Your math is flawed, Solon. To take the extreme, if that 20% of another company(company b) is all you(company a) own, and it goes up by 20%, you should go up by 20%. Your math is only valid in the situation in which the 20% of the company that you own(company b) represents 20% of your(company a's) assets.
Thank you, Geoff. I think you are mistaking NPEC has 20% of MDIN with NPEC is 20% of MDIN.
Possibly, I obscured my point rather than clarifying it, so let me try again: For whatever percentage that MDIN goes up or down, the equivalency for NPEC would be 20% of that percentage amount. I ought to have used the form of 20% of 20 points or 20% of 40 points, etc. I was trying to belie the notion that movement in the shareholder share price of MDIN ought to translate into equivalent movement in the share price of NPEC. Obviously, if NPEC was a Microsoft owning 20 % of MDIN, the doubling of MDIN would have no appreciable impact on Microsoft's percentage increase of share value. It is only adventitious that the share price of NPEC happens to be in close proportion to that 5 : 1 ratio. Perhaps most of NPEC is the MDIN factor. However, we are led to believe that NPEC is more than this. What if NPEC doubles tomorrow based on the effect of its telecommunications efforts? It would be feckless to look for a 20% equivalency thereafter as the ratio would be lost. Also, before any of these comparisons could be a meaningful tracking tool, one would need to determine the share outstanding ratio viv-a-vis the two companies...amongst other things.
This is all I met to say. Admittedly, in the bustle of the trading day, I said it carelessly and poorly--so thank you for the humble pie!
|
