If you haven't been paying close attention to Vector Group (VGR -1.39%) stock lately, you might have woken up to a shock today. At a share price of $11.27 as of 10:45 a.m. EDT Thursday, Vector's stock seems to have lost a third of its value overnight, after closing at $17.16 Wednesday evening.
But there's no reason to worry. The carnage isn't really what it appears.
Instead, what happened is that after close of trading yesterday, Vector completed the spinoff of Douglas Elliman Realty (NYSE: DOUG), its New York-based commercial real estate brokerage, effectively dividing itself into two stand-alone companies. Vector distributed all of the outstanding shares of Douglas Elliman common stock to Vector's stockholders, who received one share of Douglas Elliman for every two shares of Vector they owned as of Dec. 20.
Result: Your shares of Vector may be worth less today -- though you still own the same number of shares you did previously -- but only because you now own shares of the real estate company, too (and/or got paid in cash).
Which brings us to today. After the spinoff, an owner of Vector Group stock worth a bit more than $17 last night now owns shares of the tobacco stock worth just over $11. But that shareholder now also holds shares of Douglas Elliman Realty that began trading this morning at $10 a share, and is up nearly 14% to $11.39 as of this writing.
Combined, the stocks are trading over $22, though with the 1:2 spinoff ratio, not much has really changed for a Vector Group investor.