This theory doesn't make any sense. Stocks are (supposed to be) valued on the underlying value of the company (and it's projected growth). In overly simple terms: if a company is worth $100, and there are 10 shares in existence, each share should be worth at least $10. Of course, some might buy at a higher price thinking the value of the company is going up, and some might wait for a lower price thinking the value is going to go down, but keeping it simple, a $100 company would be worth $10 a share if the OS is 10. If the OS is raised to 20, the PPS would fall to $5. If the OS was raised to 100, the PPS would fall to $1. That is what is going on with Q and why it's PPS is falling as dilution occurs.
Now, given the above simple explanation, your theory could never work. If a CEO dilutes the market, he simply reduces the PPS to whatever the value of the company is divided by the OS. Once that CEO starts buying back, he will raise the PPS to whatever the value of the company is divided by the OS. Therefore, if the company is worth $100, and the CEO wants to buy back half the company, he can do whatever dilution / buyback scheme he wants, but, in the end, he'll have to pay $50. There is no way around it. If he issues 100 shares in the beginning dropping the PPS to $1 a share, as he buys back, the value of each share will raise, and over all, he'll end up paying $50 for half the company.
In short, your theory, mathematically, doesn't work. There's no way to dillute and buyback and fool the market and come out ahead. Dillution and buying back, doesn't change the INTRINSIC VALUE OF THE COMPANY. Therefore, dilluting and buying back wouldn't save you a penny in the long run. If Frank wants to buy back a percentage of the company, he'll have to pay for that percentage of the company based on the companies intrinsic value regardless of the share price, because that share price will rise as he buys back. There is no good that can come of dillution, and no scheme or plan to beat the system or buy companies on the cheap. It just doesn't work like that. It's simple math. IMHO.
AI
