Replies to post #40011 on Health Sciences Group Inc (HESG)
Restricted and Float
When you look a little closer at the quotes for a company, you may see some obscure terms that you've never encountered before. For instance, restricted shares refer to a company's issued stock that cannot be bought or sold without special permission by the SEC. Often, this type of stock is given to insiders as part of their salaries or as additional benefits. Another term that you may encounter is 'float'. This refers to a company's shares that are freely bought and sold without restrictions in the public. Denoting the greatest proportion of stocks trading on the exchanges, the float consists of regular shares that many of us will hear or read about in the news.
Treasury Stock (Treasury Shares)
What Does Treasury Stock (Treasury Shares) Mean?
The portion of shares that a company keeps in their own treasury. Treasury stock may have come from a repurchase or buyback from shareholders; or it may have never been issued to the public in the first place. These shares don't pay dividends, have no voting rights, and should not be included in shares outstanding calculations.
Investopedia explains Treasury Stock (Treasury Shares)
Treasury stock is often created when shares of a company are initially issued. In this case, not all shares are issued to the public, as some are kept in the companies treasury to be used to create extra cash should it be needed. Another reason may be to keep a controlling interest within the treasury to help ward off hostile takeovers.
Alternatively, treasury stock can be created when a company does a share buyback and purchases its shares on the open market. This can be advantageous to shareholders because it lowers the number of shares outstanding. However, not all buybacks are a good thing. For example, if a company merely buys stock to improve financial ratios such as EPS or P/E, then the buyback is detrimental to the shareholders, and it is done without the shareholders' best interests in mind.
company has an authorized amount of stock it can issue legally. Of this amount, the total number of shares owned by investors, including the company's officers and insiders (the owners of restricted stock), is known as the shares outstanding. The number available only to the public to buy and sell is known as the float.
Treasury stocks are shares that were once a part of the float and shares outstanding but were subsequently repurchased by the company and decommissioned. These stocks do not have voting rights and do not pay any distributions. A company can decide to hold onto treasury stocks indefinitely, reissue them to the public, or even cancel them.
If you ask its management, they’ll likely tell you that a buyback is the best use of capital at a
particular time. After all, the goal of a firm's management is to maximize return for shareholders, and a buyback generally increases shareholder value
Conclusion
Are share buybacks good or bad? As is so often the case in finance, the question may not have a definitive answer. If a stock is undervalued and a buyback truly represents the best possible investment for a company, the buyback - and its effects - can be viewed as a positive sign for shareholders. Watch out, however, if a company is merely using buybacks to prop up ratios, provide short-term relief to an ailing stock price or to get out from under excessive dilution.
Reversal_Of_Fortunes,_HESG's_Is_Taking_"Their"_Market_Back...With_Fairness_The_Only_Change.
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If we regroup and hold our shares we WILL.
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