RE:RE:RE:RE:Newbie Investor Here...I'm actually not advocating that management do anything at this point. I think it will become more of an issue once the share price starts creeping up into the high double digits, as that will likely keep some retail investors away.
Ovbiously this doesn't matter with some namebrand stocks, but I know a lot of companies I've been hesitant to buy into once their price reaches a cerain threshold -- even if the value is there. Granite REIT is one example. Trading for $80/share it's a reasonable value right now, but there's some other names trading in the $20-$30 range at a similar valuation where I can purchase 200 shares instead of 60 shares. Generally, if there are two similar stocks I tend to buy the one with a lower price so I can have more shares. This is why many companies do share consolidations -- to keep the price at a reasonable level for average investors. Think Brookfield Asset Management, Apple, and the Canadian banks, which have done many consolidations over the years.
Of course, there are plenty of companies that avoid consolidations these days. Shopify, Amazon, and the grandaddy of them all, Bershire Hathaway's Class A shares that are trading for $420,000 each. Of course, these are namebrand stocks.
Regarding the example of gold, it's not a good comparison because gold is a liquid asset. My point with institutions that like to build larger positions is that they would have to run the share price up considerably just to initiate a reasonable-sized position, and then if something goes wrong and they want to exit, they risk having to run the share price down significantly to sell. That is just the way it is with illiquid stocks. There should be no controversy with that one.
Again, I'm not arguing for the management to consolidate. They no doubt have a plan, and when the timing seems right perhaps they'll consider it. I'm just one shareholder with a measely 300 shares. I doubt anybody would listen to me.
Barley1 wrote:
I'm sure Management read BQE's Stockhouse BB. But they did a 1 for 100 consolidation, so I'm unsure why they would suddenly change the situation. By the way, you say "I think many might stay away from the stock because of the difficulty in trading it.". People don't stay away from Gold because of its price!