I would say it's not so cut and dried as you suggest. Yes, increasing a/s points to FUTURE issuance of shares. The mere authorization of shares is not the issuance and, in all likelihood, it has scared away some longs and exacerbated year end tax selling. So the magic question is whether or not the share price factors in this FUTURE dilution and basis this on, as you suggest, the past history of dilution for various reasons, which reasons include S-8, Cornell financing and business expansion.
If the company slows the rate of share issuance and actually comes through with results, not just promises, then you may find that demand for the stock exceeds the supply resulting in a bottom and a good trading or buying opportunity. The concept of the business seems very good. The new management addition seems to be a quality industry person with lots of contacts with the major manufactureres. So, it's not just existing to be a "ATM" for insiders as you seem to have previously posted.
The uncertainty is real but not an absolute. That's why I typically stagger my purchases and my sales and recommend that others consider that. It goes against the grain of traditional investment strategy of "never averaging down" and "ride your winners," but it works extremely well for me, through terrible markets and good ones, along with diversification.
However, this all takes a lot of work. Those who look for people to blame for their losses often need to go to their own portfolio management and determine if they stay away from stocks when things look the worst, when bashers are a high percentage of the posts, and OTOH, if they are buying like crazy when there is little bashing and tons of "going to the moon" tomorrow type posts.
This happened to me just yesterday with LYJN. The company had a terrible history of shareholder communications. Bashers controlled the boards and made excellent arguments about lies from management, about pumpers, about dilution and dumping in the face of promotional PR's. I liked the company's concept but was very wary of what was being said. As I said the arguments were good. I started a small position and averaged down and bought heavily at the bottom. You can look at the chart. I sold yesterday. It may run more and I may have made a mistake, but I figured it has had a strong run and it still is several months away from significant results at the earliest. So, the message is to do your own DD, but don't necessarily listen to those who speak in absolutes, whether that be an extremely bullish message or a basher message. There were many, many times that I thought I was doing the wrong thing loading up in the .06-.08 area and it looked like I was going to take a terrible loss. It looked like the bashers were right and I had stumbled into a big loss. It all turned around and patience was rewarded. I left yesterday with a big total gain. Again, I may have made a mistake and it could run further but that was enough for me given that it has now run from lows of about .05 to yesterday's run to .30's.
There are no easy answers. |
