Consolidation

[SAA]

If we have 10,000 shares in a certain company and the value of the share is say 5p. Then their is an announcement that the company is consolidating their shares, so that the value of each share becomes 10p - then if we decide to sell our whole 10,000 shares does that mean that we will basically be doubling our money?!?

Please advise since I am new to this field.

 

[TheBramble]

Yes. This happens all the time.

No. I'm kidding.

All adjustments, splits and consolidations maintain the overall value of an existing holding.

These actions are generally taken to make the share more attractive to buyers - among other reasons.

 

[Mr. Charts]

I'm afraid you don't get anything for nothing in this life.
You will find you have 5000 "new" shares.
May I ask if you own shares or if you intend investing/trading?

 

[Mr. Charts]

Pipped by a bramble.
In the US consolidations often lead to a minor fall in price.

 

[SAA]

We owned about 10,000 shares in a company called Global Group which we bought form 2.17p. After some time we sold the shares for 3.25p. After two days there was an RNS that they are consolidating their shares and the next day the share price increased to 30p. We assumed that this meant that had we sold two days later we would have received 10 times as much. Thus we had been looking out for RNS's that stated there would be a consolidation of shares soon. Thus recently CYX had the following announcement when the price was about 2p, now the price graph shows a big jump to about 32p. The RNS was as follows:

The 25 for 1 consolidation of the ordinary shares will take effect from the
close of business today. Accordingly, the consolidated ordinary shares of 2.5p
each, including the new ordinary shares being issued as initial consideration
for the acquisition of Clinomics Biosciences, Inc. and pursuant to the placing
to raise £1,915,000, both as announced on 15 December 2003, will be admitted to
trading on AIM with effect from tomorrow, 13 January 2004.

At admission there will be 41,792,358 ordinary shares of 2.5p each in issue.

Just before making an investment in companies such as these we decided to check with some experts such as yourselves. We are relieved now though that we did not lose out the first time and that we did not further invest in companies like these.

Altough not very popular among some of the other members, we are into short term investments. Any of you have any tips?

 

[Skimbleshanks]

We don't give tips round here - and you really shouldn't start your trading career by looking for people who give tips. Tips are the quickest way to get burned. The reason is that you don't really know why they are tipped, and you certainly don't know when to sell because you are reliant on the tipper saying now's the time to exit. But by then there are hundreds of others also trying to exit, and the price plummets.

You really are at the mercy of tippers. So why not start looking at some charts for yourself, and you will slowly build up your knowledge of what a 'bottom' in price looks like - then you can buy a stock, knowing that it has formed a bottom so therefore you have less risk, and certainly know where to exit if things do go wrong.

Learning to trade requires time, patience, dedication, and a lack of emotion. It's a long road, so don't expect to cut corners.

And then a little way down that road you'll realise why good money can be made by fading the stocks that are being tipped.

Just hang around these boards, and you'll slowly start to learn the most amazing things about trading, how to do it, and why things happen in the market.

Oh, and in case you are wondering, I too started out by buying stocks 'tipped' to me - my lover at the time was a stockbroker, and I really didn't know why I was buying, I just followed his advice, bought, and made money. I hasten to add that this was many years ago before insider dealing was illegal. But when I ditched him for an industrial chemist, then I had to slowly learn about the markets for myself. And I've never looked back, and I now know that I'm better than hundreds of stockbrokers out there - but of course we girls are not supposed to say things like that! LOL

 

[Mr. Charts]

Gosh, you must have started very young!

 

[Skimbleshanks]

Yes, I was quite young. :cheesy:

Not only that, but I had the foresight to ditch him a short while before the Oct 87 crash, which meant that I was holding no stocks at the time. Phew!