Stock Splits

The company I work for, hold a small amount of stock in but a pretty good chunk of options in has just announced a 3 for 1 stock split. The article can be found here. The samething happened a few years ago.

What do stock splits mean? Basically, at first not much in terms of pure value. Basically, an investor is left with the same amount of value after the split that they had immediately before the split. So why do companies split their stocks? A lot of it comes down to perception. To many investors, there is a psychological factor when looking at a $60 stock versus a $20 stock. For some reason, in people’s minds it seems to be more of a bargain at $20 as opposed to $60. If more people see the stock as having more upside at $20 as opposed to $60, then they buy the stock and that pushes the price up. The problem is these people only look at the share price and ignore fundamentals. Not a particularily smart way to trade.

If you are in my shoes, and you are provided with options then a stock split is a good thing. Basically, I receive 3 times more options that compound in value as the share price moves up (assuming it continues to move up). We shall see. I have a lot of confidence in Talisman and beleive that we can make it happen.