If I was a China Stock
By Glen Bradford
If I was a China Stock listed on US exchanges, I wouldn’t really care for dealing with a lot of the people that badger me with relentless questions about nothing. That’s what FAQ’s are for. I’d probably compile lists of questions people have asked me and I have answered and put them up on my website and have a forum that investors could use to organize them if they so feel like it. That said, here’s more of what I would do.
I’d announce that we aren’t interested in raising capital from the equity markets because the price multiple that we’d be selling equity at is laughable and I’d announce that with regards to our cash flow from operations — we’d compare the ROI of buying back our stock to the ROI of using the cash to purchase an acquisition.
I’d announce that since we don’t need money, we don’t care about our stock price. I’d announce that we don’t care about short sellers, but we encourage them to drive the stock price low enough such that a buyback would be even more EPP accreditive for our long-term shareholders. We don’t really care much about short-term flippers at our company. I’d announce that a dividend does not make sense — as I feel that I could reinvest cash better within the company than the investors outside of the company could. And, until that changes, that’s the policy. That said, if the stock price ever gets high enough to make a EPS accreditive acquisition possible by acquiring another entity, we may use cash and stock to buy other companies.
I’d announce that we don’t really care about the bear raids on our stock. I’d announce that in the long run we believe that the price will reflect the underlying fundamentals but that in the short run, anything could happen. Obviously, we are undervalued because there aren’t enough people that understand us to support a reasonable market capitalization. We believe that over time this will change.
I’d even consider only updating shareholders with 10-Q’s and 10-K’s. I wouldn’t be interested in the shareholders that I’d have to update all the time with news. Spitting out news is not worth my time. That said, I think it would be reasonable to give “my best idea of what guidance might be if I had to give it, but don’t rely on this guidance because my expectations could be far from reality.”
We may want to reverse split our stock in order to uplist. We like the idea of getting long term shareholders. Some of these shareholders are unfortunately limited by what they can by by exchange listings or minimum stock prices — among other things. We feel that it makes the most sense to try to make ourselves available to as many people as possible.
That’s just me. Seems like some people get carried away with short term price fluctuations and that’s great for them. As for me, if it really got bad, I’d encourage 3rd parties to hire independent auditors to independently acquire our financial information from our banks, suppliers, and customers to confirm them — but I wouldn’t go much beyond that.
Heck, if the stock price goes low enough, I’d consider buying it all back and then some. I might issue a statement to short sellers welcoming naked short selling “because we have the cash to buy all of our shares back on the open market if the price reaches $x.xx,” and that if we do so, we’ll be issuing a $0.01 dividend and splitting our stock 1 for 1.1 to make them all have to present their shares to the transfer agent, crushing them.
Basically, to eliminate any confusion, we’d make a lot of decisions based on the following statement:
Those who’re making an effort to fail to understand me, are not a concern of mine. – John Galt, Atlas Shrugged, Ayn Rand