Cost Basis of Preferred Shares (NOVSP)
Its been so long since I last calculated the cost basis for the preferred shares of NOVSP that were converted to common shares that I owned, I'd forgotten exactly what my "average" cost basis was.
Please keep in mind that this doesn't have to be yours truly because the historical trading records of NOVSP shares show that those shares could have been purchased from a low of .50 a share to as high as $25 a share.
My "average" cost of preferred shares was 1.50, and this incluced buying shares ranging from .50 to $4.
Again, this doesn't have to be me...it could have been you.
During the restructuring that occured about 2 years ago, each preferred share converted to 17 common shares plus a few pennies of cash that will not be used for this illustration.
Based on this its really pretty easy to figure my "average" cost basis. You simply divide 1.50 by 17 and you get .088 cents that I'll just round off to 9 cents for my "average" cost basis.
Now to be fair, and not to use a diversionary tactic like Novations forensic critics use, I also have an "average" cost basis for the common shares of Novastar that I own of 1.76 a share, so one can plainly see that if I were to sell those shares today I would have a considerable loss.
Finally, as a businessman and as an investor this has been the longest roller coaster ride I've ever been on, and the ride doesn't seem to be coming to an end any time soon.
Enjoy the ride!
Rooky
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