Hi, Zoli, I actually posted a very similar analogy
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Posted On: 01/27/2020 9:56:13 AM
Re: Zolis_onkel #11432
Hi, Zoli, I actually posted a very similar analogy a while back about someone on the street corner willing to give you more cash back than you just handed them... wouldn't we all line up to do that?
My take is two-fold:
1) The market does not believe such a return will actually occur. So you may put your $600 in and get less than $600 back. In fact, as the stock is currently priced as if it's going out of business, I believe there is a certain degree of fear that the whole thing may unravel (Veneto, CMP, constant renegotiating of payments to subsidiaries, lack of cash, stock price well below necessary thresholds, etc.).
2) There is a limited audience to do any buying. So with shares coming into the market, the usual suspects (us retail investors) are unable to soak up all the shares and push the price up. As a matter of fact, I would guess that we all have a certain amount of belief that the "unraveling" mentioned in #1 above could actually happen. I know I do. And that keeps me with available (but ready to be put into GNBT) cash sitting in several accounts instead of buying more of this "sure thing".
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Posted by Zoli:
Here is my little calculation.
Assume someone buys 1000 GNBT shares today and pays roughly $600. Now the dividend is paid and he/she now owns 1400 GNBT and 400 NGIO shares. After the spin these NGIO shares alone (they need to have a value of at least $2/share after the IPO, correct?) would have a value of at least $800. This way everyone would've gained $200 and get 1400 GNBT shares FOR FREE!!
So with that calculation in place, WHY THE HECK is the PPS still going down? For me the the only plausible answer is, someone is still selling big time or manipulating the PPS downwards. But WHY would e.g. CMP still sell their shares at these low PPS levels, if they think that they are eligible for the dividend?
Answer: They do not believe it themselves that they will receive the dividend and thus keep dumping their remaining shares into the market, for whatever reason!?
Your thoughts?
My take is two-fold:
1) The market does not believe such a return will actually occur. So you may put your $600 in and get less than $600 back. In fact, as the stock is currently priced as if it's going out of business, I believe there is a certain degree of fear that the whole thing may unravel (Veneto, CMP, constant renegotiating of payments to subsidiaries, lack of cash, stock price well below necessary thresholds, etc.).
2) There is a limited audience to do any buying. So with shares coming into the market, the usual suspects (us retail investors) are unable to soak up all the shares and push the price up. As a matter of fact, I would guess that we all have a certain amount of belief that the "unraveling" mentioned in #1 above could actually happen. I know I do. And that keeps me with available (but ready to be put into GNBT) cash sitting in several accounts instead of buying more of this "sure thing".
=============================
Posted by Zoli:
Here is my little calculation.
Assume someone buys 1000 GNBT shares today and pays roughly $600. Now the dividend is paid and he/she now owns 1400 GNBT and 400 NGIO shares. After the spin these NGIO shares alone (they need to have a value of at least $2/share after the IPO, correct?) would have a value of at least $800. This way everyone would've gained $200 and get 1400 GNBT shares FOR FREE!!
So with that calculation in place, WHY THE HECK is the PPS still going down? For me the the only plausible answer is, someone is still selling big time or manipulating the PPS downwards. But WHY would e.g. CMP still sell their shares at these low PPS levels, if they think that they are eligible for the dividend?
Answer: They do not believe it themselves that they will receive the dividend and thus keep dumping their remaining shares into the market, for whatever reason!?
Your thoughts?
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