| Take extra care when investing in small cap & micro cap companies that are in the process of, or have recently done any kind of stock split. Many investors have been conditioned
to put more heavy consideration in investing in companies that split their stock.
Stock splits only rework the equity structure of a company without ACTUALLY improving the
financial strength of the company. Most of the time, stock splits/reverse splits simply create a "mirage" to gain the appearance of more liquidity or in the case of a reverse split, inflate the stock price to make the company
seem more "worthy" to investors. There could be excellent reasons to perform a stock split if a company is trying to raise capital to grow, but in many cases it is just a corporate strategy to garner the attention of investors without tangible fundamental reasons.
Always remember to ask questions and perform the necessary research to find out exactly why the company feels a stock split or reverse split is necessary.
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