CLCT--

[New_Horizons]

the thought crossed my mind, today. What if 200 people each put up $7,000--

they could OWN! this company!!! It has just over 6 million shares, at just over $2.00 each... of course, this is AFTER! the reverse stock split, where the stock WAS! $4.00...!!!

The questions are: 1. If you could, would you?

2. Would it be considered a 'wise' investment?

3. Would you be willing to invest even more! than $7,000?

100 people, investing $14,000... 50 people, investing $28,000... you get the picture...!!!

Consider, they DID! bring in nice revenues, last year...!!! It was those pesky expenses, that hurt...!!! Your thoughts, please!!!

[chrisfuccione]

1) Yes because I am a coin collector and I think it would be cool to own a part of a grading company.

 

2) with the economy it would be a bad investment short term because not that many people have disposiable income. Long term I'm not sure. I would have to wait also to see if CU can pay back its loan.

 

3) depending on my cash flow maybe maybe not. CHRIS

[Tradedollarnut]

Even if you offered twice that amount, you could not buy control of the company. Insiders own the majority and they are extremely unlikely to sell at virtually any price.

[jtryka]

I will not offer any opinion on whether this would be a good investment, that's up to you and your financial advisor. I will say this, TDN, I believe you are wrong on the details, but right on the concept. Insiders do not control a majority stake based on my reading of the last Proxy statement (last October). There, management and directors owned 47.8%, but excluding Q. David Bowers (who is no longer an insider) they only held 39.7%, and of this amount 535,000 shares (2.1% of outstanding shares) are represented by options which are likely under water. So theoretically it's possible, however, here are a couple things to think about.

 

As you buy more shares in this plan, the supply of shares in the market dwindles, while the demand stays the same or rises, and lower supply + higher demand = rising share prices. So the first few folks may be able to buy at $2 but the further you get the higher the price, so the last person to buy the final controlling shares would be paying insane prices! My guess is that it would take about $12-15 million to buy the 50.1% needed to control. This would mean more like 2,150 people with $7,000 each.

 

Second, a bunch of collectors owning a controlling stake would require a lot of legal agreements for voting control. Imagine having no agreement, and if I decided to vote my shares with management how much power I would have over you! One member of the group could hold the others hostage if they wanted. So there would be a lot of legal work to be done to make it work. And this doesn't even consider who would make decisions for the group! Imagine getting all 2,150 people to agree on anything!

 

Finally, if you gain control, what are you planning to do with the company? Do you think all the big names would stay? Do you think the group could manage the company better? Because if you can't, the group may as well just put all that money in $100s and throw it in the fireplace.

[New_Horizons]

While 'control' poses many possibilities, it still remains that-- for a company to survive-- they must either have a monopoly, akin to your local power company, or have ability. With the different grading companies out there, there is no 'monopoly' in play, and-- with recent disappointment/question with the grading, it doesn't appear 'ability' is doing too well either...

If a group of people came together as a stock market investment company, the members could each own just short of %5 of the firm, individually, without having to disclose their direction, intent, desires, etc., and the firm could do the same.

Should a 'club' have the 'limit' of 20 members, they could effectively OWN! the company!!! Legal ramifications could be settled easily, with the 'club' member positions!!! All of this could be achieved quietly, legally, and without notice-- that is, until the club went public with their position!!!

Agreed, at the present time, the firm is somewhat 'weak', for lack of a better term. this, in itself, should be even more! reason to delve into the possibilities...

[jtryka]

I would disagree with your premise on one major point, the 5% threshold is not limited to ownership, but also to voting control. So any such group would be faced with a catch-22: 1) there is not formal agreement between the members so you avoid the reporting requirement, however then you have the problem of people changing votes and creating conflict within the formal group, or 2) you have a formal agreement to prevent the internal conflict, but then you run into the reporting requirment once the second member joins with the second 5%.

 

Even so, the cost has still not been addressed. Each of those 20 folks would have to come up with $650,000 to buy the stock assuming they could buy it at the current market price (a faulty assumption). If they were to buy it all out, then my guess is it would cost $1 million each. And how many collectors out there would rather put that $1 million into their collections?

[New_Horizons]

when an individual (or firm) becomes a 5% owner of a companys' stock, they are mandated-- by law-- to report their holding, and to what extent (purpose) they expect to weild that 'power'. In short, you are telling the SEC (Securities and Exchange Commision) your intentions, which-- to most people-- would be merely that of an investor. You still retain the right to vote your block of shares as you choose...

In a club format, I would think most everyone there would be of the same mind, and vote their shares accordingly, sidestepping that 'power-play' stuff... it would also place members on the board of directors!!!

With the stock outstanding (some 6 million shares), they would need to own merely 3 million shares. At just over $2 per share, we are wstill talking some 6 million dollars... to be more exacting, 51% ownership would require only some 6.2 million dollars... 20 investors would need to come up with just over $300,000...

Each of the 20 members could privately own 300,000 shares, without the legal paperwork of a schedule D to the SEC. Further reduced, each members wife could own half of that, or 150,000, negating the need of a schedule D, at all... 20 investors of 300,000 shares each, is 6,000,000 shares, at $2 each, is $600,000...

Still, the club would also own their! 'share' of the total, thereby reducing the number of shares each member would be required to own. You would need to divide the 6 million by 21!!! Just a thought...