I have to disagree with you cry. It LOOKS good, but I don't believe it is. When you buy shares, you buy a certain % of the A/S. This is what you really own in terms of the company. For example, assume 1 Million A/S and you buy 500,000. You own 1/2 the company. Assume someone else buys 100,00 shares. He owns 1/10th of the company and together you both control 60% of the company. Now assume, a R/S. Say 1 for 1000. Now your shares have been reduced to 500 and 100 respectively. Unless the company reduces the A/S as well, which they usually don't, in fact a lot of times you'll see an increase in A/S, your actual ownership or control has been artfully reduced from 50% to .05% (Together .06%). The company can then issue out of the A/S 600,000 shares to others, and artfully give control to others, who would now control 60% of the company. You in effect lose control of the company. In addition, your equity in the company has been effectively reduce to the same extent. They sell you this bill of goods by telling you that everyone has been reduced pro rata, which they have, pro rata loss of voting control and pro rata loss of equity. The fact that you see an inrease in MARKET value, which is consistant with your outlay(paid) or what you were holding at the time of the split, really hides the real damage to you in lost voting/controlling power and lost equity. In addition, you'll usually see management holds large options for shares, or convertible preferred shares that they can excercise AFTER the split to their advantage, by increasing their voting control and equity in the assets. I don't believe it should be viewed as legal for two reasons; 1. A direct taking of MY property without my consent, irrespective of the pitch that it's good for me(in fact, they usually don't even ask me); and 2. the self dealing benefit of management that usually occurs when they have the option/convertible share situations. These R/S's should be against the law for these reasons. Finally, as most of you well know; these short "pop ups" in market value are usually short lived. The market value usually collapses back to where it was prior to the split, and now you have far less value on far less shares, with far less control and far less equity. These R/S's are nothing but a market minipulative devise, usually undertakin when the company has nothing going for it; and it scams investors out of their money, while usually for the sole benefit of management. Remember, your OWNERSHIP of the company is to be measued by your shares to the A/S, not the O/S. (So there.)
