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Guaranty Bancorp Message Board

  • freecvo freecvo Apr 9, 2013 1:05 AM Flag

    Reverse split

    Guaranty Bancorp is asking shareholders to approve a 5-for-1 reverse-stock split, The Denver Post reports.
    is this good ?

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    • This is very good.

      I didn't even read through the proxy to see the discussion on this item, I immediately voted for it - I had said to myself for the past month or two that they needed to do a 1 for 5 or 1 for 10 reverse split.

      1. 100 million shares outstanding is too much for a company this size

      2. There is too much liquidity in the shares. This is why it is so difficult for the shares to move higher - there's just too many shares out there and always someone willing to sell a few shares.

      3. Having the share price up around $10 will be beneficial in that it will attract investors who will not even consider investing in a $2 penny stock. Anything below $5 eliminates an entire class of investors.

      4. Above $5 and $10 the shares will be more attractive and a potential investment for mutual funds that will not touch the shares at this price level.

      Reverse splits are not always an indication of something bad, or a requirement to maintain a listing.

      I purchased shares of another company that did a 1 for 10 reverse split about 8 months ago. The stock has doubled over the past 3 months.

      Going forward, should sales and earnings pick up, and the share price goes higher, the company can always forward split the shares in the future.

 
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