Bank of Philippine Island (BPI)

by **cbdude** » Thu Mar 16, 2006 1:36 pm

there, bos ws
my ever fav blue chip :lol:

banking in general will be in good valuation after the extension of spav.

by **bigbro** » Thu Mar 16, 2006 1:42 pm

Makes me wonder why this stock moved just because of a 20% stock div. As Sir Ante said, only matrons get excited with stock divs. :roll:

by **cbdude** » Thu Mar 16, 2006 1:45 pm

. gfis are matrons

by **Sakura Haruno** » Thu Mar 16, 2006 1:48 pm

Maybe traders are not fond of stock dividends pero yung mga long term buy and holders are sure fond of it. Who doesn't want free stock which has a chance to appreciate in the future? :lol:

by **antediluvianist** » Thu Mar 16, 2006 2:21 pm

No, you don't get anything additional, really. Your proportionate ownership of the company is exactly the same - remember, every other shareholder got the same proportionate increase in pieces of paper that you did. Say, instead of 100 shares worth P100 each, you now have 200 shares worth P50 each. (But matrons will probably value the 200 shares at higher than P50 , so maybe there is some benefit IN THE PHILIPPINES.)

Let's see if BPI will keep the cash dividends per share constant - absolute value of cash dividends per share. If they do, yes, you got something to celebrate because you have twice as many shares. But typically, the company adjusts subsequent cash dividends per share downwards too to allow for more shares out there.

Anyway, if you're happy, I am sorry to interfere with that happiness.

by **bigbro** » Thu Mar 16, 2006 2:36 pm

. Well I'm smiling. Not with the 20% stock div but with GFI's being matrons. It's time we put some centerfolds there to perk things up.

by **whipsaw** » Fri Mar 17, 2006 7:46 am

antedi, so do you think the price rise is due to another play not caused by the stock dividend?

by **antediluvianist** » Fri Mar 17, 2006 2:36 pm

I didn't say that stocks don't zoom up because of stock dividends. I said that they shouldn't , unless cash dividends per share will remain the same after the stock dividend (but 99.9% of the time, the cash dividends per share are adjusted downwards proportionally.)

However, if I had advanced inside information that a blue-chip was going to declare a substantial stock dividend, I'd probably buy the stock, not because I think the stock dividend will make me wealthier, but because there are a lot of people who do think that, and they will bid the stockprice up. Let it never be said that the local stockmarket is necessarily logical.

Having said that, Winston Garcia does look kind of matronly.

by **chupitero** » Fri Mar 17, 2006 4:06 pm

eps, pe, book value all stay the same before and after a stock dividend.

by **antediluvianist** » Fri Mar 17, 2006 8:45 pm

No. There are more shares outstanding after a stock dividend, so the denominator for the EPS formula (Net profit/# of shares outstanding) increases, making the EPS drop.

The net worth of a corporation is not changed by a stock dividend, because both retained earnings and capital stock are part of net worth and so turning some retained earnings into capital stock ("capitalizing retained earnings") -which is all that a stock dividend does - does not change net worth. However, book value PER SHARE does drop, for the same reason as above : the denominator - the number of shares outstanding - has increased.

by **chupitero** » Sat Mar 18, 2006 5:34 pm

Oops, my mistake. :oops:

eps and book value per share do have to drop in order for pe and price to book to remain unchanged.

by **antediluvianist** » Sat Mar 18, 2006 7:59 pm

No problem, chups. You just keep coming up with your news about stocks and companies.

by **antediluvianist** » Sat Mar 18, 2006 8:01 pm

"antedi, so do you think the price rise is due to another play not caused by the stock dividend?"

Well, the Special Purpose Vebicle Law was extended, and operating results of banks in general have been pretty good. I'm interested in BPI, MBT and UBP if the prices drop a bit.

Bank of Philippine Island (BPI)

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