Thursday, December 01, 2022 11:00:02 AM
A R/S is particularly dangerous when executed near TZ1. There are two main reasons. First, it eliminates the flipping attraction, so the Casino money might make a run for it. Secondly, a R/S puts a company valuation to the test. Since nothing regular comes below TZ1, a price like that can attract money, simply on the grounds of a technicality. To do a R/S under those circumstances, is like removing the floor while you’re standing on it. A higher post-split price can suddenly start falling again. The greatest junk among those companies will fall another 100%, right back to TZ1, do the next R/S, and start falling again. Such conduct raises the question if those buyers actually asked to be ripped off. Stocks with a disastrous combination of reverse splits and performance include BBRW, SPRV and PPCB. All of them beyond redemption.
I‘m aware of HCMC‘s SS. I personally find that aspect overhyped on message boards. The cap is what matters. HCMC made a couple of 1,000% when the entire OTC went to the moon, even the ghost ships, like Caveat Emptor companies with no financial report in years, or no delivery address.
HCMC mostly took off because of their infringement lawsuit against PM. They ultimately lost. Their appeal might still be underway, but only has a marginal chance. Cozen O‘Connor represented them, but not very successfully so. My point regarding HCMC was simply that the note holders can be as wrong as anyone else. You implied that they‘re smarter than the average bear, and that this might be based on an objective analysis with more insights than could be available to others. I don’t think so. It‘s certainly a possibility, but by no means a certainty. The same goes for the TGHI note holders.
HCMC might actually have to do another reverse split, one day. The main motive for this, that I can imagine, is that even at TZ1, to which they came back down, their cap is so large that the interval between TZ1 and 2 has simply become unreasonable. In many cases, that only accounts for a difference of a million Dollars or so, but if a company costs, for example, a hundred million, and there’s no regular price between 100 and 200 million Dollars, that’s obscene. I see HCMC above the critical mass. A stock like that should be tradable at more differentiated prices. In their case, that could require another reverse split. The endless barcode trading between 1 and 2 is a definite indication of that.
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