Accounting for PayPal

With our Buy List, I always go out of my way to be as transparent as possible. For track record purposes, I assume that the Buy List is a $1 million portfolio at the start of the year. The 20 positions are equally-weighted, so that means $50,000 in each stock. As usual, I can’t make any changes throughout the year.

For the 2015 Buy List, here are the number of shares for each stock to the fourth decimal point.

Starting tomorrow, PayPal will join our Buy List as the 21st stock. The accounting is pretty simple. Since eBay shareholders will get one share of PayPal for each eBay share the own, the same holds true for our Buy List.

In the $1 million portfolio, eBay had 890.9480 shares. So PayPal will also get 890.9480 shares.

Update: I see that eBay’s closing price for Friday is listed as $27.90. PayPal’s is listed as $38.39. The two add up to $66.29 which is where the old eBay closed.

Taking those two numbers, that gives us a cost ratio of 0.579122 for PayPal and 0.420878 for eBay.

Applying that to the old buy price for eBay of $56.12, that gives us a cost basis of $23.6197 for eBay, and $32.5003 for PayPal.

Posted by on July 19th, 2015 at 8:25 pm

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