I’m afraid a lot of people don’t understand how the massive new issuance HIPH shares, going from 55 million common shares at the beginning of the year to 564 million by February 19 effect their holdings.
Hypothetically speaking, at the beginning of the year if Mr. Stockhokder owned 5,500,000 HIPH common shares, and HIPH had 55,000,000 common shares outstanding, Mr. Stockholder would own a 10% stake in HIPH.
But HIPH had been issuing lots of new common shares and very soon HIPH had 110,000,000 million commons, or twice the number of common shares HIPH started the year with. Suddenly Mr. Stockhokders 5,500,000 common share stake doesn’t represent a 10% stake in HIPH but now represents a 5% stake.
Another couple months pass and suddenly HIPH reports 220,000,000 outstanding common shares. Suddenly Mr. Stockholder’s 5,500,000 share stake doesn’t represent a 5% stake but now represents a 2.5% stake.
Another few months pass and HIPH reports 440,000,000 common shares. Suddenly Mr. Stockholders 5,500,000 shares don’t represent a 2.5% stake in HIPH but now represents a 1.25% stake.
And yesterday HIPH reported 564,192,422 common shares. Unfortunately for Mr. Stockholder, his 5,500,000 share stake in HIPH represents less than a 1% stake in HIPH now.
Now Mr. Stockholder isn’t very smart, doesn’t understand equity dilution. He doesn’t understand that all these new HIPH’s being created and sold into the marketplace has diluted his stake in HIPH from a 10% stake at the beginning of the year to less than a 1% stake now.
Unfortunately Mr. Stockholder is clueless his equity is eroding away fast from the flood of new shares. He doesn’t even know it because he’s not aware how massive new share issuance slices and dices away shareholders equity stakes, and does so very fast.
