The exponential growth in revenues and eps stemming from the fish triad:
More farms
More capacity per farm
More equity per farm
lucrative as it will be, applies only to the wholesale business.
Solomon's vision, the one for which he is spending $100m per year, will sell these vastly growing numbers of wholesale fish and cattle to his own wholly owned marketing and distribution network, which will in turn distribute the fish and cattle to his owned, franchised, or partnered retail and restaurant outlets, who will again sell the fish and cattle to end consumers.
This vertically integrated " food chain" is just starting. The wholesale had to be established first, for obvious reasons.
Would any shareholder want Solomon deterred from this vision?
He has chosen to issue shares equal to 10% of cap ex to realize this vision. It's hard to argue with the progress, as frustrating as the share action is. I believe he iis borrowing as he can, and will more in 2013. There is quite arguably no dilution in eps from the marginal $10m cap ex. Even if there were in year one, there would be accretive earnings in later years.
More importantly, the wholesale, distribution, retail triad is being established in a really short amount of time. It is clear that Solomon views this as a significant competitive advantage, and for good reason.
In the meantime, $100m +/- cap ex spent will increase NTA by double or triple the current market cap.
Starting in 2013 the exponential growth in the wholesale businesses will be buttressed by incremental growth in distribution and exponential growth in retail, as the outlets are deployed in increasing numbers.
When the growth rate of the fish business slows from the current 500% to maybe 50% in 2014 or 2015, the retail revenues add ANOTHER 50%, itself growing at 50% to 100% in 2014.
I think this overall strategic scenario is what is to be measured against the increase of shares, along with the first mover advantages of each business, enhanced by their horizontal and vertical synergies.
Since eps are increased, I think dilution is the wrong word for the issuance.
