A Case for the Reverse Stock Split A number of posters here are complaining about the proposal to consolidate the Excellon shares 5:1. They cite "low float" which will be made lower and that such a circumstance will disadvantage current shareholders. They don't provide any number or rationale for their positions, I am a large holder of Excellon (not an Insider) and I think the consolidation could be a good thing for existing shareholders and here is why:
1. The current float on Excellon share is just over 86 million out of 287 million (this is not low float).
2. Increasing the trading price of Excellon shares will broaden the market for the shares and make it less susceptible to manipulation as has been occurring with this stock, and it will increase demand for the shares by institutional investors who will not invest in penney stocks.
3. Reducing the float somewhat will make the share price react more to positively to good news being released (increases price volatility), because there will be fewer available shares to meet increased market demand (law of supply and demand). Since I think Excellon is trading substantially below its true value and I believe that good news out of Excellon is far more probable than bad news, I am in favor of making the share price more responsive to good news......I'd like to see the share price accelerate and float reduction with good news will have that effect. Of course lower float would also mean that the stock will react more dramatically to bad news as well, but as I indicated I think our Company is more likely to be releasing "good news" rather than bad news, so odds are that lower float will be an advantage for we current holders.
4. Placing a guy like Goodman on the Board will better position Excellon to access capital markets and will increase the investment attractiveness of the company, all other things equal, to other institutional investors.
5. The actions enumerated in the strategic action release, if implemented effectively, will increase the profitability of Excellon even at existing silver prices, and if silver increases in price, as it should over time, it further increases the attractiveness of lower float to existing shareholders.
Now, I am not claiming that a stock with the lowest possible float is a good thing....it is not ....I am just saying we can reduce ours somewhat and see a lot of positive effects as opposed to the doom and gloom that some posters on this board are describing.
That's just my view of things.