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Tuesday, June 02, 2009 5:03:25 PM
A F/S doesn't change the mkt cap, so, post the split ex-date, it'll just auto drop to 1/5 the price. That's normal and expected. Since the whole thing is non-sensical from a Mkt Cap standpoint, there could be a different reason. For example, mgmt may feel they have a serious NSS problem from NIT/UBSS/GNLR, who typically short the pennys without borrowing shares. Were that to be the case, they may feel a F/S will force accounting of shares. It doesn't, but they may think it will. It will with legal shorts, but illegal ones will just laugh. They should have stuck with the share divy. It had a better chance.
Anyway, I was just asking what others (who are long) feel is purpose for F/S? I gave one possibility above. There may be others that could have positive results.
I'm long as of a couple days ago, but a very small bite so far.
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