CDL & CDI ... Another Great Result

[blackcap]

again, it's not about value. liquidity is about how easily an asset can be turned into cash. a larger parcel of shares provides the investor with more options, should they want to sell and turn that asset into cash. the GPG example is a good one. Post bonus, shares can go up, down or hold steady. we shouldn't assume they go down. You are, of course, free to have your own outlook. But don't assume everyone has the same outlook as you.

Liquidity is indeed about how easily an asset can be turned into cash. That requires willing buyers and sellers. If I have 10,000 shares at $1 or 100,000 shares at 10 cents (the effect of a bonus issue) will not change the liquidity or my willingness to sell one iota.

My 100,000 parcel is not more liquid than my 10,000 parcel. My 100,000 parcel gives me no more options than my 10,000 parcel does.

[podg]

back on the value again. How interesting to hear all about you. Why are shareholders sometimes required to either increase their holding to a 'marketable' parcel of shares or have the company acquire them as they mop up 'unmarketable' parcels? It happens. Having more shares, in some circumstances, makes them more liquid. I refer back to my comment about how little there is trade in CDI at times. in July, August and September last year there was about $30k of trade ... total. Not very liquid. More shares on issue would help to make it a more actively traded stock, even if it's a little more active. and improve some shareholders' liquidity.

[blackcap]

More shares on issue would help to make it a more actively traded stock, even if it's a little more active. and improve some shareholders' liquidity.

How does more shares on issue make a stock more actively traded? Really struggling to get my head around that one.

[Snow Leopard]

For the benefit of the poorly informed on this thread

A 'marketable parcel' is an ASX defined term and for head shares is a single holding of shares with a value of A$500 or more.

A company can offer to sell 'unmarketable parcels' (which is generally understood to be a share holding that is not a marketable parcel) on behalf of their holders for a reduced brokerage.
However there is no provision to force a holder to either sell their the 'unmarketable parcel' or to increase the holding to a 'marketable parcel'.

Legally you can hold 1 share in an ASX company and no-one can do anything about it.


Meanwhile on the NZX there is the 'minimum holding' and for CDI trading in the range of greater than $0.50 to $1.00 that 'minimum holding' is 500 shares.
A NZX company can, but is not compelled to, either top up (for free) all holdings such that they meet the definition of a 'minimum holding' or sell all the 'minimum holdings' out from under the holders.

CDI at 1-Mar-16 had 14 shareholders with a combined total of 2,520 shares who did not meet the requirement of a 'minimum holding'. That represented less than ten millionths of the total shares on issue.


Companies that have a large quantity of non 'minimum holding' shareholders are generally those that are or have been pretty sick and their share prices have declined dramatically.


As for the rest of the subject under contention, the phrase 'never get involved in a butt kicking contest with a porcupine' seems most appropriate to me.

Best Wishes to most of you.
Paper Tiger

[podg]

How does more shares on issue make a stock more actively traded? Really struggling to get my head around that one.

It gives it the potential to be more actively traded. If a stock had 1m shares on issue, tightly held, it would likely trade less that a stock with 100m shares on issue, widely held. at least you are getting the concept of liquidity now. well done.

[macduffy]

A 'marketable parcel' is an ASX defined term and for head shares is a single holding of shares with a value of less than A$500.

"Of a minimum of A$500", surely, Tiger?

[podg]

For the benefit of the poorly informed on this thread

A 'marketable parcel' is an ASX defined term and for head shares is a single holding of shares with a value of less than A$500.

A company can offer to sell 'unmarketable parcels' (which is generally understood to be a share holding that is not a marketable parcel) on behalf of their holders for a reduced brokerage.
However there is no provision to force a holder to either sell their the 'unmarketable parcel' or to increase the holding to a 'marketable parcel'.

Legally you can hold 1 share in an ASX company and no-one can do anything about it.


Meanwhile on the NZX there is the 'minimum holding' and for CDI trading in the range of greater than $0.50 to $1.00 that 'minimum holding' is 500 shares.
A NZX company can, but is not compelled to, either top up (for free) all holdings such that they meet the definition of a 'minimum holding' or sell all the 'minimum holdings' out from under the holders.

CDI at 1-Mar-16 had 14 shareholders with a combined total of 2,520 shares who did not meet the requirement of a 'minimum holding'. That represented less than ten millionths of the total shares on issue.


Companies that have a large quantity of non 'minimum holding' shareholders are generally those that are or have been pretty sick and their share prices have declined dramatically.


As for the rest of the subject under contention, the phrase 'never get involved in a butt kicking contest with a porcupine' seems most appropriate to me.

Best Wishes to most of you.
Paper Tiger

poorly informed? I see you have moved away from the subject of liquidity. paper weight, more like.

[Snow Leopard]

"Of a minimum of A$500", surely, Tiger?

Whoops! My bad & now amended.

Many Thanks
Paper Tiger

[blackcap]

It gives it the potential to be more actively traded. If a stock had 1m shares on issue, tightly held, it would likely trade less that a stock with 100m shares on issue, widely held. at least you are getting the concept of liquidity now. well done.

Now you are being disingenuous. You wrote in an earlier post that "a rights/bonus issue or even just a bonus issue would go some way to improving liquidity and provide some value to shareholders through something other than what is a modest dividend."

However in the above scenario the stock would still be as tightly held post bonus issue as it was pre-issue. The bonus issue (as stock is distributed on a pro-rata basis to current shareholders according to shareholding (so no new shareholders on the register)) will not make the stock more widely held. (even though there would be more shares on issue) This will be my last post on the subject of liquidity.

[podg]

Now you are being disingenuous. You wrote in an earlier post that "a rights/bonus issue or even just a bonus issue would go some way to improving liquidity and provide some value to shareholders through something other than what is a modest dividend."

However in the above scenario the stock would still be as tightly held post bonus issue as it was pre-issue. The bonus issue (as stock is distributed on a pro-rata basis to current shareholders according to shareholding (so no new shareholders on the register)) will not make the stock more widely held. (even though there would be more shares on issue) This will be my last post on the subject of liquidity.

thank heavens for that !!!