TSIG.com TIGI (formerly TSIG) Message Board

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Microcap & Penny Stocks : TSIG.com TIGI (formerly TSIG)

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To: Jim B who wrote (9282)	11/6/1998 10:20:00 PM
From: Mags	Read Replies (1) of 44908

What do you mean by "but I sill think the shares out are hurting the stock and ultimately it will take either the company buying back some shares "? Here is a slightly altered message that I have repeatedly sent to people who insist upon buybacks simply to reduce the total shares outstanding. The only reason for a stock buyback plan is if TSIG cannot deploy its capital more profitably than individual investors can. Buying back stock just to reduce the total O/S is uneconomical and irrational. Similarly, if TSIG identifies more opportunities for profitable acquisitions and/or other investments that require additional equity capital, then by all means TSIG should issue additional shares. The earnings generated from the acquisitions/investments will more than offset the dilution that occurs. Mechanical issuing/repurchasing of stock for any reasons other than those listed above is a foolish endeavor that will ultimately result in a lower valuation. Of course the down side to issuing additional shares is that management doesn't deploy the capital profitably and the there is no increase in earnings to offset the dilution.

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