posted
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?
Posts: 669 | From: Gouldsboro, Pa. | Registered: May 2006
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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
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!
Posts: 188 | From: MISSOURI | Registered: Jul 2005
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posted
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...
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