the vla share consolidation

In recent posts, two issues are being raised, sometimes with angst. One is the consolidation, the other the SPP. Both affect the SP, but they're distinct issues. The opening to this thread is about the consolidation.

Reasons I've read or been given verbally:

1. Institutional investors and potential M&A parties prefer a smaller shareholder register, rather than one that has a long tail of few shares. The list of top 26 shareholders in the last annual report presented at the November AGM, held 18.8% of the company's issued capital. The largest shareholder is shown with a 2.28% ownership. The average shareholding for the remaining 5814 shareholders is 10,200. There is a very flat distribution of shares. I don't know whether consolidation had any appreciable effect in reducing the size of the register.

2. Some institutions in the U.S. are prohibited from investing in companies whose share price is less than 10 cents. I don't know whether this applies to any in Australia. Logically, it makes no sense; but life and perception are not often sensible. I accept the argument that to be more accepted by institutions and other potential investors in the U.S., it was critical for VLA that the tag of "penny dreadful" could not be applied.

I think it was Mooroolbark who made the point that consolidation has reduced liquidity, contributing to pressure on the SP. Agreed. Do I think consolidation has helped? On the face of it, not yet at all. However, if it has been potential U.S. investors who have driven VLA to consolidate, then mid to longer term it makes good sense. And of course in hindsight, May 2011 would have been a better time to consolidate. We're always wise after the event.

But that's where we are today, and as I've said previously, I believe we have very good prospects with this stock, and I expect we shall continue to see good news flow. I suspect the stock will be back in the 40s very soon, and the 50s in January is not unlikely (as suggested earlier today in a post).