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Technology Stocks : Internet Capital Group Inc. (ICGE)
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To: bob zagorin who wrote (3780)9/22/2004 7:18:02 PM
From: Fred Levine   of 4187
 
Motley Fool
A Not-So-Bad Reverse Split
Wednesday September 22, 3:39 pm ET
By Bill Mann

If there's something that is nearly taken as gospel in investing, it's the belief among investors that a reverse split is a sign of a company in big, big trouble.

In almost all cases this is true. Internet Capital Group (Nasdaq: ICGE - News), for example, had a reverse 1-for-20 split in May to bring its badly slumping stock back up over the $1 level that Nasdaq requires for companies to retain their listing. Someone who owned 500 shares of Internet Capital Group stock at $0.24 per share before the reverse split woke up the next day owning 25 shares at $4.85. The company viewed the ignominy of having a reverse split as being "less worse" than continuing to be at risk for delisting from Nasdaq. Though its shares had lost 99.5% of their value since the heyday in 1999, this was still a $200 million market capitalization company. Do the reverse split; live to see another day on Nasdaq. By the way, the all-time high for Internet Capital Group now that the reverse split has been factored in is $4,240 per share. Ouch!

There are a few cases when a reverse split doesn't come as a result of a big downturn in company prospects. These splits generally come as a result of other corporate actions: spinoffs, mergers, and going-private transactions. Just such a case happened today, and it's a situation I've been watching for a long time for an investment opportunity.

fred
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