Post by
goldpoet on Jan 13, 2018 10:44am
How much did the share consolidation cost?
I don't know anything about share consolidations except I remember reading a piece by Buffett decades ago that he never split Berkshire-Hathaway stock because things like stock splits and share consolidations cost a considerable amount of money, more like millions than thousands. I tend to buy companies based on their market caps rather than the share count if the fundamentals of the company look enticing. When RPG consolidated its shares, its MC should have gone down by the amount of capital they used to do the consolidation, there's less cash than before. Now I'm aware that some institutions can't buy penny stocks, and I think there are other bench marks like a $5 a sahare to trade on this or that exchange, as I say, I don't know. And they mention rasing money as well as a reason to have a higher share price. In any event, there must be some stategic theory that the cost of the share consolidation will somehow result in much greater liquidity and investor interest because of the higher share price. When McDonald's has success selling hamburgers in southern California, someone decided to take a risk and try to sell the same concept in Kentucky, where I grew up, and we bought the $.15 burgers like crazy....good business decision, more capital deployed to expose a concept to more customeres, more money, more profit....this is why people get MBA's, to make business decisions. I have no idea if a 6.5 consolidation cost the same as a 10:1 consolidation, why they would consolidate to $1.40 a share rather than to $5.50 a share, but I'm sure someone has an analytics theory to justify the deployment of capital to make a profit.
I used to own a lot of RPM, sold everything over the last four months, think I broke even or made a slight profit on my original 100K investment...I sold because of the debt and decided to take my chances on other new or more mature producers with less debt. I decieded to buy back in with a small 3k position just before the share consolidation because they seem to be getting their act together, finally, and I continue to believe that the case for gold makes sense.
Hoping to make enough money to eat at a great San Franciso restaurant sometime this year, but if my new bet doesn't pan out back to McDonalds in Palo Alto where i live now.
Poet
PS. I just published my first book on Amazon, The Personal Pledge by Christopher. Help me out and buy a copy! Thanks