Citigroup shares struggled on Monday, the first day after a 1-for-10 reserve stock split. Although intended to improve investors' opinion of a company, trader Jon Najarian said a reverse stock split is "no magic bullet."
The optionMONSTER.com co-founder pointed to two recent examples. AfterAIG [AIG 29.67 -1.03 (-3.35%) ] went through with a 20-for-1 reverse stock split on June 30, 2009, Najarian said its stock plummeted. This year, AIG's stock peaked at $61 a share.
Priceline [PCLN 529.41 10.38 (+2%) ], on the other hand, did a 1-for-6 reverse stock split. Afterwards, its stock didn't go anywhere for a considerable period of time before exploding to the upside.
"I would think Citi [C 44.08 -1.12 (-2.48%) ] hangs in here far more than I think it explodes to the upside on this reverse split," Najarian said. "Keeping in mind that the company's the same and really just the stock price and the amount of shares you have were cut 1-for-10, I think that this will be something that will be good longer-term for Citi, but it's not a reason to buy it ."
POPS & DROPS
Stocks rallied on Monday, as energy names pushed higher. The "Fast Money" traders, though, thought these market movers to be the most interesting.
POPS (Stocks that went higher)
U.S. Steel (X) popped 2.7%: This metal fabrication company's stock was oversold, Stuart Frankel's Steve Grasso said. For those interested in the sector, he thinks AK Steel [AKS 15.19 0.28 (+1.88%) ] is a "better bet."
Apollo Group (APOL) popped 1.5%: The education and training services company caught several upgrades on Monday, trader Pete Najarian said. It appears as though it has further upside and given the stock has been beaten up lately, he thinks APOL is worth looking at.
Sysco (SYY) popped 12%: The food wholesaler's stock is trading at multi-year highs, yet still has a fairly attractive price-to-earnings valuation ratio, Veracruz founder Steve Cortes said.
DROPS (Stocks that went lower)
Tyson Foods (TSN) dropped 6%: The meat products company reported a disappointing quarter on Monday, RiverTwice Research's Zachary Karabell said. He has shorted the name because of rising chicken prices, but may soon end that trade because he doesn't think Tyson is in "any real trouble."
The optionMONSTER.com co-founder pointed to two recent examples. AfterAIG [AIG 29.67 -1.03 (-3.35%) ] went through with a 20-for-1 reverse stock split on June 30, 2009, Najarian said its stock plummeted. This year, AIG's stock peaked at $61 a share.
Priceline [PCLN 529.41 10.38 (+2%) ], on the other hand, did a 1-for-6 reverse stock split. Afterwards, its stock didn't go anywhere for a considerable period of time before exploding to the upside.
"I would think Citi [C 44.08 -1.12 (-2.48%) ] hangs in here far more than I think it explodes to the upside on this reverse split," Najarian said. "Keeping in mind that the company's the same and really just the stock price and the amount of shares you have were cut 1-for-10, I think that this will be something that will be good longer-term for Citi, but it's not a reason to buy it ."
POPS & DROPS
Stocks rallied on Monday, as energy names pushed higher. The "Fast Money" traders, though, thought these market movers to be the most interesting.
POPS (Stocks that went higher)
U.S. Steel (X) popped 2.7%: This metal fabrication company's stock was oversold, Stuart Frankel's Steve Grasso said. For those interested in the sector, he thinks AK Steel [AKS 15.19 0.28 (+1.88%) ] is a "better bet."
Apollo Group (APOL) popped 1.5%: The education and training services company caught several upgrades on Monday, trader Pete Najarian said. It appears as though it has further upside and given the stock has been beaten up lately, he thinks APOL is worth looking at.
Sysco (SYY) popped 12%: The food wholesaler's stock is trading at multi-year highs, yet still has a fairly attractive price-to-earnings valuation ratio, Veracruz founder Steve Cortes said.
Tyson Foods (TSN) dropped 6%: The meat products company reported a disappointing quarter on Monday, RiverTwice Research's Zachary Karabell said. He has shorted the name because of rising chicken prices, but may soon end that trade because he doesn't think Tyson is in "any real trouble."
