The question of LEVERAGE Sclarda,
You asked: What is the difference if a person owns 100 000 $1 shares or 12 500 $8 shares?
Here is the difference. Say I owned 80,000 shares preconsolidation. Now say the share price goes up 10 cents. How much paper gain did I make: 0.10 x 80,000 = $8000.
Now they do they rollback so I now have 8000 shares after the 1 for 8 reverse split. Again the share price goes up .10 so how much do I make on paper: 0.10 x 10,000 = $1,000
So by doing the rollback, even though I own the same amount of the company, with the reduced amount of shares, I have less gains for each cent increase in the share price. When I chose to accumulate shares, it was to have the aforementioned leverage. By deleveraging my shares, they effectively stole my additional gain of $7,000 by having 80,000 shares instead of 8000. Now the share price would have to accelerate by 8 times what it was in the past for my paper gains to be equivalent and that isn’t going to happen.
Also, if you look at the potential gain one would have had at 80,000 shares for the share price increase from $1 to $8 : (8-1) x 80,000 = $560,000. This potential is gone with the share rollback. They took away my leverage to gains with reducing my share count. For an equivalent gain now to happen, the share price would have to go on a delivered basis from $8 to $64 which is a lot harder.
If they had continued to operate the mine with keeping capex under control to increase their EPS, they could easily have got their share price up to over $5.00 in the next year, with Shafter coming on. Plus any good news from any more discoveries from exploration. Then with the price over $5 the funds could propel it higher on fresh buying.
So it’s not that we own the same % of the company that’s the issue – it’s the fact that they’ve stolen our leverage by rolling back the shares – our chance to make big money by accepting the RISK of buying a lower priced stock, and accumulating a large number of shares to give us leverage to upside price gains. That is the difference.
It’s not the math that is hard – it’s defining the problem clearly so you can address the issues. Few understand; fewer are outraged; fewer act – are you one of the few?
Take action now and let them know you are outraged: https://aurcana.limequery.com/index.php/survey/index/sid/697782/newtest/Y/lang/en
Banman