Entering a Stock Split

Stock splits can play out in a number of ways, but generally they are in one of 2 categories:

  1. Standard stock split – A standard stock split is when you end up with more shares after the split than before. For example, a common stock split is when every 1 share you own before the split is converted into 2 shares after the split. So if you owned 100 shares before the split, after the split you would own 200 shares. This example would be called a 2-for-1 stock split.
  2. Reverse stock split – A reverse stock split is when you end up with less shares after the split than before. For example, for every 2 shares you own before the split, you will have only 1 share after the split. So if you owned 500 shares before the split, after the split you would own 250 shares. This example would be called a 1-for-2 stock split.

Share splits not only affect the number of shares you own, but also the current trading price of the shares. In a standard 2-for-1 split, you will receive double the number of shares after the split as before, but the share price for that stock will also be half the pre-split price.

In a typical, pure stock split, the total cost basis of the shares you own does not change. The cost basis per share will have changed according to the split ratio, but the total cost basis of your holding in that stock after the split will be the same as before the split.

You can enter and apply stock splits to holdings in your StockMarketEye portfolios by following the instructions below.

The Stock Split Window

Open the StockMarketEye portfolio where the split occurred and select the stock that is to be split. Then use the menu, Portfolio -> Split Stock….

Portfolio Split Stock Menu in StockMarketEye

This will open the “Stock Split” window.

Portfolio Splitting Stocks Window in StockMarketEye

The “Split Ratio” field in this window is where you enter the split details. If this is a standard stock split, the first field will be larger than the second (ex. 2 for 1). If this is a reverse stock split, the second field will be larger than the first (1 for 2).

Be sure to enter the official date of the split in the “Split Date” calendar. You can also enter any comments about this split in the “Comments” field.

Press the OK button when you have filled in all of the details. StockMarketEye will then:

  1. Apply the split to your current holdings in the Prices and Fundamentals views. The number of shares as well as the buy price (and related columns) will be updated.
  2. Add the SPLIT transaction to the Transactions report. The original BUY transactions for the items being split will not be altered.

Applying Split to Individual Lots

StockMarketEye will apply the split to the lots you have selected in your portfolio. If you selected the aggregate item of one of your holdings, the split will be applied to all sub-lots. If you only want the split to be applied to one of the lots, select that lot before opening the “Stock Split” window.

Stock Split Details in the Transactions Report

Once you’ve entered a stock split, you can see it in the Transactions report. Note that the “Shares” column for a “Split” transaction represents the split ratio. For example, a 2-for-1 split would have a split ratio of 2.0 and a 1-for-2 reverse split would have a split ratio of 0.5.

Portfolio Stock Split Transaction in StockMarketEye

You can change the details of a stock split after you have entered it by double-clicking on the “Split” transaction in the Transactions report. Note that some changes to a split transaction can not be correctly propagated to the current holdings. In this case, you should follow the suggestions in the “What To Do If There Are Problems” section below.

How To Handle Uneven Share Splits

Sometimes a stock split will produce an uneven number of shares. For example, if the company declares a 1-for-7 reverse stock split, and before the split you owned 100 shares, after the split you would own 14.2857 shares.

Depending on how the company and/or brokerage have elected to handle the fractional shares, in the example above, you may only end up with 14 shares in your account. The fractional shares are often paid cash-in-lieu, which means you receive the equivalent value of the fractional shares in cash instead.

To handle this type of situation in StockMarketEye, you can model it in essentially the same way that your brokerage does:

  1. Record the split transaction as described above. You then have a fractional number of shares in your portfolio.
  2. Sell the fractional number of shares so you end up with the required whole number of shares. The proceeds from the sale should be added to your cash balance.

What To Do If There Are Problems

If you are having problems correctly splitting your stock, the best option is to delete the problematic “Split” transaction. Then follow the steps in the section, Rebuild Your Portfolio From Its Transactions, to rebuild the Prices view from the Transactions. Afterwards, apply the stock split again.