Stock prices were generally lower Thursday on bad news on the jobs front and a drop in durable goods sales. But we were particularly interested in watching the stock price of Saga Communications, which was trading for the first day after a one-for-four reverse stock split.
Saga was not spared from the downward draft on Wall Street, but its stock opened at $4.00 and traded up to $4.10, holding up pretty well from its effective Wednesday closing price of $4.12. (The Wednesday closing price was adjusted from the $1.09 originally reported to $1.03.) Thursday’s trading was in a range of $3.91-4.10 and the stock closed at $3.98.
It is interesting to note that Daniel Tisch, son of one-time CBS owner Larry Tisch, has been actively buying Saga shares. He and his Towerview LLC now own over 1.5 million (pre-reverse-split). There’s no takeover threat, since CEO Ed Christian owns all of the super-voting Class B shares.
RBR/TVBR observation: In theory, after a reverse split the stock price should be the appropriate multiple of the pre-split price – in this case, four times the official Wednesday closing price of $1.03. But that’s not always the case. Sometimes a panic ensues and the stock goes into free-fall. Kudos to Ed Christian and the board at Saga for laying out their reasoning for investors and taking action before the stock was in any immediate danger of delisting. The market understood what was going on and pricing stood firm.