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Strategies & Market Trends : Value Investing
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To: Madharry who wrote (39258)9/14/2010 6:52:12 PM
From: E_K_S  Read Replies (2) of 78702
 
RE: Gulf Resources, Inc. (GFRE)

8:03AM Gulf Resources provides updates on financing and acquisition strategy; plans to continue to acquire additional bromine and crude salt production assets. (GFRE) 7.33 : Co provided updates on its financing and acquisition strategy. The Company's Form S-3 shelf registration statement was declared effective by the Securities and Exchange Commission on August 31, 2010. The registration statement provides the Company flexibility to offer and sell from time to time up to $120 million of securities, including equity, debt and other securities as described in the registration statement. Co stated "Acquisitions remain an important part of our growth strategy and we plan to use our common stock as currency for acquisitions, but only at levels that are accretive to our existing shareholders."

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Not too sure why the company issued a S-3 shelf registration to raise $120 Million when they already have $55 million cash in the bank?

It has been their strategy to grow by acquisition and to have access to more funds through the possible sale of stock (or acquired debt) provides management flexibility when structuring another deal. Just hope that when the deal(s) are done, they indeed are accretive and not just fancy accounting.

FWIW, I have owned U.S. companies where a lot of fancy accounting was done and they never booked a "real" profit but only Non-GAAP ones. When the non reoccurring charges started to occur every quarter and then every year, I felt I was the sucker and sold the stock. I still made money on my investment as there was another greater fool ready to buy my shares.

EKS
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