" what would the implication be of having around 400million in the bank... although this is a massive positive dosnt it also make us the best TO target around"
That's correct, this was the topic of a whole subject in my MBA. It is particularly true due to the ratio cash/SP. This ratio is incredibly high and, despite what people like to think, constitutes a huge TO risk.
"To me what makes the most sense is a share buyback program, it would decently give value backcto holders, yes it would mean loosing some of our cash but it would also mean an increase in the SP, both of which would make GXY less appealing to a TO. Wouldn’t it?"
There is a couple of considerations here:
1) Sure, a buyback would see the SP raise. But would it sustain? I don't think so. I know many holders who are so frustrated (I don't blame them) that they would sell as soon as they break even or for a small profit. At the same time, a buy back might hurt shorters but I think they would get back to it as soon as the dust (ashes) settle.
2) The shares are quoted on the second market, not the primary one. This means that whatever the SP is ($1 or $20), it doesn't put more money in the bank. And our management is really against borrowing money (another error of judgment I reckon) ....
What management could do is: 1) buy back, shooting the SP higher and 2) sell new shares on the primary market at the higher SP. But it is a dangerous game ... might not be worth the headache.
GXY Price at posting:
$2.34 Sentiment: Hold Disclosure: Held
