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NEW YORK (Reuters) – Citigroup (C.N) unconcealed on weekday that alter splits crapper be a somewhat agonized exercise.

Its shares dropped 2.4 proportionality after a alter 1-for-10 separate that could be fruitful eld from now, but thickened feat for whatever weeks. The higher impact toll is more appealing to field fund investors but inferior captivating to screen jockeys hunt to trade the impact for quick gains.

Shares of the third-largest U.S. slope by assets lapse 2.7 proportionality to $44 on Monday. The alter separate has the impact in double-digits for the prototypal instance since November 2008, when it prototypal poor below $10, but the manoeuvre has a integrated track record.

"I doubt the impact is feat to go backwards to the level it was pre-reverse split, but Citi has its work revilement discover for them," said Jason Weisberg, managing administrator at Seaport Securities Corp in New York.

The shares are trading in the mid-$40s for the prototypal instance since Oct 2007, when the slope started to discern zillions of dollars of losses on intense loans.

Often, companies module organise a alter separate to ready from existence delisted because their impact toll has fallen through $1 a share. Many of those companies ease don't survive.

For larger companies, the ratio are better, though they ofttimes verify a short-term hit.

Data from Birinyi Associates Inc shows Russell 1000 stocks that impact enacted a alter separate since 1990 impact suffered an average impact toll fall of 1.6 proportionality 30 days after the split. Those who impact finished this in the terminal 10 eld impact lost nearly 6 proportionality in the prototypal 30 days.(For factbox, click here: ID:nN09245380])

A number of big-cap obloquy impact been successful, including Priceline.com (PCLN.O). Its alter separate was in 2003 when the shares were inferior than $5 a share. It today trades at about $530.

Larger companies ofttimes organise a alter separate to boost their deal toll to attract institutions, whatever of which are illegal from owning low-priced stocks. This ofttimes makes the shares inferior volatile as well.

"You crapper call it the person push bourgeois -- every of their competitors are in the threefold digits while their impact was in the azygos digits," said Mohannad Aama, managing administrator at Beam Capital Management LLC in New York.

"Over instance they do increase institutionalised control -- that haw impact been the important dynamical factor."

Some continue to struggle post-split. Brocade Communications (BRCD.O) did a 1-for-100 alter separate that bumped its impact to about $8 a deal from 80 cents in June 2007; the shares are currently at $6.25. Ciena (CIEN.O) is down about 28 proportionality since its Sept 2006 split.

Priceline.com was an exception, though the impact took a some eld to verify off. Shares of underwriter dweller International Group Inc (AIG.N) lapse in 2009 after a 1-for-20 alter split, though the impact has rebounded since.

Citigroup, whose shares impact a nadir of 97 cents in March 2009 in the consequence of the business crisis, haw be another -- but it depends on consort performance.

"It could be the omission that proves our rule," said April Klein, a academic at New royalty University's Stern School of Business.

Klein co-wrote a 2008 study with Emory University's Goizueta Business School direction academic saint Rosenfeld display that those companies that conduct alter splits ofttimes undergo poor market and operating action for eld post-split.

"Most of the companies on our itemize were not 'too big to fail.' Also, there was no delisting danger here," psychoanalyst said.

With its shares at a higher price, Citi haw be held to a higher standard.

"Why would anybody own Citigroup when they crapper own JPMorgan for the same deal price?" said Mark Sebastian, honcho operating officer of Option Pit Mentoring, an options education concern in Chicago.

"JPMorgan is a much meliorate company. Now there is actualised toll risk for the impact when it wasn't at $4.50."

Citigroup shares lapse on the day in March when the slope declared its alter split, and industry observers had forecast they would fall again on Monday.

(Additional news by Jen Rogers in New royalty and Doris Frankel in Chicago; Editing by Evangelist Wallace, Kenneth Barry, saint Dalgleish and Dan Grebler)

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