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Share Consolidation - Legal Theft

Discussion in 'Medium/Long Term Investing' started by Ann, Dec 28, 2018.

  1. Ann

    Ann

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    Until you as a shareholder experience a Consolidation of shares you will never be able to appreciate the feeling of being legally robbed of multiple thousands of dollars. It works this way. Buried in one of the annual reports or interim reports there will be a notification of a motion for shareholders to vote on a Consolidation of the company's shares. As most of the people voting are the ones who have a self interest in the Consolidation, the motion will always be passed. Then a little while later you will get a letter saying your share holding in the company has diminished to a fraction of your original holding leaving you on many occasions holding a non-marketable parcel or very close to it if you don't get out fast.


    Consolidations confirm failure


    Shareholders often receive letters from their directors like this:


    “We are pleased to announce that following shareholder approval received at the General Meeting we have completed a 50-for-1 share consolidation. This consolidation will deliver a simplified and more efficient share capital base and reposition the stock for broader investor appeal.”


    More appropriately the letter from directors should be couched thus:


    “We very much regret having to advise that for every fifty shares you once owned in BadlyManaged Limited, you now have one. This savage reduction reflects the underlying diminution in the value of your shares that has already taken place during our stewardship of BadlyManaged. If your shares are still worth anything it would be in your best interests to sell them now and invest the proceeds in a company in the ASX 200.”


    Here is a classic:


    If in 2006 you bought 50,000 shares in Antilles Oil and Gas NL (formerly Advance Energy Limited), they were worth $14,500 at the closing price of 29 cents on 2 June 2006. The value of your shareholding gradually dwindled and by May 2014 the shares were trading at a tenth of a cent and your 50,000 shares were worth about $50. In June 2014 the company completed a 1 for 60 consolidation. Your new holding of 834 shares traded around the three tenths of a cent mark and was worth in total about $3. A couple of months later the company again consolidated your shares 1 for 80. Your new holding of 11 shares was and is worth nothing.



    The whole idea behind a consolidation is to try and restore the company’s share price into the investment grade range and thus make it more appealing. Don’t be fooled, the damage has already been done. http://www.investogain.com.au/companies/corporate-actions

    There are an enormous amount of these Consolidations happening all the time and it isn't just happening to small speculative stocks, it can be major mainstream stocks and they can take out life savings from people who can least afford it......

    quote: "I am a self-funded retiree in my 80s. In September 2015 I bought 50,000 shares in Ten Network Holdings at $0.1925 each. In October 2015, I bought another 50,000 at $0.1925 each and, in November 2015 I was allotted 18,919 shares at $0.15 each, taking my total to 118,919 shares. On January 21, 2016, I received a statement from Ten Network advising me that due to consolidation of capital on the basis of 10 into 1, I now hold 11,892 shares only. The price of the shares on January 21, 2016, was quoted as $0.14 each, which means my capital was reduced by $107,027 overnight. I was never notified by the Ten Network that such action was going to take place. Shouldn't the shareholders have been notified prior to such action? Is such action legal, or even ethical, taken by the network without discussing it with the shareholders first? I would appreciate it if you can clear up this matter for me, as I am not well-versed with share trading. T.O."
    https://www.smh.com.au/money/invest...onsolidated-is-that-fair-20160906-gra48o.html

    Eventually the price of TEN diminished to nothing and went into receivership and then.....
    On the 10 November 2017, leave was granted to the receivers and managers of TNHL to transfer shares in TNHL pursuant to the deed of company arrangement to CBS Australia or its nominee. CBS Network Ten BV was nominated as the proposed transferee. Shareholders in TNHL did not receive any payments for the transfer of their shares.

    There goes an 80 year old gentleman's $100,000 plus and probably quite a lot more just like him. It would be interesting to know the $ value of that particular Consolidation of ordinary shareholders investments. The rich get richer and the poor get poorer, and the worst part, nobody cares.

    We must begin to protect ourselves and each other as best we can. We need to educate ourselves. If we want to buy a share, we need to check to see if it has had a Consolidation and if it has, best advice is to move on. Go through all the ASX notifications for all the years the stock has been listed. Hunt out the Consolidations if there were any. You can find out how long the stock has been around by looking up delisted.com.au http://www.delisted.com.au/ They list all shares not just those which have been delisted. It gives you the company name changes and Directors names and a host of other very valuable information.
     
  2. Darc Knight

    Darc Knight Investor not Trader

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    And until the villagers (us investors) get their pitchforks out and march on the town square, change will never happen!

    Cliffs: speak up, lobby your local Member people :)
     
  3. Darc Knight

    Darc Knight Investor not Trader

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    @Ann you don't mind if I cut and paste some of your post into an email to my local Member and maybe a few others do you? :)

    Probably a good ideas others do too, if Ann approves.
     
  4. Ann

    Ann

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    Go for it dk, I doubt it will do any good as what is being done is perfectly legal, no crime is being committed and there is not a doubt in my mind that ASIC and politicians have been lobbied for years and years to no avail. That is why I am doing it the way I am doing it, simply to make us at grass roots level aware of this situation and learn to protect ourselves. If a red Wealth Warning can help a new person coming into the markets by letting them know, how much richer will the markets be because this whole scheme, (and I won't call it a scam as tempting as it may be) will be doing enormous damage to the overall health of the markets and its available capital. As the money isn't actually pocketed by anyone it just evaporates.
     
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  5. Darc Knight

    Darc Knight Investor not Trader

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    An election coming up, Bill Shorten might be looking for a policy to appeal to everyday Australians after the neg gearing fiasco. What do you think @SirRumpole ?
     
  6. Ann

    Ann

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    No dk, as much as you may think becoming a rabble may help, it won't. If you really, really want to make a difference, help me, get into the ASX notices, and ferret out these Consolidation companies and slap a red 7 point bold Wealth Warning onto them. Then bring their ASX Code and name with all their other codes and names and simply add a post to this thread.....and I say that to all those lazy bloody onlookers who sit on their asses watching us do all the work... I see there are over four hundred of you sitting like lazy frogs watching the show. Pull your fingers out and get a name and help us here on ASF clean up the markets, your kids and grandkids may thank you one day. You can tell them you were part of the solution, not part of the silent majority aiding and abetting this outrageous problem.

    WEALTH WARNING: This stock has been subject to a Consolidation in the past and may at some time in the future cause you to lose all your invested capital. Better value elsewhere.
     
  7. Ann

    Ann

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    Unlikely, there are more people out there who have passive investments in either super or managed funds who know these people will be watching out for rogues and scammers. That is the appeal of these products. A few sad punters losing a bit of their dosh won't win too many votes. The vast majority of voters would probably say they knew the markets were a load of garbage and full of crooks and shysters and that is why they stay away. The ASX has around 2,100 listed companies, most of those are going to be these listed bits of sh!t, some with a compelling story which appeal to the gullible, just lying in wait to scam your money off you.
     
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  8. Darc Knight

    Darc Knight Investor not Trader

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  9. SirRumpole

    SirRumpole

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    I'm sure Labor will match or exceed any personal income tax cuts that the Coalition propose but they will be targetted at blue collar workers rather than the middle/upper classes.

    I think/hope that they will also provide assistance to emerging companies especially in the clean energy sector and I also hope they will increase funding for R&D especially CSIRO which the Coalition has hacked to bits.
     
  10. Ann

    Ann

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    Geez, you are a little bottler DK, I hadn't thought to do that, well done Sir! Although I am still going to look through the Tipping Contest one by one. Sometimes, reading through the ASX notices for a company gives you a good feel as to what they are up to. It isn't just Consolidations, it is the volume of Capital raisings and rights issues they are doing. All of these will seriously dilute your holdings over the years. So I still say, if you are in the market for a company, go through the notices headlines and get a feel for their behaviour. How many you-beaut stories are they coming up with to excite the punters? How many capital raisings? This sort of thing. We must always be on the look out for the scam. Where money is involved there will always be a scam.
     
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  11. Darc Knight

    Darc Knight Investor not Trader

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    OK, thanks. I'll slap some warnings up with a link to the ASX Notification. Cheers.

    If others could search as well and stick a few warnings up, including you "lazy frogs" watching pls :p
     
  12. Parse

    Parse

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    ribbet

    Strange place to house this thread, took me ages to find it!
     
  13. Ann

    Ann

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    Sorry about that Parse, at least you found it eventually!
    When I was looking for a place to put it I felt the majority of people likely to be impacted negatively would be people who buy and hold as they are exposed to a stock for longer. I almost never look at the beginners threads because I am not a beginner, but I had no idea about this scam in the decades I have been in the markets. I am guessing there would be many others who are medium to long term investors like myself who are blissfully ignorant of this scam practice. Hence the choice of section selection.

    Hopefully we can keep bumping this thread back to life, it is a very important issue and unless they ban the practice, which is unlikely, it will keep happening. My guess is none of these dodgy companies have enough money for a share buy back, that is why they are Consolidating their shares in order to lift its value in order to get more money from a venture capitalist. Then it is back on the same treadmill until the next Share Consolidation.

    I am hoping at least to warn the smart people who hang out on ASF by slapping these WealthWarning signs on companies. Maybe long term they will get the message we can't be fooled anymore and take your vulture capitalists, big hole in the ground, next cure for cancer or a dodgy air filter from a one month Indian hospital test and go away, forever and delist.
     
  14. Triple B

    Triple B

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    a couple things you can do to protect yourself from these situations. NEVER invest more than say 10% of your capital in any 1 company, any company. If it is a speccy cheap one much less.
    Always read thoroughly any reports /news regarding a stock you are in. if you read about an upcoming vote on consolidating shares (usually buried somewhere hard to find) GTFO. get the Fxxx out!
    If you cant read reports regarding your capital , dont invest.
    I like the idea of noting possible pump and dumps and diluting shares . I am one day going to visit the possiblility of trading pumps by identifying high volume during accumulation phase. I have noticed many times before a pump there will be a spike in volume with minimal price movement.(sub 1$ stocks)
    then a few days later positive news BS will encourage traders/ speccy investors to buy the cheap? stock.
    The pumpers hold the supply while the suckers pay higher and higher prices accelerating the buying frenzy. at the peak of the frenzy the pumpers Dump the shares back into the market. Once all the suckers who were going to buy have bought then there is no -one left to sell to . Any profit taking selling starts the price decline as sellers take lowere and lower prices( nobody left to sell to)
    other holders see the alarming decline and want out . selling lower and lower ,, rinse and repeat .
    Look for this behavior previously .
     
  15. Triple B

    Triple B

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    ummm :
    Sept 2015 Buy 50,000 @0.1925 =$9625 +
    Oct 2015 Buy 50,000 @ 0.1925= $9625 = $19250
    Nov 2015 Alotted 18919 @0.15 = $2838 + 100,000(bought prev at 0.1925) @0.15 = $15000+ 2838 =
    $17838 worth of shares (118,919)as at Nov 2015
    Jan 21 2016 10:1 consolidation
    now 11,892 shares @ 0.14c (understandably not happy)=$1665
    His capital was reduced overnight? by $16173
    ie at no time were the shares worth $107027.
    me thinks there was an error with a decimal place here. ie $19.25 was entered or was it supposed to be $1.925??

    old mate needed to keep track of what was going on. Last day of trading of pre consolidated shares was jan 12th 2016 notice given jan 06th 2016.
    According to the reply to the letter , notice was also given after the AGM where the consolidation was voted on.
    https://www.asxonline.com/content/dam/asxonline/public/notices/2016/jan/asx_046442.pdf

    Its unfortunate he lost all his $$ invested in this stock . Hopefully it was a fraction of his porfolio.
     
    Last edited: Dec 31, 2018
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  16. Ann

    Ann

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    Thanks Triple B, you are probably the only person who ever checked these figures, what do you reckon, never ruin a good story with all the facts? As far as keeping track of annual reports, over the years they have just become so much junk mail for me. Recently I have been clicking the button for no paper annual reports. No more, I am going to scan these little suckers from now on. That is what brought me unstuck, and clearly this old boy as well. TEN was clearly run into the ground and then scooped up for nothing, such a lack of ethics and morals, still I guess these guys only worry about one question.....is it legal, stuff the rest!
     
  17. Triple B

    Triple B

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    Yep , just need to keep track of the ones you are in.
    ^ This 100% correct

    Would you like to see an example of a stock about to start a pump maybe?
    CXZ
    read the asx news back to about oct last year! They can legally buy back your shares under $500 worth if you dont fill out a form, name changes , recent performance incentives shares bought, one Client that they are placing the whole shebang on ,(GM) spouses buying shares, asx price and vol query, Its all there. I look at this stuff all the time . you could make a full time job of it .
    Have the chart open wile you read!
    Now soaking up the stocks ready for the mark up .
    The pump will probably be something along the lines of: GM deal now good to go and other manufacturers interested blah blah blah in early Jan.
    Lets see what happens! could it fizzle out or boom pump on.
     
  18. Ann

    Ann

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    You know what Triple B? I think ASF should benefit from these sh!tty little companies. As much as I detest pump and dumps and wouldn't touch them with a set of BBQ tongues, that is me but I reckon there would be a few ASF cowboys that would be really happy to hop onto some of these broncos for a bit of a ride. On another forum a lifetime ago, I used to watch the PVI and go, ready...set....pump! I am going to put CXZ chart up with a bit of a caution and see if some of the guys can make a quid....if you find any more of this sort of junk, give us a PM and I will wack them up. In fact I say that to anyone with a P+D potential. I really hate the PO3s of this world who come here after the event. The problem with sh!t, it is quickly recognized and everyone dumps it fairly quickly these days. Gone are the days of the stary eyed suckers, they have been ripped off too many times. So Mr Beer (not meaning Triple B) get one of your lackies here who is a touch smarter than verse and we will give it a damn good push as long as you give me a decent PVI before the main event.
     
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  19. Triple B

    Triple B

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    He He , dont get too fired up Ann, I reckon a lot of theses companies honestly believe they will be the next microsoft , apple, bhp etc. nobody wants their shitty shares so they go down ....downn..
    Then finally they catch a break , or make a deal, whatever . they get exited , euphoric even , they share the good news , everybody in , all of a sudden their shitty 0.005 c shares are worth 0.20c !! the say 100,000,000 shares they hold($50000) are now worth $20m . I know what I would do . Sell half.
    This is the trusting side of me saying this, the cynic believes all shooting stars are pump and dumps.
    Truth is probably its a mixed bag of the above and real pumps.
    But sure if we can see em coming , even a few we can cash in.
    When I research these companies I always TRY to look at them with a cynical eye and a naive one .
    But I tell you what , I f I ever start a listed company i will have a few tricks up my sleeve.
    Did you read the latest news CXZ. Check out the performance rights lol 0.008 c close or above for 5 consecutive days between dec 17 2018 and 2023............they made that target in the first 5 days lol
    10,000,000 - 7,000,000 shares earned each thanks for coming. not bad if thay are at say $1.00 in 2023
     
  20. Ann

    Ann

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    Keep telling us what you have seen/know Triple B, just because it is headed Share Consolidations doesn't matter, it is all about the Big Con which can be anything.

    I just see vulture capitalists who can organize a decent math for a pump and dump. It is same old same old and really easy to identify. I reckon they pick a dying/dead company and say, "have I got a deal for you darlin". First, consolidate your shares so Bill/or whoever will come into the picture. Change your name, get some product we will supply. Then if they are any good, they do a rising PVI for a while and then a stairway to heaven and then if they have a really good story, plenty of money to sell into the market on the way up and a dollar target, then up she goes. I think most of the story telling is done on HotCrapper or whatever is the equivilent. This is what I would like to see channeled to ASF. Not the good story, just the rising PVI and notification by PM or in someway I see. Tipping Contest will work, I chart all the entrants. I sure as heck will not be hunting you out, nothing in it for me. I hate you guys!
     
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