Question on Reverse SplitJust digesting this RS. I have several thousand shares, most bought at 3.00 and last week at 2.66. My intent was to make a capital gain so I am OK here but am asking questions about what my postion will be like when this takes effect. I wa surprisd when the stock did not collapse when this was announced as this is the usual with Reverse Splits.
So my analysis is that instead of 2000 shares at 3.47 I will have 800 shares that will begin trading at 8.68 on Dec 17. The stock will have an intrinsic value of at least 7.88 (17.88-10). The yield will be 13.8% (1.20/ 8.68). Formerly the dividend was .125 monthly which gave a yield over 20% at a price of 7.25.
I don't know what the NAV was historically but I see a downward sloping chart over time which indicates a deteriorating NAV. Risk in general. This RS should resolve that. I regard these things as risky investments that are useful in tough times for capital gain...
So with a minimum breakup value of 7.88.. I see the price rising provided this deal happens to reflect the excellent dividend return. Maybe to $9 or $10... I am suerprised that it has not risen since the announcement.
Comments on my analysis?? Thanks.