Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

AAPL rises on stock split rumour, manipulation suspected, Apple 'can't actually split stock'

Karen Haslam | Feb. 28, 2013
Yesterday investment manager Doug Kass started a rumour that Apple will announce a stock split. He tweeted: "High above the Alps my Gnome is hearing a rumor that Apple will announce a stock split at tomorrow's shareholder meeting." What followed has lead to claims of stock manipulation.

Apple's shareholder meeting is today. Expect fireworks. In fact, they may already have started.

Yesterday investment manager Doug Kass started a rumour that Apple will announce a stock split. He tweeted: "High above the Alps my Gnome is hearing a rumor that Apple will announce a stock split at tomorrow's shareholder meeting."

This set of rumour and speculation, and sent Apple's share price up, eventually closing at $448.97 (up from $442.80 the day before, and a low of $437.66 during the day's trading). However, now it is being suggested that Kass was manipulating the stock, especially since, shortly after tweeting his gnome-lead rumour, he tweeted that: "Apple is now trading near $449, up from the day's low at $437.65." Prudence dictates that I sell off some of this outsized position"

He later retracted his share-split claims, tweeting: "Apple continues to climb - now up by over $8. I continue to pare back as the rumor seems to be baseless based on current share authorization". A quick look at his tweets since suggests that he is fighting off claims that he has been "unethical" or "insider trading", however.

He went on to claim that he sold having realised that Apple would require a shareholder vote to split the stock, as the company only has authorisation to split the stock 2:1 without shareholder approval.

Has there been AAPL manipulation?

AAPL has had a rocky ride in recent months. It recently emerged that just four hedge funds were responsible for the decline in Apple's share price at the end of last year. Omega Advisors, Eton Park Capital Management (Goldman Sachs?), Jana Partners and Farallon Capital unloaded 796,000 Apple shares between September 30 and December 31, according to quarterly disclosure documents filed with the Securities and Exchange Commission.

There was also the unprecedented last second decline in Apple's share price on Friday 25 January. The spot on $500 closure on Friday 19 January, the day that call options expired. And of course the 'Flawed' WSJ report that causes Apple's value to fall.

It may be the case that no manipulation is going on with AAPL, simply that until last September it was popular with big fund managers, but now it is not so popular.

What is a stock split?

Apple would increase the number of shares by issuing existing shares of outstanding stock to current shareholders, explains Cult of Mac. If the stock was split 2:1 each share would become two, and the share price would be halved.

The last time Apple split its stock was February 28, 2005.

Normally stock would be split because it was considered expensive - this is why a few months ago there were calls for Apple to split its stock. However, right now the stock is worth a fraction of what it was then.

 

1  2  Next Page 

Sign up for CIO Asia eNewsletters.