Aloha! Back to specifics on GBDX. The key components of this pps continuing to move up are:
1.) Yes small increase in O/S to +-110M from +-75M. Dilution occurs when an very large increase in A/S and O/S happen. With GBDX, the minor increase in share count is based on additional capital required for expansion of diamond inventory; predicated on increased demand. With such a small float to begin with, makes business sense to utilize share increase vs. cash outlay or creating debt to do so. So many bs pink co.s dilute huge amounts and have no revenue producing capability. GBDX is not one of them. Why?
2.)Must consider the history. The former mgmt. who originally merged w/ WWCD uses co.s as shell plays to make money. WWCD was sought after for its increased production capablility and a possible buyout. After merger with WWCD, new mgmt. who took over WWCD increased production and then sold it for $2.3M gain (cash). Then, saw GBDX as next play to make serious revenue with. Why? GBDX has existing reputation and contacts in NY diamond district; existing contracts with top russian cutters and exporters w/ new change in russian law; and start of a serious increase in quality diamond demand.
Now, some posts have suggested lower highs, lower lows in pps.
Incorrect. Since merger, continued higher highs and higher lows with short term plays using CHART TECHNICAL INDICATORS, bringing pps back to short term MA. Which is expected in pinkieland. Trade short term accordingly.
Significant is if the first shipment equates to several million in revenue, and basically 50-100% presold; possible annual revenue potential is huge COMPARATIVE to float size. Again, former mgmt. of WWCD did not take time and $ outlay to merge with GBDX to bs dilute or not make substantial gains shortterm. That is the bottomline with this particular play.
And in regards to Buffet, made billions doing the same thing that the former mgmt of WWCD is doing merging with GBDX now; looking to capitalize on a growth component by using a co. that can acheive it.
Best Regards to all! Not a buy or sell recommendation. My opinion only.
Wow the sunsets in Maui or awesome.
