$MHHC is a "holding" company. What's a "holding" company you say? Good question. I just so happen to have the answer. Let me tell you about holding companies:
Broadly defined, a holding company is a company that doesn’t have any operations, activities, or other active business itself.
Instead, the holding company owns assets.
In fact, many of the most successful companies in the world are really holding companies. Verifiable examples (look at their stock history and salivate at the gift you are literally being handed based on MHHC's current stock price):
- Johnson & Johnson (yes, it is nothing but a holding company).
- Sears Holding Corporation (Nasdaq:SHLD. SHLD. )
- Hertz Global Holdings (NYSE:HTZ. HTZ. )
- Berkshire Hathaway (NYSE:BRK.A. BRK.A. )
- Humana Inc. ( NYSE:HUM. HUM. )
- WellPoint, Inc. ( NYSE:WLP. WLP. )
- Citigroup (NYSE:C. C. )
- Americredit Corp. ( NYSE:ACF. ACF. )
- The St. Joe Company (NYSE:JOE. JOE. )
As previously stated, the holding company owns assets.
These assets can be shares of stock in other corporations, limited liability companies, limited partnerships, private equity funds, hedge funds, publicly traded stocks, bonds, real estate, song rights, brand names, patents, trademarks, copyrights, or virtually anything else that has value.
For example, one of the most respected blue chip stocks in the world, Johnson & Johnson, is really a holding company. The firm itself, in which you are buying shares when you acquired stock, doesn't actually do anything in the sense that people think it does. Instead, as a result of its complex history, Johnson & Johnson holds ownership stakes in 265 separate, individual businesses the same way you might own shares of different businesses through a brokerage account.
Why is this important? Holdings companies grow in value through M&A (mergers and acquisitions). M&A is very often executed through restricted shares (hence increases in AS is actually a sign of growth).
What is the difference between your typical penny stock float/AS increase and a typical holdings company increase? Most of the former try to generate capital to execute/run operations by dilution or increasing AS. A holding company has no desire or technical need to do so. They do nothing but acquire and run other companies. That's it. And that's what the shares are for.
