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in reply to: SMIT and Dutch auction #16118
Sean,
Delisting and moving to pink sheet is close to a death penalty of a stock. Theoretically the stock still can be traded publicly up and down, but the spread between the bid price and ask price is going to be big (percentage wise). Trading volume will shrink. In the long run the overwhelming majority of the pink sheet stocks will continue to be losers. There are less and less people interested in the stock and there may be no trades for days and even weeks, and finally people forget about this stock and disappeared without a stock symbol.
Some pink sheet stocks will still be able to shoot up for short time because of some boiler room operations.
I would try to get out early if possible, or when people are stirring up the price.
That’s my observation.
Paul,
TD Ameritrade did not charge for mandatory reorganization before. This happened to my stocks many times. Ever since they changed to $0 commission policy, they start charging it. Well, that is the way to compensate for something. As long as the stock is making money, this $38 is not too bad.
Paul,
Which brokerage firm that you use? Most brokers do not charge their clients if that is mandatory reorganization. Hope the price appreciation will make this $38 become insignificant.
Dear Faris,
I totally agree with you that most reverse splits can be seen as negative. In my multi-decade observation, most reverse splits happened because of depressed stock price and avoiding delisted by the stock exchange. One extreme case that I noticed is DCTH (Delcath). One share today would be equivalent to multi-million dollars 10-13 years ago, but the company is still in business. My cursory estimation would be 70-80% of the post reverse split performance will be negative in a few months. It is almost impossible to compile any meaningful statistics for that because fundamental changes and company news affect the post split performance. I also observed some companies with 200M+ shares did well after the reverse split, assuming no major good or bad news. The first few days post reverse split, those who hate reverse split and those who hate odd lots just dumped the stocks. Price improved slowly after that. After studying VHI a little bit, I think VHI probably has the potential to be one of those will improve after reverse split. One other factor is the company still paying out dividends. There is a saying in Wall Street: Dividends Don’t Lie!
Today, shortly after the reverse split, VHI was down, but it closed up. Only time can tell what will happen later.
I was hoping the current protests would drive the market down, so I can continue to add some Terrible Ten stocks, but that did not seem to affect the stock market.
Good sock trading!
6/2/20
The stock price dropped significantly, probably based on this announcement. Stock holders do not like this, I guess. Just like what you said, this is necessary. However, I like this, as this will reduce the number of stocks outstanding to a level that may help price move up easier in the future.
in reply to: SMDM Singing Machine #16042I had to cut my loss and dump SMDM a few months ago. Held it for two years, got disappointment quarter after quarter.
in reply to: Contact form 1 #11394SMDM dropped from Category 2 to Category 3 and the Bowser Rating dropped from 9 to 7 in the March 2018 issue. Is there any specific reason for such drop ? Recent news for the company had been reasonably good.
As a multi-decade subscriber to the Bowser Report/Warrant Register, it is a pity to see the Warrant Register discontinued. I used to read financial newspapers such as Barrons and Investor’s Business Daily line by line for the keyword ‘warrant’ or ‘wt’, and then do the research from there. Reading annual reports for information of warrants, calling the CFO’s office of the company to clarify terms of the company’s warrant…etc. You see, how tedious it is !
Since I subscribed to the Warrant Register, I relied heavily on the Warrant Register on information to the point that I just did not do any further research on warrants. I really appreciated the editor pointed out (corrected) that Citigroup Warrant A has a conversion ratio of 0.1 only several years ago. I was astonished and then dumped the Citigroup Warrant A and switched to Bank of America B warrants. Glad I did that!
Through the years I have seen the unbelievable happened in Wall Street. People traded one specific warrants as if the warrant had a conversion ratio of 1 to 1, but in fact the conversion ratio was .05 (after a 1 for 20 reverse stock split). People had complained to me that originally they had a healthy profit on the warrant but all of a sudden the warrants got called away by the company at a minimal value, making the healthy profit turned into almost a total loss. The reason for these cases: They do not know the terms of the warrant considered.
I even feel the Warrant Register is more valuable than the Bowser Report itself. It is easy to do research from the internet once the name for “Company of the Month” is known, but sometimes even knowing the symbol of a warrant doesn’t mean you can find information from a certain web site.
I tried putting the keywords ‘warrant’ on the ‘stock symbol’ search field of different brokerage firms and financial web sites. Sometimes one or two warrants will show up, but I believe going back to the basic (reading newspaper line by line) is most reliable.
Keep in touch for warrant information and good luck to all of us subscribers !
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