Most of these small public companies are not generating revenues anywhere near what they need to fund their operations. Most cannot go into well-established financial institutions and secure loans either. They are dependent on selling shares to retail investors and/or smallcap financiers. The latter of whom usually offer loan shark rates. When these small companies announce a buyback, most of the time it's just a gimmick to attract more buyers.
Treasury shares can be resold on the public market, used in mergers/acquisitions, or issued as stock options. Shares which companies repurchase don't necessarily come out of the float. They could easily have been restricted ones issued. Look at this way -- if these guys didn't continue to sell shares, they would literally have to shutdown their business when money ran out.
From a short-term shareholder's perspective, IMO the dividends are a good deal IF they aren't r/s or lose too much of their value by the time they can be sold. For true long-term shareholders and the company itself, frankly giving away the GEMM and UCAD dividends makes no sense to me. Seriously, why aren't they using those to fund operations here?
In the mean time I'm going to do just like Melvin said and not believe anything from ANY outside source until I see it in a company PR.
IMO that is the exact opposite of what an investor should do. PRs are often filled with pipe dreams which never come true or downright false info. Using other sources can be helpful in trying to verify what is actually true in a company's PRs.
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"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
-- Warren Buffett
AI
