Forum Archive Index - August 2001

["Richard Hooper" <hoop@ihug.co.nz>]

Its all to do with psychology ( a big word to spell at this time of night)
:))
hoop

----- Original Message -----
From: "Ben Dutton" <bendutton@sharechat.co.nz>
To: <sharechat@sharechat.co.nz>
Sent: Wednesday, August 22, 2001 12:15 PM
Subject: Re: [sharechat] SKC- Another good result!


> Hi John,
>
> Just thought I'd tap out a quick answer to your statement:
>
> "Also I still fail to see how splitting can improve liquidity"
>
> New Zealand retail investors have traditionally had a fear of buying
> "pricey" shares - anything over $10 is seen as "expensive" (the logic is
of
> course flawed).
>
> To increase liquidity in a share (liquidity = a large number of buyers and
> sellers) a company must increase its shareholder base (illiquid shares
tend
> to be companies with a few large shareholders that own most of the stock).
>
> So, the situation with Sky City at the moment is that some NZ investors
> regard the company as being "expensive" (even though its not as such) and
> thus may not buy the shares.  If a share split was to occurr the company
may
> become more attractive to smaller investors because of the lower price,
and
> therefore the shareholder base may increase with a resulting increase in
> liquidity.
>
> Best Regards
>
> Ben Dutton
>
>
> ----- Original Message -----
> From: John & Robyn Armstrong
> To: sharechat@sharechat.co.nz
> Sent: Wednesday, August 22, 2001 7:52 AM
> Subject: Re: [sharechat] SKC- Another good result!
>
>
> Thanks John W. My mistake, meant 3:1.
>
> However the principle remains. By cutting an apple into 3 we still have
the
> same amount of apple (less the costs of cutting it).
>
> There may be powerful reasons for splitting but none are based upon
> mathematics.
>
> Also I still fail to see how splitting can improve liquidity and for that
> matter how can it make a take-over by another company expensive?
>
> If you carry the logic to near the extreme then they should have a 100:1
> split.
>
> regards
>
> John
>
>
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