Like Macy's (M)
One common (now almost clich ) example is to use a catchy ticker symbol, like those of Harley Davidson (HOG)
Another sales tactic is actually enabled and perpetuated by government regulation. Company officers and directors are required by the Securities and Exchange Commission to report when they buy and sell their company's stock, and that information is then disseminated to the public and reported on by news organizations, web sites and blogs dedicated to tracking "insider" trading.
That kind of reporting ends up being a very inexpensive and widely watched form of advertising -- and one that I'm bewildered more executives don't exploit.
Buying an advertisement in a publication like Barron's, or on web sites like Bloomberg or MarketWatch, isn't cheap, nor is hiring a public relations firm to drum up investor interest. Yet Thomas Galligan, Chairman of the Board of Town Sports International (CLUB),
The most effective trick by far is changing the stock price itself. Although it might sound counterintuitive, as we've pointed out before, a company can actually peg its stock price just about wherever it wants using stock splits.
While some amateur investors gravitate toward penny stocks, institutions tend to avoid them, so companies will use reverse splits to raise the absolute price, either for cosmetic purposes or to meet an exchange's listing requirements. In a one-for-ten split, for example, your 10 shares of stock at $5 would be replaced by one share of stock at $50. To some, the new price tag may seem more legitimate or reputable, but neither the company nor the value of your investment has changed.
The most obvious and current example is AIG (AIG),
The "Real" AIG (without July 2009 1:20 split)
You can't help but feel a little safer buying a $16 stock than a $1.60 stock, which is where E*Trade Financial (ETFC)
The "Real" E*Trade (without June 2010 1:10 split)
Even stronger stocks have played this game. Priceline.com (PCLN)
The "Real" Priceline (without June 2003 1:6 split)
Reverse splits are completely cosmetic. Nothing fundamentally changes within a company, which is why three of the Japanese financial stocks I've been buying recently might consider undergoing their own reverse splits. Higher prices could help persuade skeptical American investors to consider their shares. Based on looks alone, these are stocks that are priced way too low, given their size and regional dominance.
For example, Mitsubishi UFJ (MTU),
Mitsubishi UFJ (with a hypothetical 1:10 split)
The same goes for Mizuho Financial (MFG),
Mizuho Financial (with a hypothetical 1:10 split)
Shares of Nomura Holdings (NMR)
Nomura Holdings (with a hypothetical 1:10 split)
Sources for all charts: Bloomberg, Rosewood Research
Hoenig's fund held positions in many of the securities mentioned.