Stock split for Citigroup: Will it work?
Stock split boosts Citigroup's share price. The big question: Will reverse stock split bring in institutional investors?
The Citibank logo is seen at branch in Washington April 18, 2011. Citigroup hopes its 1-for-10 reverse stock split will boost the value of its stock and make it more attractive to institutional investors.
Larry Downing/Reuters/File
By Giovanny Moreano, quantitative analyst for CNBC.com
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Graphic: Click on this chart to see recent reverse stock splits and how companies fared after them.
(CNBC Analytics & Capital IQ)
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Citigroup's 1-for-10 reverse stock split took effect today, decreasing the company's shares outstanding to about 2.9 billion, and boosting its share price to around $45.
Prior to the financial crisis, in December 2006, Citigroup shares reached an all-time high level of $57. By March 5, 2009, Citi shares fell below $1, trading as low as $0.97.
Since January 2009, the stock has remained in the single digits, trading below $6 until today.
Following Citi's reverse split, will large investors such as pension funds and mutual funds, which are usually barred from owning stocks under $5, reach for the carrot?
Click on the chart above to see some of the stock splits in the past year in the S&P 500 and how those stocks performed.
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