that time it distributed 30 percent bonus and 20 percent cash divined to its share holders.
See more

Later on,there was issue of middleman selling the shares of local people by purchasing them at price way lower than the prevailing market price at that time.
There were total 960,000 shares earmarked for Rasuwa locals. The inhabitants of three project-affected VDCs — Goljung, Chilime and Syafru were given 636,000 units and the remaining 624,000 units were allocated to the locals of 15 other VDCs.

After some time period, Chilime expressed concern over cheating of its Rasuwa shareholders.


In March 25, 52.41 lakh units of Chilime bonus share get listed from the serial number 17472001 to 22713600.
Total: 52,41,600 units of bonus share.
According to second quarterly report for the current fiscal year,
EPS = Rs 50.04
Net worth per share = Rs 286.19

May 13:
In the third quarter of the current fiscal year 2070/71:
Chilime Hydropower Company Limited
 Marginal growth = 3.85 percent 
Net profit of Rs 71.67 crore

EPS = Rs 63.11
P/E ratio = 38.57
Net worth per share = Rs 292.39.

Notifications: Further investment from the earned profit in: Sajen, Mid Bhotekoshi and Rasuwagadi hydropower.

May 27:
Chilime Hydro Power Company Limited has four subsidiaries :Sanjen Jalavidhyut Company Limited (SJCL), Madhya Bhotekoshi Jalavidhyut Company Limited (MBJCL), Rasuwagadhi Hydropower Company Limited (RGHPCL)
Estimation of production of more than 1000 MW with four projects combined.

Here the price variation of Chilime stock:

CHCL. Click to enlarge.