SPROUT (Single-share Positions in Reverse-split rOund-Up Treatments): A More Cost-Effective, Higher-Yielding Framework for Youth-Managed Algorithmic Value Creation

SPROUT (Single-share Positions in Reverse-split rOund-Up Treatments) is a documented wealth-building method for minors, executed through multiple UTMA custodial accounts (Uniform Transfers to Minors Act): an ordinary brokerage account that any supportive adult, usually a parent or guardian, but not required to be a parent or guardian, can open on behalf of a minor. Publicly listed US companies whose share price falls below exchange minimums (usually 1.00 USD on NASDAQ and NYSE) over a period of 30 consecutive days can choose to execute reverse stock splits to stay listed on these stock exchanges. For example, a company trading at 0.10 (ten US cents) may execute a 1-for-20 split, where twenty old shares are combined to become one new share, increasing the value of the new share to approximately two dollars, thereby maintaining listing compliance with the stock exchange. Maintaining stock exchange listing compliance is vital to most publicly listed companies because it represents a continued and immediate source of capital for these businesses to continue to function and remain solvent. However, in this example, stock holders of less than 20 shares, called fractional share holders, should also be compensated by the company when it conducts a reverse split. Some companies pay the fractional shares’ cash value, called cash-in-lieu (“CIL”) and some choose to round the shareholder up (called “round-ups”) to the next whole new share, because fractional bookkeeping can be costly and round-ups generate shareholder goodwill. Therefore a share holder of a single share before the split sometimes receives a whole new share after the reverse split worth many times the previous share. SPROUT buys exactly one share of each announced round-up candidate before the reverse split, never sells during the settlement window (the days in which the new share legally changes hands with the brokerage), and holds these rounded up shares for an extended period of time. SPROUT buys only companies whose reverse-split announcement explicitly promises round-up treatment; therefore, announcements that pay cash in lieu or “round down” are never bought. I attempted 1,093 one-share purchase events across six custodial accounts over 19.4 months. 413 of these events actually delivered “round-up” shares; while the other 711 were repaid the fractional share value as CIL (even though these companies had stated publicly they would provide round up shares as part of their reverse split). A total of $118.67 of net outside capital over this 19.4 month period produced a total unrealized account value of $924.30: a cumulative overall return +679%, which is at least +256% per year annualized (+453% per year money-weighted). Put differently, each custodial account, on average, created over $100 of new value annually. The documented transaction history also shows an oscillating delivery rate of actual rounded up shares versus CIL payouts (27% to 49% per quarter since mid-2025, with a small-sample 69% in the first, partial quarter), and a proposed exit rule which I named “PRUNE” based on the following rules: (1) do not create and trigger any stop-loss until the broker's transaction ledger proves the new share truly arrived, and (2) only sell if the price falls to half its post-split peak. This PRUNE exit rule improved outcomes by a median of +53.6% versus holding, on 204 of 206 settled post-split segments that had passed both arming gates, in backtests, though it has not yet been run live. This research paper compares outcomes per public dollar against the proposed Booker “baby bonds” (the proposed American Opportunity Accounts Act) and the enacted federal Trump accounts for underserved children, and publishes every ledger, script, and failed hypothesis openly.[1] [1] Checked before every purchase on the announcement screen [10] and confirmed in the issuer's own press release or SEC filing; see Section III, step 1.