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Microcap & Penny Stocks : PanAmerican BanCorp (PABN) -- Ignore unavailable to you. Want to Upgrade?

To: Pepper1 who wrote (1720)	6/20/1998 11:05:00 AM
From: LegalBeast	Read Replies (1) \| Respond to of 43774

#### He did emphasize they will act in the BEST interest of his shareholders.. #### You know, that is one of the most problematic lines yet. Like when DHS tries to break up a family "In the best interests of the child" ... it is so subjective. IMHO, the big reason that folks have so much trouble with reverse splits is psychological. You see, you have a company that was trading for 10c and all of a sudden it is trading for 1.00. Well, the impulse is to sell and take a profit. But we all know there is no profit to be taken at that price. Thus, the price goes down. We all also know it is easier to take a price down than to take it up. There are also those who have been burned with this effect in the past, and they sell before the rev split. Well, the overall thing is that the company has one heck of a time getting the shares back up in price after they do that. If they are truly acting in the best interests of the shareholders, IMHO, they should do a stock buyback. The effect of that is that there are fewer shares in the float and thus demand for shares has more of an effect of pushing the price up, and shareholders have on paper a better price. All of that having been said, from the company's point of view, it is all pretty much irrelevant. It only makes a difference when the company wants additional financing and market cap is a factor in the financial analysis. Other than that, it is more that you own a share, you own 1/75,000,000 (Or whatever the real number is, of the company. As long as the company does business in a proper manner trying )But not required to) make a profit, then they are acting in the best interests of the shareholders. To simplify a bit. Lets say that you own 1/2 of the company and the stock price is 1.00. The price goes to 10.00 how much of the company do you own? Right, 1/2! OK, lets say the stock goes to 1c per share, now how much of the company do you own? Yup, 1/2 of the company. Now lets assume that we have a 100 to 1 reverse split ... how much of the company do you won now? Surprise, still 1/2. So you see, that best interests line really means little about stock price. Now there is another factor that enters into this equation. That is the duty of majority stockholders to look out for minority shareholders. This fiduciary duty is pretty much controlling in terms of how the company makes money, but again if the market reacts to an action, does it really effect that minority shareholder? Only if the minority shareholder wants out, and then he is no longer a shareholder, is he? Well, so much for rambling. Those who have gotten this far, I appreciate your ear. I feel better now! Those who have not gotten this far are not reading this and to you I say go ahead and sell because you are looking for that 100 bagger in 2 days and it aint here, but maybe in a few months it will be ... see ya!