Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of specialist telecom company Windstream Holdings (NASDAQ:WIN) closed Friday's trading session at $7.83. On Monday, the stock opened at $11.90 per share for a quick 52% weekend surge. Then it fell 17% in short order before settling down in the neighborhood of $10.20 per share. What's going on with this crazy roller coaster?
So what: Actually, that's only part of the Windstream story today. On Friday night, the company spun off its networking hardware assets under a brand-new ticker. Communications Sales & Leasing (NASDAQ:CSAL), as that real estate investment trust is known, has wobbled between $26.60 and $29.50 per share this morning. As of 11:15 a.m., CS&L carried a $4.3 billion market cap while the remaining Windstream ticker was worth $1.1 billion. The two companies add up to about $5.4 billion in total market value, up from $4.7 billion on Friday night. All things considered, it's probably best to mark it up as a 15% price surge for existing Windstream investors.
Now what: Windstream's REIT split was a long-awaited move with well-known implications. New Windstream investors can now choose whether to buy into the company's dividend-heavy networking assets under the CS&L ticker, or to look for more growth and smaller dividends in the regular old Windstream ticker. As a reminder, CS&L expects to pay out $2.40 in annual dividends this year, which works out to an 8.4% effective yield at current prices. Windstream's expected payout of $0.60 per share amounts to a lower 5.7% yield. You should expect Windstream to fall out of the S&P 500 market index in the next rebalancing of that index, perhaps to be replaced by the larger market heft of CS&L.
Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.