Fools know the value of a stock split: zero. It's a nonevent. Instead of a $20 bill in your wallet, you've now got two $10 bills. You're eating 12 smaller slices of the same-sized pizza, instead of six larger ones.

So if stock splits mean nothing, why do companies do them? There are a few reasons, none of which has anything to do with whether the stock is a good investment. Here are the usual ones:

  • To make the stock look cheap.
  • To increase liquidity.
  • To meet stock-exchange listing requirements.
  • To express a bullish management sentiment.

Regardless of the reason, the market tends to view stock splits as positive events, and a company's shares can get a short-term boost from the news. But if the business isn't a good, long-term company, it doesn't matter whether its shares split, or whether you buy them before or after.

A split decision
That's why we pair up stock-split announcements with the sentiments of the 100,000-plus investors at Motley Fool CAPS. Every day, professional and novice investors rate the prospects of thousands of stocks, resulting in a rating between one and five stars, five being the best. If the best stock pickers think a company's long-term performance is outstanding, and the company has announced the bullish signal to split its shares, perhaps investors should take notice.

Here, we'll dive in and see exactly what the CAPS community has to say about some of these companies. The following stocks have recently announced splits.



Announcement Date

Date Payable

CAPS Rating (5 Max)

Cleveland-Cliffs (NYSE: CLF)





Weatherford (NYSE: WFT)





Atlas America (Nasdaq: ATLS)





Bucyrus International (Nasdaq: BUCY)





Invitrogen (Nasdaq: IVGN)





Source: Company SEC filings. Ratings courtesy of Motley Fool CAPS.

All of these companies are apparently well-liked by investors, as their CAPS ratings of three stars or better suggest. CAPS investors seem just as confident about the companies' prospects as management apparently is. Yet as the market takes its toll on share prices, the need to split shares may decline as well, causing a dearth of split announcements -- just as we've seen over the past month or so.

Turning a weather eye
The erosion of oil drilling in the North American geographic segment affected oil services companies like BJ Services' (NYSE: BJS) and Schlumberger (NYSE: SLB), and it's hurt Weatherford as well. Yet the company was still able to turn in a quarterly result that beat analyst expectations, thanks to the geographic dispersal that allowed it to offset weakness in one area. Because it holds a key role in the worldwide production of oil and gas, Weatherford's shares have appreciated more than 50% over the past year, no doubt playing a role in the announced stock split.

As CAPS investor Sly2Slim noted back in January, the world is coming to realize that the price of oil hasn't risen because of speculation, but because of economic fundamentals. As a result, Weatherford is benefiting from those market forces:

With the world slowly realizing that it's fundamentals that are driving oil markets and not speculation (demand [outstripping] supply and heavy draw downs on reserves), oil services look poised to have another robust year. After all, the oil majors need to find new reserves while also replacing declining production from existing oil fields, which is no small task. It will demand an astronomical level of investment, which is where the oil services companies come in, and WFT appears perfectly positioned to reap the rewards of this windfall.

Split the difference
How about you? Will profits continue to flow to oil companies? Get in the mix with Motley Fool CAPS and share your opinions on these stock split stories with tens of thousands of your fellow investors.