You've done a great job of explaining the math and making it sound not so bad for a company to R/S;) and I think that any trader worth his weight knows how to do this.
However, I don't think anyone has spoken or touched on the big negatives of an R/S. And believe me I have been through quite a lot of them, whether they're penny stocks or blue chippers.
(1) An R/S shows extremely poor leadership from the CEO, CFO and all other board members. It's lazy, inept and pure selfish and stupidity on their part...It says to investors holding, future investors and the market in general "We can't come up with any ideas, we couldn't be bothered to try or we lack the knowledge and expertise to consider anything else.
(2) The best time from my experience to Sell is the day after an R/S. Then maybe, and only maybe get back in to that same stock months, or even a year later after it's complete decline. There are maybe a handful of stocks that have done an R/S and seen improvement...However, these have been HUGE companies, well known household names. Most if not all of the time, companies R/S just to keep listed on a major exchange because their price has fallen to woeful lows and their about to be kicked off the exchange.
(3) You drastically reduce current share holders trust and faith in your company i.e. "If you've done it once, you WILL have no choice but to do it again, and so the cycle will continue to repeat itself until the company will be forced into bankruptcy. I stay away from companies that have ever had even 1 R/S...Unless something major changes i.e. they completely re-structure the management.
It's a horrible situation for any investor, I don't care what anyone says, if they say different they haven't been through one or two or three (With different companies) or 4 with the same company. 9.75 times out of 10 you'll lose more money then if they hadn't have R/S. These are just my personal opinions so take them for what their worth. But hey, if you've never been through one, just lay down a quick $100 on a couple you think are about to R/S and see what happens, good learning experiences.
There will be NO R/S here, and talk of it from any educated person is just silly. I'm more interested to see and hear what the Deal actually was with ASAMA...Got a feeling ;) the SS changes here dramatically...for the better!!
$ASAMA$
