It's a gem of a scheme if you think about it, EH! The former CEO, as you present him, emphatically despised short-termers and flippers out for a quick buck or two and relished the idea of screwing the shorts, really nailing them to the wall. So out of the brooding and gnashing of teeth comes a plan that hits all the bases at once, like DON Michael Corleone getting even with the heads of The Five Families.... all at once, his way.
Were these the elements of the scheme? Just speculating.
1) DR says nothing publicly to shareholders for an entire year. Trap is shut in the bunker. Not even a "Hello, how are you? Your company is still breathing."
2) Silence casts a pall of anguish and uncertainty over CSMG. Market hates/despises uncertainty. With help from shorts, DR can bleed CTGI from double digits to a nickel.
3) Now CTGI at price that drives 99% of regular long shareholders underwater. We despise short-termers. Now, most everybody is long term, a long term bagholder. Mission accomplished? Now,we are all a close knit family, lol!
4) As price swoons, DR scoops up millions of super-cheap shares. More than doubles his holdings in May 2009 from 4.3 Mil. to almost 9 Mil, but DR doesn't tell shareholders about his buys until October 2009. Mission accomplished?
5) OK, now to really give it to #$%^&* shorts. All set with 9 Mil shares. Bring on the PR's. First, the treadmill, though, to sweat off last night.
Epilogue
If the PPS is tied to the cost of financing, that reaffirms my previous post that selling shares in the $2 range would have an astute move for an astute CEO. Instead of hating volatility, perhaps DR could have embraced it and sold shares to pay off debtors and plaintiffs.
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