A subscriber recently asked me if I was aware of any websites that have an email notification system or an RSS feed for special events like stock splits, spinoffs and special dividends. Academic research has shown that companies declaring stock splits and special dividends tend to do well for a period of time after the announcement of these events. The stock split theory discussed in the academic paper “Underreaction to Self-Selected News Events: The Case of Stock Splits” by professors David Ikenberry and Sundaresh Ramnath formed the basis for selecting Logitech (LOGI) and Infosys (INFY) in the June 2006 edition of InsideArbitrage.
Logitech is up more than 44% and Infosys is up an impressive 54% since June. Another recent example is the asset management company U.S. Global Investors (GROW) that has almost doubled since it announced a stock split on November 8, 2006. Yes, a gain of over 92% in little over a month. I am still kicking myself for not taking a closer look at U.S. Global, especially since I had a drink with one of its directors less than two months ago.