Why does capitalization equal share price times shares outstanding?
While that's correct, it's the wrong way to look at it.
The number of shares you own, relative to the number of shares outstanding is what defines your percentage ownership in the company. Your ownership in the company is always diluted whenever new shares are issued.
As far as authorized but unissued shares being an asset, that depends on the size of the reserve and what management's plans are for using them.
What it comes down to is this, do you honestly think that management really needs to have a reserve that is 550% larger than the number of shares outstanding?
If you go back through the past 10 years of Peregrine 10-K's I really doubt you'll find any time when they had a reserve larger than 50%
But, if what you think is true, and management ends up dramatically ramping the value of this company relative to the number of shares outstanding, that's great.
And, I'll promise you this, if by the end of this year the stock is trading over $20/share you'll have a bottle of Johnny Walker Blue Label to enjoy during the BCS Championship game.
The only thing I ask is that I get to hand deliver it and polish it off with you.
That's a guarantee.
Regards,
moby
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