The Serious Return of Stock Splits (CLH, OKS, OKE, ALXN, CERN, PLCM, CWT, OII, CSX, SIX, IIVI, FLO, CHD, PEIXD, C, AAPL, GOOG, NFLX)

Stock splits usually bring back memories of the old tech bubble and dot-com bubble.  Fundamentally, nothing changes at the company other than that smaller investors get to invest in shares at a lower nominal share price.  Now that the markets have recovered so much, with the recent weeks as an exception, we are seeing many companies with higher share prices starting to announce stock splits. There may even be more current stock splits pending and freshly affected than we can remember seeing in years.

We have seen major stock split announcements from the likes of many companies.  Some of the larger splits are from the following: Clean Harbors, Inc. (NYSE: CLH); Oneok Partners LP (NYSE: OKS); Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN); Cerner Corporation (NASDAQ: CERN); Polycom, Inc. (NASDAQ: PLCM); California Water Service Group (NYSE: CWT); Oceaneering International, Inc. (NYSE: OII); CSX Corp. (NYSE: CSX); Six Flags Entertainment Corporation (NYSE: SIX); II-VI Inc. (NASDAQ: IIVI); Flowers Foods, Inc. (NYSE: FLO); and Church & Dwight Co. Inc. (NYSE: CHD).  We even have a fresh reverse stock split from Pacific Ethanol, Inc. (NASDAQ: PEIXD).  You might think it learned from Citigroup, Inc. (NYSE: C) but Pacific Ethanol did not have a choice if it wanted to keep its listing.

There is also no way to have an article about stock splits without pondering when or what it would take for great companies like Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG) or Netflix, Inc. (NASDAQ: NFLX) to consider splitting their shares.

The road to stock splits has really become more common.  We have not seen this many pending splits in years.  These are not presented in any significant order.

Clean Harbors, Inc. (NYSE: CLH) announced a two-for-one stock split in the form of a dividend payable on July 26, 2011 to holders of record at the close on July 6, 2011.

On Tuesday came word from Oneok Partners LP (NYSE: OKS) that it planned to conduct a two-for-one split of its common and class-B units.  This was its first split and you rarely see “units” split.  It is 43% owned by its general partner, Oneok Inc. (NYSE: OKE).

In May came a biotech stock split from Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN).  It previously approved a 2-for-1 stock split and shares began trading on a split-adjusted basis on May 23.  Shares went from almost $100 to under $50…

Also in May came word from Cerner Corporation (NASDAQ: CERN) that its board of directors had approved a 2-for-1 stock split in the form of a dividend for holders of record on June 15, 2011. The distribution date for the new shares is June 24, 2011.

Polycom, Inc. (NASDAQ: PLCM) announced last month after its pact with H-P that its board of directors approved a two-for-one split of its stock in the form of a stock dividend for holders of record at the close of business on June 15.

California Water Service Group (NYSE: CWT) is set to reflect a previously announced 2-for 1 stock split with an ex-date of June 13.  What is interesting is that this is another stock with a split when the share price is relatively low around $36.00.  That looks like its first share split since 1998.

Oceaneering International, Inc. (NYSE: OII) is set to reflect its 2-for-1 stock split on June 13 as an ex-date.  This looks like its second split but that is after almost five years since the last one.

CSX Corp. (NYSE: CSX) announced a 3-for-1 stock split back in early May and that seemed high considering that shares are around $75.00, not exactly off the charts for an old transport company.   Its last share stock split was 2-for-1 back in 2006.  CSX goes ex-split on June 16.

Six Flags Entertainment Corporation (NYSE: SIX) was one we completely forgot about.  The Theme park operator is set to reflect a 2-for-1 stock split with an ex-date of June 16.  Maybe the company is turning a new leaf as it is now paying a small cash dividend as well.

II-VI Inc. (NASDAQ: IIVI) is only around $50 but the company announced in mid-May that it plans to split 2-for-1.  Its ex-date is June 27

Flowers Foods, Inc. (NYSE: FLO) was not your usual stock split as its share price was never off the chart.  In May came word that a 3-for-2 split would be paid in the form of a 50% stock dividend to holders of record on June 10, 2011 for a June 27 ex-date.  It simultaneously boosted its cash dividend for holders as well.

Church & Dwight Co. Inc. (NYSE: CHD) completed its previously announced split just last week.  Its split was a 2-for-1 split and that was the first since its 3-for-2 Stock Split back in late-2004.

Pacific Ethanol, Inc. (NASDAQ: PEIXD) is the filed an amendment to its Certificate of Incorporation to effect a one-for-seven reverse stock split in order to maintain a NASDAQ listing.  This is one example of “What not to do in the world of stock splits.”  Now investors just get to short sell all over again at higher share prices.  The split-adjusted basis starts at the open of trading on Wednesday, June 8, 2011.

Citigroup, Inc. (NYSE: C) recently made huge waves when it conducted a reverse split of a 1-for-10 back on May 9, 2011 and shares magically went from $4.52 to a l$45.20 but closed at $44.15 on the first day of its post-split.  As with most reverse stock splits, the time since has not been kind as shares are trading down under $38.00 as of now.

Apple Inc. (NASDAQ: AAPL) has so far refused to split its stock despite shares being far north of $300.00.  It seems though that Apple thinks this keeps the swing trading out of the shares.  We won’t even bother pondering when Google Inc. (NASDAQ: GOOG) or Netflix, Inc. (NASDAQ: NFLX) will consider a split, but let’s just go on record and say, “Those splits are WAYYYY overdue.”

When you see certain trends they can be alarming.  We hope this is not a sign of bad things to come.

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JON C. OGG