MHA, better hope that CSCO does not fall under $10 per share. According to a Dorsey Wright site, New Your Times writer Gretchen Morgenson in her research stated that, "the recovery rate for is grim" for stocks falling beneath $10 per share. "Of the 437 companies that became one-digit wonders in 2000, only five have come back in 2001. That is on 1.1 percent."
The causes are: "Many professional money managers, like thos in charge of mutual fund porfolios, are barred by their firms' bylaws from buying sotcks under $10. . . And for many companies with low-priced stocks, the mere fact that their market value is low makes it difficult to tap the stock market for money. That is because investment bankers find it much easier to raise money for a company whose stock has rocketed in the recent past. As for takeovers, forget about it. Since many of these low priced companies are short on cash and facing potential bankruptcy, from a strategic acquisition perspective it makes more sense to go after the assets at a reduced price onct the company files bankruptcy, then play the good Samaritan and bail out a troubled company by acquiring the assets, not to mention the debt."
MHA, IMO, we better not wish for single digits in CSCO. We may get our wish and something we do not want.
Just my opinions and those quoted.
Paul |
