On November 1, 2016, Alcoa Inc became two companies. The original Arcon shares (AA) became Arconic Inc (ARNC). Then ARNC spun off a new company, Alcoa Corp (AA). Great news for investors, but a headache for PortfolioCenter users.
Because the new company is trading under the historic symbol while the historic company has a new symbol, how you handle the symbol change and post the new shares matters for pricing and cost basis.
BIG KUDOS to Schwab Performance Technologies for posting detailed instructions on exactly how to handle this spinoff so quickly!! I recommend you follow their instructions carefully. Here are a couple minor questions they didn’t answer.
1) If you have clients that owned and sold AA prior to this spinoff, do you need to do anything?
Technically no, but to be safe I would update the Interface mapping tables, so it’s clear your clients bought and sold what is now ARNC. (This is Step 8 of the SPT instructions.)
If you have multiple brokers (e.g. Schwab, Fidelity, TD Ameritrade, etc.), update your Interface table for each broker to ensure AA is not mapped to ARNC.
2) What prices are accurate?
If you posted November price files before following the SPT instructions, you may have posted new the wrong price to the wrong symbol. At least, check the price file for the day of the corporate action (11/01/2016), even if you don’t think you made any mistakes.
- AA 10/31/2016 price =$ 21.44
- AA 11/01/2016 price = $23.00
- AA 11/02/2016 price = $22.91
Yahoo Finance lists the ARNC prices as:
- ARNC 10/31/2016 price = $28.72
- ARNC 11/01/2016 price = $18.92
- ARNC 11/02/2016 price = $17.94
4) What information do I need for the spinoff wizard?
Here is the information needed to use the Spinoff Wizard in PortfolioCenter:
Spin off Date: 11/1/2016
Security Type: Equities
Parent Company Symbol: ARNC
Parent Company Price Per Share: $28.72
New Company Security Type: Equities
New Company Symbol: AA
Percent of Cost Allocated: 0.00 (Unknown)
Allocate Value the Same as Cost Basis: Unchecked
New Company Price per Share: $22.10
Share Distribution Ratio: 0.333333
Conversion Price for Cash in Lieu For Fractional Shares: $0.00 (Unknown)
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