Your article on how to value the Lucent/Avaya spinoff has reminded me that I have a similarly terrible problem involving Dun & Bradstreet (DNB) . They have spun off so many times that I have lost track of all the permutations, including the latest transaction with Moody's.
Can you suggest where I can get help in determining the basis of these stocks? -- Taylor Oncale
As with most mergers, acquisitions or spinoffs, you should always check out the investor relations section of the company's Web site. Most will include information about how the action affects your cost basis, i.e. your original cost for the shares.
Dun & Bradstreet's Web site has a
cost basis section that will walk you through the details of the earlier spinoffs. You'll need to adjust your basis for these earlier actions, if you haven't already, before you can tackle any recent action.
The latest distribution was hardly straightforward.
The goal was to divide Dun & Bradstreet into two public companies. So they split the company into two divisions -- the Dun & Bradstreet operating company and
Moody's Investors Service
. The operating company offers business-to-business credit, marketing and purchasing information, and receivables management services. Moody's is a global provider of credit ratings, research and analysis of debt instruments for the capital markets.
Now's here where things get a bit confusing.
On Oct. 3, the old Dun & Bradstreet changed its name to Moody's -- so it became the main company -- and broke off the new Dun & Bradstreet, says Greg Alves, vice president of operations
, the portfolio tracker that calculates these corporate actions for you.
If you were a shareholder on Sept. 20, the record date, for every share of the old Dun & Bradstreet held, you received 0.5 share of the new Dun & Bradstreet. Your old Dun & Bradstreet share will be replaced with a new share of Moody's stock.
So if you were holding 100 shares of the old Dun & Bradstreet, you would receive with 100 shares of Moody's and 50 shares of the new Dun & Bradstreet.
Fortunately, this was a nontaxable event. But don't forget, you must allocate a portion of your cost basis in your old Dun & Bradstreet shares (now Moody's) to the new Dun & Bradstreet shares you received.
According to Dun & Bradstreet's Web site, 76.34% of your original cost basis in one share of Dun & Bradstreet must be allocated to your new Moody's share and 23.66% should go to your 0.5 share in the new DNB.
Check out our
Avaya spinoff story for details on the number-crunching.
Stop the HOLDRs Mail!
If you're a shareholder in of one of the
Merrill Lynch HOLDRs
, one of your biggest gripes -- aside from some recent lousy returns -- may be that you're getting more mail than Santa Claus at Christmas.
That's because with the purchase of a
HOLDR, you get a basket of 20 stocks. Unlike a mutual fund, you actually own all the underlying stocks. But as a shareholder in these stocks, you're entitled to receive annual reports and proxy statements from all of them. If you own more than one HOLDR, your only hope was to buy a bigger mailbox.
Fortunately, now you have the option of receiving everything by email.
Just click on to the "proxies by email" section on the home page of the HOLDRs
Web site and follow the directions.
Then, as long as the underlying company has entered the 21st century and is set up to send proxies and annual reports via email, that's how you'll receive them.
So consider it. You mailman will thank you.
College Savings Got You Down?
If you're concerned about saving for college than you can't afford to miss our
chat Thursday at 5 p.m. EDT. I have invited Joe Hurley, author of
The Best Way to Save for College, to chat with us about the state-sponsored college savings plans. So come armed with questions.
here for this free personal finance chat.
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TSC Investor Forum aims to provide general investment information. It cannot and does not attempt to provide individual advice. All readers are urged to consult with a professional as needed about their individual circumstances.