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39.0¢ musgrave minerals limited

Ann: Trading Halt, page-37

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Spec-man

644 Posts.

48

10/12/20

10:38

Post #: 49477013
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Originally posted by Harry1960: ↑

For those who think a CR is a good thing :

The problem with capital raisings Issuing new shares seems like a ‘no-brainer’ if a company needs more cash.

But investors often hate them, and here’s why.

If Company X has 100 shares outstanding, owning 10 shares gives an investor a 10% ownership of the company and an entitlement to 10% of the company’s earnings.

But if Company X decides it needs more capital and issues 100 additional shares, that investor’s ownership just fell to 5% of the total company with an entitlement to 5% of the earnings without that investor selling anything.

In this way, it can represent wealth destruction for shareholders.

Now if a company is really in trouble, investors might be sympathetic. Better to have your ownership reduced in a company than see it go bankrupt, after all.

But don’t get fooled by any glossy brochures or sweet talk from a CEO.

Capital raisings usually aren’t good for shareholders, and (in my opinion) you should be wary if a company you own joins the party.

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So when MGV goes on to be a unicorn, you're saying that's not good for share holders ...huh

MGV Price at posting: 42.5¢ Sentiment: Hold Disclosure: Held
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