Are there any good sites for spotting potential reverse merger/shell companies? I tried ShellStockReview but it doesn't seem to be active. Any others?
Posted by A.J. on :
I'm sure there are more than me who would like clarity on this.
1) "real" company takes over shell: ABC Private Company wants to go public w/o cost/expense of IPO; WXYZ public shell is available; ABC buys all/controlling interest; shell officers out, ABC officers in; WXYZ is now the ticker for ABC. Expect r/s, name change and new ticker---> ABC "emerges" as public company.
2) no merger involved: RSTU has 10b shares--possibly as a result of a preceding forward split--that have fallen to untenable prices, say, .0003, and is stuck there. RSTU issues reverse split in ratio of 1000:1; afterward, your 10,000 shares are now 10; price "should be" adjusted accordingly, from .0003 to .3
Sometimes legit--as in necessary to move to an exchange--usually a ruse to start new cycle of f/s & dilution...
3) the "nomal" split most think of when a company announces a stock split; usually occurs as big winner, say, MSFT, rises and rises in pps, to the point where Joe Retail perceives "too expensive." So, company issues f/s, which creates more shares at whatever ratio, but lowers pps to Joe Retail price range...
in pennyland, most often used as "bait" to fuel a run...dilution highly possible, selling into run...perhaps setting up next r/s
4) the critical date in overwhelming amount of splits; literally, ex dividend means "without dividend"; the day before the "ex date" is (most often) the last day to buy with "due bills" attached that make owner eligible to receive the divvy. Why? Because the ex-date is the day it begins trading without the dividend. Companies, brokers, and traders get this confused, chronically. Special cases exist, but that's the basics...
Posted by A.J. on :
Thanx Tex, Will copy,and digest. Just more learning and I appreciate the time and effort. Just rc'vd ex dividend with SSTY [for TPDI] - and the whole thing has been kind of confusing. Seemed like a good deal [Shares restricted for 1 yr]. What bothered me is: IS THERE A CATCH?
Then on the other plane - I thought I understood forward split O.K. as I did receive one and made a lot of money in 6 Mos. in OIL.
The Reverse split threw me as I felt that it meant dilution and did not know if it was a good thing in the long run.I keep seeing posters saying to watch out as an R/S may be in the offing and I do not know if it is good - It seems not. Thanx again!
Posted by T e x on :
most R/S bad--if nothing else besides traders' perceptions; also chronic diluters are often repeat r/s-ers...those types rarely PR their r/s, hence the valuable job performed here by Magnetic Microspheres with his Splits forum...
an r/m, on the other hand, *can* be quite lucrative...
Posted by A.J. on :