Why it can sometimes pay to invest in illiquid stocks

In nervy markets, lower liquidity can make more difference to shares in major companies than you’d expect

The news that Apple is to carry out a 4:1 stock split has sent the tech giant’s shares soaring again. Apple’s stock price is up by 20% since 30 July, when the split was announced, having already doubled over the past year.

Stock splits theoretically shouldn’t make any difference to the price of a share. Yet studies show that when companies split their stock, they tend to outperform over subsequent periods ranging from months to years. (The opposite is true for reverse splits, which is bad news for floundering voucher-deals firm Groupon: its recent 1:20 consolidation seems unlikely to check its steady march towards zero.)

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.