How HLT's 2017-01-04 stock split ratio is calculated?
How HLT's 2017-01-04 stock split ratio is calculated?
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Azmisov · External communityPost link
External question — Personal Finance Stack Exchange
Author: Azmisov
Original post: https://money.stackexchange.com/questions/144564
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
Adaptation: HTML converted to plain text; contact email addresses removed.
I am trying to understand a discrepancy among a few stock split data sources. One such example is HLT's split on 2017-01-04 (see
https://ir.hilton.com/spin-off-information
). On this date, HLT spun off into HLT, PK, and HGV. Investors received 0.2 PK and 0.1 HGV for each HLT. HLT then had a 1:3 reverse split to bring the trading price back up.
The NASDAQ's splits calendar shows a 1:3 ratio, however Yahoo Finance and splithistory.com both list a 1000:2052 ratio instead. Seems this latter split is accounting for the spinoff somehow. How do they arrive at 1000:2052... is that some officially published number? I am unable to figure out how they got that.
My attempts at reproducing that ratio:
HLT closed 2017-01-03 at $27.39, and opened 2017-01-04 at $57.3. That's a 1:2.092004381 ratio, so doesn't quite line up. From
this link
it seems "when issued" tickers PK-WI and HGV-WI started trading ~21 days prior. My guess is NYSE took the closing prices for those on 2017-01-03 to calculate the split ratio to apply the morning of the 4th. E.g A ratio of
27.39 : 3*(27.39 - close(PK-WI) - close(HGV-WI))
. However, I can't find any historical data for those when-issued shares, so can't verify if that gives us 1000:2052. Just seems there would be some central, officially published split ratios that the exchange applied to magically update the price.
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Richard at NorgateData · External communityPost link
External answer — Personal Finance Stack Exchange
Author: Richard at NorgateData
Original post: https://money.stackexchange.com/a/144565
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
Adaptation: HTML converted to plain text; contact email addresses removed.
There is no central source for split ratios. NYSE doesn't actually calculate split ratios - that is up to each data vendor to determine based upon the corporate actions reported. Here's how Norgate Data does it under the hood:
Ex-date for corporate action: 2017-01-04
Entitlement date or corporate action: 2017-01-03
HLT Closing price on entitlement date: 27.39
HLT Open price on ex-date: 57.3
HLT Open price on ex-date: 58
Spinoff action leg 1:
Demerger of 0.1 Hilton Grand Vacations (HGV, was trading as HGV-WI on the day
HGV on entitlement date: 25.58
Value of leg 1: 2.558
Spinoff action leg 2:
Demerger of 0.2 Park Hotels & Resorts Inc (PK, was trading as PK-WI on the day)
PK on entitlement date: 30.5
Value of leg 2: 6.10
Total value of spinoffs: 2.558 + 6.10 = 8.658
Spinoff dilution factor: (27.39-8.658)/27.39 = 0.6838992332968237
Reverse split 1:3 = factor: 3
Combined factor: 0.6838992332968237 * 3 = 2.051697699890471
That factor is then applied to all prices prior to the ex-date.
Regarding the "when issued" prices and historical data, this is also up to the data vendor. Norgate Data prepends any "when issued" pricing data to a stock's history. Some vendors don't do this though.
Best regards,
Richard Dale
Disclosure: I am a co-owner of Norgate Data.
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