I think its about time we had a share consolidation so potential investors don't get turned off by the number of shares on issue.
In my experience with the Australian stockmarket stocks are more likely to get the ruler run over them by investment houses moreso if they don't have too many shares on issue. What is too many shares I hear you ask ?
Well that is open for arguement but I think we now need a 1 for 5. That is for every 5 shares you own you get consolidated into 1 and there shareprice by rights should be 5 times higher. If we did that on a fully diluted basis we would have about 200 million on issue. Realisticly, it wouldn't be done on a fully diluted basis so undiluted we are talking 150 million head stock.
Having less shares on the register tends to make investment houses sit up and take notice as it shows the board is keen on eliminating there stock from being a punters paradise. Don't get me wrong I like having a punt just as much as the next trader but I usually draw a line in the sand and will not touch anything that has over 700 million shares on issue. Therefore we not even be attracting a large proportion of traders. If buying stocks for fundamental reasons I tend to go with stocks that have closer to 100 million on issue than 1 billion.
Why do it now ? 1. We don't need any more cash for at least 12 months. Maybe never again. So no more dilution for quite some time. All kinds of players hate dilution and a consolidation usually means "Hey have a look at us, we feel strong and proud of our fundamentals, we don't want our stock to be a punters paradise" 2. The fundamentals haven't been this strong for years. 3. We need to attract investment houses and the more savy fundamental investors in any way we can.
Cheers Sputnick
SBN Price at posting:
0.7¢ Sentiment: Buy Disclosure: Held
