Replies to post #2033 on OM Holdings Intl Inc (OMHI)

[Peggy]

Remember that what I tell you is only my opinion. But, here tis ...

Forward splits certainly do tend to attract new investors and cause current investors to increase their positions prior to the split. Human nature I suppose ... the chance to own a much larger number of shares at no additional cost.

On the major stock indices, forward splits are oftentimes done when management feels that the pps has gotten too high and is causing investors to shy away because of that. So after the split the pps is proportionally lower and is of interest to more investors ... that's the theory anyway.

At the time of the split, it is a zero sum game ... more but cheaper shares. Of course, the earnings per share also go down proportionally. However, as you have already noticed, POTG doesn't have any earnings so their eps remain at zero.

The pps often, but not always, goes back up after the split. For big companies like MSFT, there have been many splits over the years. Over time Gates ended up with billions of shares. Warren Buffett, on the other hand, refuses to split Berkshire shares. Last time I looked they were over 100,000 per share. But, POTG cannot be compared with MSFT, BRK.A or most big companies that actually have earnings. But many seem to want them to act like these big companies. Not going to happen.

I have argued here that POTG is being disingenuous by calling this forward split a dividend. A dividend is a return of earnings from the company to the shareholder. POTG has no earnings so they have nothing to return to the shareholder. Others here say it is technically a dividend. I disagree. How can it be a dividend when the company is only increasing the number of shares by a factor of 10, but is not returning anything of value?

Tread carefully here. I have seen pennies split in the past to create buying interest, thus higher pps, only to see it crash very soon after the split.

If you are going to play POTG, do it between now and the split record date. You might be able to get a nice gain. But long term, this is a toad.

[lotusvu]

It is obvious that Portage Resource has not yet generated any revenue yet because the company is still in exploring and buying properties stage. People buy its stock if they believe in the company's future revenue or at least the accumulated properties are worth something. Dividend will be paid when the company starts to make money.