Reverse Split function, gives Fractional shares, although it should not

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peo

15 Jan, 2025 01:39 PM

The Reverse split function for shares is creating fractional shares. I have 18000 shares that are reverse split into 3000 Shares. I.e. 6:1. If I use this ratio, moneydance calculates that I shall get 2999.999 Shares.

Is this a bug or am I using it wrong?

  1. 1 Posted by Stuart Beesley ... on 15 Jan, 2025 06:56 PM

    Stuart Beesley (Mr Toolbox)'s Avatar

    What version of MD?
    How is your security setup?
    It works for me?

    see SSs

  2. 2 Posted by dtd on 16 Jan, 2025 01:43 AM

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    .

  3. 3 Posted by peo on 16 Jan, 2025 07:19 AM

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    I am using 2024.2 (5172)

    Its setup as Lot Matching

    In the screenshot below you can see that I get 2999.9999 shares and that the Split from 2025 is 0.16666…67
    [cid:[email blocked]]

  4. 4 Posted by Stuart Beesley ... on 16 Jan, 2025 08:35 AM

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    .

  5. 5 Posted by peo on 16 Jan, 2025 09:36 AM

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  6. 6 Posted by Stuart Beesley ... on 18 Jan, 2025 12:47 AM

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    [updated]

    I think that the MD calculation is correct... or arguably not wrong. I fully expect a debate at this point.. You do not have 18,000 shares / 6 = 3000. You have 18 transactions that each have to be calculated for splits and then added up... The issue (or not) is rounding..

    Take the first BUY for 2000 / 6 = 333.333. But unless you tell me that you can actually buy and hold 333.333 shares of that stock, then I would say you probably own 333 shares of that stock for that transaction. This is what MD is calculating. Certainly in the UK you cannot buy and own partial shares (only funds).

    So here's the dilemma.. Did you loose 333.333? Did your cost basis per share actually increase because of this...?

    Now do that 18 times....

    MD rounds each transaction's calculation of split / unsplit to the number of decimal places stored on the security. Really for this normal shares, it should be zero anyway, but that wouldn't help this situation.

    Because MD doesn't want to guess at your country's rules/regulations on reverse splits and rounding, and also what your share holding quantity really is, then it maintains the qty rounded to x (your security's dpc setting) dpc calculation up down the total calculation. So it's adding 333.3333 for example...

    You have to perform the split maths on every transaction and come to an answer. That answer goes into the total.... The total of 2999(.9999) matches this.. See screen shot..

    (I haven't at this point involved LOT matching as the calculation is still the same)

    Do you have a broker's report that shows you transaction by transaction the result, or the total? Perhaps they use different rules?

    Certainly a reverse split is a very tricky beast to handle.....

  7. 7 Posted by Stuart Beesley ... on 18 Jan, 2025 12:57 AM

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    If it were me I would do the following. Understand what total your broker says you have in real life. If different, on MD perform a sell all shares on the day before the split for the cost basis total value, and then buy the correct total for the same cost basis. Using avg cost basis, no issue… but I can see with LOT control this being problematic. Do you need LOT control for this?

  8. 8 Posted by dwg on 18 Jan, 2025 01:38 AM

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    Their is a problem is that there is arbitrary process that occurs with splits. As Stuart said in many jurisdictions you cannot have fractional shares. I see companies, when it happens, take one of two approaches, they either round the shares up or down, they generally say up front which will happen. Software however uses an arithmetic process.

    I think it is difficult to come up with a complete solution with such a random factor.

  9. 9 Posted by Stuart Beesley ... on 18 Jan, 2025 08:53 AM

    Stuart Beesley (Mr Toolbox)'s Avatar

    Or, I know it's a hack, but you could try this... Edit one of your earliest BUYs of 2000 to 2000.0001. On my system this trips the rounding and I now get 3000 at the end... This is probably the best bet. I will try it with your matching later.

  10. 10 Posted by Stuart Beesley ... on 18 Jan, 2025 09:02 AM

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    Just tried it... Do this as a hack to get the right result... Note you have to do this on a non-lot matched buy

  11. 11 Posted by Stuart Beesley ... on 18 Jan, 2025 09:10 AM

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    One last comment. I want to refine my earlier explanation.. The system rounds each split/unsplit calculation on quantity to the number of decimal places that the security has been set up to hold.... No one realises this, but most stocks/shares should probably be set up with zero decimal places. Anyway, in your situation this does not actually help. It's just the maths of each calculation adding up and it's getting 0.0001 different. This is because as we know, 1/3 gives you 0.33333 reoccurring which is a non-resolvable floating point number... When taken away from 1 you get 0.66666667 (example) and the little 7 on the end is the resolution and the very small difference... something like that!

  12. 12 Posted by Stuart Beesley ... on 18 Jan, 2025 09:20 AM

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    (see updated post 6 too)

  13. 13 Posted by peo on 18 Jan, 2025 09:20 AM

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    I updated this after reading Post 6 on the issue with Lot Matching. I agree it makes it more complicated if you must consider each lot.

    Since I do not necessarily need Lot matching in Moneydance (I will anyway do an extra excel calculation as input for my tax declaration) I could try to change it for this security.

    In this case I could also do another workaround. I will sell everything in a few months due to another tax issue and in worst case I could remove the split at that point and just register it in Moneydance as a sale of the “not split shares”.

  14. 14 Posted by peo on 18 Jan, 2025 09:35 AM

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    And thank you for all the help with the incredibly detailed explanations. I am impressed!

  15. 15 Posted by Stuart Beesley ... on 18 Jan, 2025 10:11 AM

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    Let me know what you do?

  16. 16 Posted by peo on 18 Jan, 2025 11:19 AM

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    I will and please see my update of the previous post also. I did not see your post 6 when I wrote it.

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  17. 17 Posted by Stuart Beesley ... on 18 Jan, 2025 02:52 PM

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    Avg cost control is easier if you don’t need it.

    A fake sell all, remove split, buy all would clean up the records.

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