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Strategies & Market Trends : Buying SPLITs and other Strategies -- Ignore unavailable to you. Want to Upgrade?

To: dolan who wrote (836)	5/11/2006 4:20:07 PM
From: Terry Whitman	Respond to of 1163

I see. Here's the original post, #2: >SPLIT ANNOUNCEMENT Strategy- This Strategy is pretty simple: Buy a stock within a few hours of a Split announcement, and Hold for 3 days. I have not studied this one for much time, but I can tell you that it seems to have worked Very Well over the recent past. I think it works best when the market is broadly advancing- as it has been doing the past 7 months. Anyhow- for all the splits announced 11/4 to 11/12 (7 total) Over the following 3 days: - 6/7 are positive (86%) - Average return is 6.5% - Avg. return on gainers is 8.4% - Return on the loser is -4.4% I will update these as we go along..< I subsequently changed the holding period to 10 days, which i found gave much better returns. Here's a post with some of those results, post #41: >Here's the best I can do with it in a short time: SPLITS STUDY $ = Real trade Avg. 10 day Rtn= 14.29% Avg. 3 day Rtn= 3.41% % SYMBOL Date Time Start/3 day HOLD/3day %/10 day HOLD 10day % Rtn DIOD 4-Nov 945 24.5 30.63 25.02% 28 14.29% TRID 5-Nov 910 25.6 25.5 -0.39% ATA 5-Nov 1000 29 29.5 1.72% CRRC 6-Nov 1000 56 58.6 4.64% LABL 7-Nov 930 25.5 26 1.96% SWWC 10-Nov 900 14.6 15.3 4.79% MRTN 11-Nov 800 26.8 25.5 -4.85% CKFB$ 12-Nov 1120 29 32 10.34% CLBK 13-Nov 1200 32.5 32.75 0.77% SEM 13-Nov 1700 35 34.2 -2.29% MFLR 14-Nov 1200 23.75 22.75 -4.21% CTX 18-Nov 1000 102< Here's the final early post on the strategy, #122: >Bad News- My hard Drive died yesterday, and I lost all of my Splits data. So I'm gonna wrap it up- I think my sample was large enough to draw some valuable conclusions. From my biological memory- I'll try and summarize my findings here: -The period of the study was Oct. thru early December. There were about 25-30 splits occurring. -I took the Buy price as the avg. price of the first 2 hours after the announcement. Commissions were excluded for all trades. -I took the sell price at two different points- One was a 3 day holding period (fm announcement), and the second was a 10 day holding period (2 weeks). - I later added the SP500 price at all buy and sell points to compare the strategy to an overall market performance. SUMMARY of RESULTS: For stocks announcing splits, the average 3 day return was just Over +3%. The 10 day return was just Under +3%. The averages appeared to both be converging on 3% even. The average return on the SPX over the same holding periods (buying and selling at the same time as the splits) was slightly positive (+0.1% to 0.2%). In conclusion, the Split strategy appears to be workable. Over the period studied, the strategy was far better than trading or holding the overall market. There is, of course, no guarantee that the strategy would perform this well over other periods- I suspect that it would not do as well during a bearish market phase. Then again, there are probably far less splits during bearish periods- so that would aid the overall return. It is only speculation however. >> Hope this is of some help, TW