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Strategies & Market Trends : Analysis Class for Beginners

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To: Arthur Tang who wrote (624)	10/15/1997 11:15:00 AM
From: Arthur Tang	of 1471

Fundamental analysis 23? Why reverse split is bad? Lazy management instead of refocus and re-engineer their company; they would talk themselves into reverse split. Most of the time they did not even have the earnings to support the reverse splitted earnings per share. In market making the lowest price of bad stock is 6 cents. Below that there is no profit anymore. What ever the number of shares, it still can sink down to 6 cents/share. Most of the time, some majority stockholders try to force out the small investors with reverse split. A class action suit on miss management can be started by contingency lawyers who charge 30% of the award. These lawyers never let go. Of course, SEC also protects small stockholders and may delay approval of filings. So that stockholders vote can never be done on time. Recently MSEL stockholders fought the management and won. No reverse split yet. Due to SEC delays, management gave in for now. However MSEL stock went from $1/share to $4 15/16 today. Small stockholders seldomly won, but that is another story.

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