RE:Keeping Board of Continental away from moral hazard?Hello Mr KpSingh,
I hope I understand your concern. I say with respect that I believe that one of your statements is not correct. Shares that are (as you say) "floating in the market" are not available for the company to retain for itself with a view towards a large, negotiable per-share pay-out in the future. Although the financial community does, as you say, refer to shares that are floating in the market, this expression means that there is some regular trading going on, in contrast to shares that are tucked away on a longer-term basis by individuals and institutions who have chosen not to trade but rather to hold. At the end of each trading day, there are shareholders (possibly short-term traders) who control that hypothetical last 50 mil. shares of which you speak.
If the company holds some of its shares in treasury, those shares are periodically cancelled by the company. Treasury shares would not be purchased by the acquiror when the buy-out transaction is being effectuated. This is why, when you look at a balance sheet, there is a reference to "issued shares" and "outstanding shares," which are usually fewer in number. Only the outstanding shares are used in the per-share equity calculation. Free-floating shares are outstanding, i.e., not company-controlled.
I don't think it would be legal for insiders at a quoted company to fail to tender their shares and to hold out for a significantly higher price after the acquisition is finalized. Moreover, I don't think the acquirer would be very tolerant of hold-outs on the board.
I do agree that there seems to be a consensus of opinion that $5.50 is not a truly full valuation, but I think the company chose not to be mine operators. Perhaps the wisest expenditure of your share-market energies (should you choose not to hold on until the buy-out day) is to concentrate on companies thay interest you, and in time, use some of your proceeds to invest in other fundamentally sound companies (whether in precious metals or elsewhere). I don't mind saying that I had a rather nice-sized position in CNL. As of this week, I am out. I have been selectively investing elsewhere. I do not claim to be an investing genius, but I have been at it for a long time. I am happy to exchange ideas with polite investors.
I hope I have been helpful.
robert