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Strategies & Market Trends : Roger's 1997 Short Picks

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To: Carl H. Gotsch who wrote (7057)11/16/1997 12:23:00 AM
From: Roger A. Babb  Read Replies (2) of 9285
 
Carl, RE: ORG stock dividend. A stock dividend is just another way of doing a split, in this case a 5:4 split. There is really no reason that a split should cause the stock price to go up because your 5 shares will own the same percentage of the company as your 4 shares did before the split. But many investors are not smart enough to figure that out and will think the new lower price is a buying opportunity and drive it right back up to the old price. Thus it is usually unwise to short before a split, wait until it tops out after the split.
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