TWC special dividend and 3-1 reverse stock split

C2
1

Hello,



TWC recently paid out a special dividend and enacted a 3for1 reverse stock split… as a result the return metrics associated with TWC on Collective2 (and a number of other places) are all screwed and it’s impacting my portfolio… could you please take a look and fix? Thanks a lot…



more info

http://finance.yahoo.com/news/Time-Warner-completes-cable-apf-14641846.html



http://finance.yahoo.com/echarts?s=TWC#chart2:symbol=twc;range=3m;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=on;source=undefined









2

TWC Open High Low Close

23-Feb-09 17.60 18.00 17.39 17.55

24-Feb-09 17.62 18.85 17.54 18.85



From another data record I keep, I believe I short selled 242 shares of TWC at an average price of $18.41.



$18.41

$10.27 Special Dividend

$8.14 after special dividend

$24.42 after 1/3 reverse split

$25.90 price today

loss of $1.48 per share or $358.16 on 242 shares,



but C2 shows that I initiated a short sale on 734 shares at an average price of $6.07, and that I now have a a loss of $14,552 on this trade. I’m not sure what’s going on…



was a normal split done instead of a reverse split, or was I somehow penalized for the special dividend?



my understanding on the dividend is that I pay it out and from the cash in the short sale and adjust the original short sell price/value accordingly…



what am I missing? thanks…



3

When you short a stock, you owe the dividend to the holder, and thus (in C2 land, anyway) your C2 cash balance is deducted by the dividend amount. Further, the market price of the stock changed on the ex-dividend date (because after the ex-div date, holders were no longer entitled to the cash payout).



I believe the split was handled properly in your C2 account: i.e. you have 1/3 the shares your used to hold, at but at 3x the price. If this is incorrect, please email me privately - matthew at collective2.com and let me know what you think is incorrect.

4

Actually, upon review, it appears that our data source had an error and indicated a 3:1 split, and not a 1:3 reverse split. I will try to correct this by the end of the day.