Posted On: 09/12/2014 2:20:52 PM
Post# of 30039
While I do agree with you NT, I believe the point JP was trying to make was that if you are not continually adding to your position, with an increasing outstanding share count, your ownership stake is gradually being reduced.
As you said, when you first purchased, there was less than 100m shares outstanding. Say you were holding 1m shares then, you'd own 1% of the company!
Now... If you were to still be holding those 1m shares, and the share count is roughly ~760m, you now only own 0.0013% of the company.In order to have maintained that 1% ownership from before, your holding would now have to be ~7.6m.
As you can see, your stake would be greatly reduced due to the dilution. I'm sure you understand this, but I just wanted to clarify what I think JP had meant.
As you said, when you first purchased, there was less than 100m shares outstanding. Say you were holding 1m shares then, you'd own 1% of the company!
Now... If you were to still be holding those 1m shares, and the share count is roughly ~760m, you now only own 0.0013% of the company.In order to have maintained that 1% ownership from before, your holding would now have to be ~7.6m.
As you can see, your stake would be greatly reduced due to the dilution. I'm sure you understand this, but I just wanted to clarify what I think JP had meant.
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