Strategic Global Investments, Inc. (STBV)

[420man]

R/S example:

Reverse Splits Don’t Create Any Value

Reverse splits may not totally destroy shareholder value, but they certainly don’t create it either.

For a start, there’s zero value created for existing investors. If you bought 10,000 shares of XYZ when they were worth 94-cents each, after the reverse split you then owned 500 shares worth $18.85. Up front at least, there is little difference, since the book value of your shares are $9,425 either way.

I would even argue that investors have lost value, since by having their volume of stock cut by 20, they’ve lost the potential for gains that can be made from small movements in share price multiplied by a large block of stock.

A Higher Price Doesn’t Mean Better Shape

Reverse splits only delay the inevitable: decline, delisting, and becoming destitute.

A company’s fundamentals have in no way improved, despite a share price that’s 20 times higher than it was pre-reverse-split.

If the company is still troubled, a reverse split just gives the share price a higher roof to plunge from. Today, XYZ is trading at $15.51, which is equivalent to 77 cents pre-split. At $13.21, XYZ's pre-reverse split is equal to 66-cents, slightly up from the 50 cents it was trading at previously.

Of course, if as an uninformed investor you jumped in to XYZ after the split and bought 10,000 shares at $18, God help you.


Conclusion.....If Andy files for a R/S...then you can bet your bottom dollar that he will issue the other 30 billion .0001 shares into it!!!!