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Technology Stocks : Dell Technologies Inc.
DELL 122.55+4.4%Nov 21 9:30 AM EST
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To: jhg_in_kc who wrote (55004)7/31/1998 8:40:00 AM
From: Marie Smith  Read Replies (1) of 176387
 
JHG "Dilution"

I'm sorry I haven't responded sooner. I've had little time for the Thread lately.

I would say that BRKA's decrease of 18% is due to dilution from the new shares issued in the acquisition of General Re.

Dilution refers to Earnings Per Share (EPS). There is a basic EPS in which earnings are divided by the number of common shares outstanding. Corporations that issue stock options, convertible preferred stock or convertible bonds have the potential for issuing many more shares if all are exercised. Therefore, there is also diluted EPS in which the denominator consists of all the outstanding shares plus those that can be issued through the exercise of options and convertible preferred stocks and bonds. So you can see that diluted EPS is much lower.

Mergers and acquisitions can also cause the denominator to increase since a rather large amount of common stock is issued thus lowering EPS. And we all know that EPS has a profound effect on stock prices.

Hope this helps.

Marie
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