I'm curious what makes you think if the Company was not adding liquidity to the market that the price would go up?
You do realize traders are what ultimately drive liquidity, not investors. Investors take liquidity away from the market.
The market is not going to magically decide to price SIAF at a higher P/E ratio because it stops issuing shares. P/E is a function of the over all market for a peer group.
Do you think traders are going to trade in a China/OTC stock with a P/E of 5+?
Take a look at Companies like YHGG, DEYU or any illiquid China/OTC. They actually trade a lower P/E than SIAF. So this argument that dilution hurts the share price is a misunderstanding in how market forces actually work.
Investors do not add liquidity Trader, they take it away. Traders do not trade illiquid stock. Much in the same way Market Makers are intended to make markets by pricing stocks where the liquidity is, Company's must also generate liquidity by growing the float to allow new investors to come on board. They must create that liquidity at a P/E that is acceptable by the market. Right now SIAF trades on the higher end of the ratio around 2.5.
This is an issue of liquidity, not dilution. We are simply not going to get the kind of liquidity in an OTC market to support a higher share price with a float of 50+ million shares.
Once the Company lists on a senior exchange, the kind of liquidity the Company needs to get and maintain a higher share price will be made available.
What the CEO was trying to explain to you is that as long as the dilution is not taking away shareholder equity, which it is not, then with improving liquidity you will get a higher share price.
Stocks are priced on fundamentals, not liquidity. Liquidity however is the means to achieve fundamental growth. It's a balancing act some Companies fail to figure out.
I can't explain it any other way. Like the CEO said, the only people who can be upset here are short term traders. But even then, with this liquidity and price volatility, I can't see how a good trader couldn't make money.
Maybe you need to decide whether you are an investor, or a trader. You can't merge the two mental processes because they require completely different strategies.
