DryShips Inc. (NYSE: DRYS) released a pretty embarrassing press release yesterday, announcing that it was canceling its planned stock split in light of the fact that its stock had tanked:
Although the Company previously announced its intention to effect a 3:1 stock split in the form of a share dividend following today's special meeting, the board of directors has determined that in light of recent developments in the trading price of the Company's common stock, it is in the best interests of the Company and its shareholders to defer the proposed stock split until a more favorable time in order to preserve shareholder value.
Right. I, along with Warren Buffett, have never been a big fan of stock splits, mainly because they don't really have any point or serve any purpose -- unless a stock is so expensive that most people can't afford a single share. But in the case of DryShips, the highest its stock has traded this year is $131.34.
Here's my philosophy when it comes to stock splits: anytime a company's management/board is so pleased with itself that it can't think of anything better to do than slice the pie in different shapes... find a less complacent management team at a different company.
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