Don, You are right about reality. But many cos. used the public price to offer employees stock options at a "value."
This hearkens back to the 1960s and the infamous era of Letter Stock. The Enterprise Fund was the best performing fund in the 1960s because they bought private, or, letter stock from cos. The letter bascially stated that the co. would register it at some usually unspecified date. They bought letter stock for a deep discount and in most case, valued it at the price of public stock.
The fit hit the shan when stocks started to decline in value and shareholders cashed in their shares. Uh, can't sell the stock, folks. At least, we can't sell it at these prices.
This is a story I had a lot of experience with. I bought Enterprise and sold before the fiasco. I made like 70 bucks. Then, later, I went to work for American Capital, which had taken over Enterprise after the disaster. In fact, American Capital was sort of a detox center for funds that had gone astray. We also had the Equity Funding funds after their disaster. It was a smart move, because the price of acquiring lots of assets was very low. I actually did a stint managing the American Capital Harbor Fund, which was a refugee from Enterprise. We inherited fund directors who were very leery of anything different after those two experiences. They just loved me with my options and futures. <G> |
