# Share Consolidation - Legal Theft



## Ann

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.


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## Darc Knight

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


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## Darc Knight

@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.


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## Ann

Darc Knight said:


> @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.



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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## Darc Knight

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 ?


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## Ann

Darc Knight said:


> 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




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.*


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## Ann

Darc Knight said:


> 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 ?



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 ****, some with a compelling story which appeal to the gullible, just lying in wait to scam your money off you.


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## Darc Knight

Googling "notification of consolidation asx" brings up what I assume is the ASX pdf notification?

https://www.google.com.au/search?ei...6.2-8j2......0....1.........30i10.EbLG41rTzpA

Am right Ann?


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## SirRumpole

Darc Knight said:


> 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 ?




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.


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## Ann

Darc Knight said:


> Googling "notification of consolidation asx" brings up what I assume is the ASX pdf notification?
> 
> https://www.google.com.au/search?ei...6.2-8j2......0....1.........30i10.EbLG41rTzpA
> 
> Am right Ann?




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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## Darc Knight

Ann said:


> 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.




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


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## Parse

Darc Knight said:


> 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




ribbet

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


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## Ann

Parse said:


> ribbet
> 
> Strange place to house this thread, took me ages to find it!



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.


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## Triple B

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 .


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## Triple B

Ann said:


> *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.




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.


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## Ann

Triple B said:


> 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.




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!


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## Triple B

Ann said:


> 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



Yep , just need to keep track of the ones you are in.


Ann said:


> is it legal, stuff the rest!



^ 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.


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## Ann

Triple B said:


> 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.




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 ****, 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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## Triple B

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


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## Ann

Triple B said:


> 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



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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## Ann

KAS did a 10 to 1 share Consolidation on 2/1/2019. This was approved by stockholders on the 20 of December 2018. There has been no trading since the 19 of December 2018. Consolidations are bad enough but when you are totally trapped even if you read your annual report it seems horribly unethical. Legal of course, all legal!


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## Ann

Just updating the Wealth Warning template.

*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.*


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## Ann

XTV - This is a particularly nasty one 200 shares consolidated to 1 share and all done while the company is in suspension. First day under the new structure 11 Jan 2019.


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## TiminOz

WHAT ~IS~ CONSOLIDATION exactly?

Hi traders!

I'm a newbie who is interested in a stock that was consolidated in the past, so I want to find out what it actually is.

There doesn't seem to be any reference on Investopedia, in Graham or on Youtube.

Is there:
- a more precise/formal description for this practice that I could google
- even better, a clear thorough description somewhere someone can point me to

And is it related to/same as a share SPLIT? Maybe it's a REVERSE split?

Unfortunately the word is used to describe quite a variety of things.


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## Ann

TiminOz said:


> WHAT ~IS~ CONSOLIDATION exactly?
> 
> Hi traders!
> 
> I'm a newbie who is interested in a stock that was consolidated in the past, so I want to find out what it actually is.
> 
> There doesn't seem to be any reference on Investopedia, in Graham or on Youtube.
> 
> Is there:
> - a more precise/formal description for this practice that I could google
> - even better, a clear thorough description somewhere someone can point me to
> 
> And is it related to/same as a share SPLIT?
> 
> Unfortunately the word is used to describe quite a variety of things.




Hi Timinoz,

Yes it is a very over used word. In charting I will talk about a 'consolidation phase' that tends to be a good thing! 

However back to your question about this particular Consolidation. It is when a company decided they want to reduce the number of shares they have on issue. The appropriate avenue for a company to reduce their shares on issue is a buy-back. If they don't want to do that, they just have to sneak a resolution into their Annual General Meeting saying they are going to Consolidate their shares by turning say 40 shares into 1 share or even 200 shares into 1 share on such and such a date. This effectively can reduce an original holding of say $10,000 worth of shares to maybe $10  or nothing depending on how much the shares were at the time of Consolidation. Hope that makes it clearer...if not please ask for some more explanation.

A share split is when they give you extra shares for nothing but the value tends to be reduced. I have actually done really well with share splits in the past.


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## Ann

TiminOz said:


> WHAT ~IS~ CONSOLIDATION exactly?
> 
> Hi traders!
> 
> I'm a newbie who is interested in a stock that was consolidated in the past, so I want to find out what it actually is.




......and then after the Consolidation at some time in the future they issue millions of new shares and then do a massive share placement of millions of shares to some venture capitalist thereby diluting the stockholders share value who were foolish enough to buy into a shifty bit of junk after Consolidation. Still interested in the stock you were looking at?
This stuff is fine for the day trader or those who don't mind losing their money on a short punt. I prefer to stay well away.


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## Triple B

Hi Ann. Have you been keeping an eye on CXZ. Most interesing .  When I first
 posted share price was 1.2c  . now about 1.7c close Friday. thats about 41% gain
This move should now attract "penny stock"traders as they screen for movers. The more that find it the more buying there should be . Also consider this company was at one stage $36.00  (no Typo)
I expect the big news at the end of Jan when the buy back is complete. They may even have some negative news before then to help keep a lid on things .
I Might Start a Hunting for pennies thread as I will be more relevant than having it here as this is more for the consolidators.


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## Triple B

Hi Tim . The real trap is for the unwary investor who does not read the asx  news every day on their investment. The company needs to inform holders of an upcoming vote on the consolidation.(I assume)
That is the time to get out. (when the notice to vote comes out) .  If the vote is positive for the consolidation there may be a week or more till that happens. Now is the second chance to get out.
Sometimes there may be a trading halt after(or before  in the case ann shows above) the vote and you get trapped in. Read the article ann posted above about what happened to old mate in TEN. His numbers were off but he still lost the lot.


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## Triple B

CXZ news of GM roll out out today. now at 0.018


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## TiminOz

*USEFUL EXPLANATION about STOCK CONSOLIDATION for NEWBIES (I hope),
BUT ALSO A QUESTION*

Hey guys,

(For the purposes of educating my newbie self,)

I've now had a really good read about
*SHARE CONSOLIDATIONS / REVERSE SCRIPS / REVERSE SPLITS (all the same thing).*

My understanding is:
*1) Technically, there is no drop in the value of your holdings
2) However is it potentially a warning of problems which MAY reduce the value of your holdings (even soon)*

Expanding on 1):
If they turn your five $1 shares into 1 share, that 1 share is priced at $5.
So the value is exactly the same.

[SIDEBAR: Old mate mentioned in the SMH seems to have misunderstood what was going on: not reaslising that each (consolidated) share was also WORTH proportionally more...So he thought he'd immediately lost money, I think....The expert replying to him seems to have noticed this and advised him to consider consulting a knowledgable broker from now on!

But of course, the reverse-scrip did not auger well and he later lost money because of the problems with the company.

[SIDEBAR WITHIN SIDEBAR: regardless of any nefarious conduct, it's also clear that - at least for a while - people thought net advertising would kill TV advertising...I myself always doubted this. I've clicked on two ads in 20 years! TV ads are far, far more noticable!]
]

*The reason they do it is mainly to increase the headline price of the shares, 
especially to:*
- make them seem more attractive, which is yes, pure marketing
- to prevent delisting on a certain exchange (because the price is too low)
- to prevent falling off the list of potential buys of certain players (ditto)
- because they are making some kind of new offer (eg a subsidiary???), which they (genuinely?) believe is worth more and so they don't want the poor current price of their stock to (unfairly?) influence that?
- and perhaps other reasons I can't remember lol !

(A few articles about all this on Investopedia)
*
Please feel free to correct me if any of this is wrong,*
...and question below!


----------



## TiminOz

*Question for Ann or others...'Marketable parcels'?*

Ann,
you mentioned something about consol' causing a problem with 'marketable parcel'(s)...something perhaps about being left with a quantity that can't be sold?

Could you elaborate?

In principle I can already see this:
Its surely easy to sell 20 apples at $1 each
than 5 parcels of apples (that cant be broken up) at $5 each...
For one thing, each parcel is more pricey...

That's all I've worked out so far....
_________________________________

I also seem to remember that if your holding doesn't quite match the new division of shares, they will do one of the following:
- round your holding up
- send you a cheque or ask you to donate it to charity
- or even keep it for the company (not so keen on that one!)
...but that could vary with country, and may have actually been related to SCRIPS/SPLITS rather than REVERSE script/splits, or perhaps even to rights issues?
(Argh I'm a bit confused there!)


----------



## TiminOz

*Throwing out a small 'challenge' to a point Ann made !*

Hey Ann,
(from memory) you said that some companies will do a consol to make the co more attractive to someone like a a venture capitalist...

I can see how this might happen if the consol leads to increased interest and therefore the post consol price itself goes up....

But surely a venture capitalist wouldnt be fooled by the 'marketing' aspect of the shares suddenly leaping in price? Wouldn't they have the smarts to know about such things?

What am I missing here?


----------



## Triple B

marketable parcel is $500 doesnt matter what the share price is
CXZ is currently buyng back share parcels under $500. You need to notify them if you dont want to sell to them. If you dont notify they will buy back the shares at the end of Jan from memory.
your $400 worth of shares at the cut off date (mid jan i think)  may then be worth $800. but they buy them back anyway as they were worth less than $500 on the cut off date.


----------



## TiminOz

*Finally, MOST IMPORTANTLY:
A question: P03 - what gives?
(For Ann and anyone else  ) *

The whole reason I even became interested in consols was your comment on P03 Ann, because I am actually thinking of getting that as my first ever stock.

My day trader friend* has it as his only long-term stock, after looking into it quite a bit.

So right now I'm looking into it.

Do you know anything else about P03 you think I should be careful about and look into further.

_______________________
* He's been doing it for about a year


----------



## TiminOz

Triple B said:


> marketable parcel is $500 doesnt matter what the share price is
> CXZ is currently buyng back share parcels under $500. You need to notify them if you dont want to sell to them. If you dont notify they will buy back the shares at the end of Jan from memory.
> your $400 worth of shares at the cut off date (mid jan i think)  may then be worth $800. but they buy them back anyway as they were worth less than $500 on the cut off date.




Why are they buying them back?
(From memory) I remember Ann (or someone) saying that a buy back was a better way to....? reduce the total number of shares in the market ??

Is it to prevent the consolidation causing too much pain for smaller shareholders?

My understanding anyway is that you only need to buy $500 the FIRST time you buy a share. 
After that you can sell any amount you want...?


----------



## Triple B

They state the cost of shareholder administration is high so reducing the number of shareholders reduces costs.
Not 100% sure on selling under $500


----------



## Triple B

looks like buy only is Min $500 but companies can legally buy back less than $500 with notice.
Companies seem to like to state in the buy back notice that share holder may have trouble selling parcels less than $500 but no mention of it being a rule. I think selling smaller parcels in the micro caps would be easier than a larger parcel!  ASX rules define a small parcel but nothing about selling. 
Would advise to check with your broker if they are happy to sell small parcels. Some have a $600 min buy limit.


----------



## Triple B

I just checked with self wealth online chat and the minimum buy is $600 . selling less than $500 is no problem.


----------



## Triple B

The thing with the consolidations are that they are not necessarily a bad thing in themselves. 
However they CAN be seen as a last resort for companies really struggling.
When a consolidation happens and you are then stuck in a trading halt , you have no control to sell your holdings. If after the halt the share price opens drastically reduced , bad luck.
It can work the other way too . A Company might have good reason to consolidate shares and the price goes up . Or the value of your shares stay the same. Old mate eg earlier was an example where someone lost the lot , and the writing was on the wall.
Think of them as a tool the directors can try to use when in trouble , or a tool for a legit positive  reason.(cant think of one ATM)


----------



## So_Cynical

Stock consolidations come in two flavours, basically recapitalising a broke company or simply a bit of a reduction in the number of shares on issue, i have a large portfolio thus have experienced a few consolidations of both variety's, some consolidations are benign others deadly.


----------



## TiminOz

So_Cynical said:


> Stock consolidations come in two flavours, basically recapitalising a broke company or simply a bit of a reduction in the number of shares on issue, i have a large portfolio thus have experienced a few consolidations of both variety's, some consolidations are benign others deadly.




Why reduce the number of shares?


----------



## Triple B

The increased share price may attract  more investors from a pchycological viewpoint , or some institutional investors may have in house rules about investing in stocks under $x.
A Company quoted at $5 LOOKs better to some than a company trading at $0.50


----------



## So_Cynical

TiminOz said:


> Why reduce the number of shares?




Depends - if a company is broke and has 1 billion+ shares on issue and trades or last traded at 1c or less then it make sense to reduce the shares on issue and thus raise the share price so more shares can be issued at the higher price - recapitalising the company.

If a company isn't broke but has a billion+ shares on issue and 500+ share holders it makes sense to do a small consolidation of say 10 or 5 to 1 and then clean up the smaller share holders by offering to buy their shares and save on admin costs.


----------



## sptrawler

Another reason for consolidation is, they sometimes get in the $hit and issue ship loads of shares to raise capital, if they get out of the $hit they then can consolidate.
Many do the first, but don't get to second base. lol


----------



## TiminOz

So_Cynical said:


> ....raise the share price so more shares can be issued at the higher price - recapitalising the company.
> 
> If a company isn't broke but has a billion+ shares on issue and 500+ share holders it makes sense to do a small consolidation of say 10 or 5 to 1 and then clean up the smaller share holders by offering to buy their shares and save on admin costs.




...so recapitalisation must occur mainly AFTER the consol, right? Because the consol itself doesn't change the total value of the company...You're saying that with the new higher price they then issue MORE shares, so they get more $....

People often talk about these share admin costs...they must be substantial...

Forgive my ignorance but how does the higher price/fewer shares help to clean out the smaller holders? (Compared to status quo?)


----------



## TiminOz

sptrawler said:


> Another reason for consolidation is, they sometimes get in the $hit and issue ship loads of shares to raise capital, if they get out of the $hit they then can consolidate.
> Many do the first, but don't get to second base. lol




I get that they issue more shares to raise cash, but why consolidate afterwards?


----------



## sptrawler

TiminOz said:


> I get that they issue more shares to raise cash, but why consolidate afterwards?



They consolidate to lift the share price, it makes the company look like it is doing better and also some larger investment companies only buy into shares above a minimum entry price.
Also for the casual observer, the consolidation doesn't show up, so wow last time I looked they were only x now they are triple that. lol


----------



## basilio

Consolidation is useful to "tidy up" numbers of small shareholders where admin costs outweigh value to the company.

But overall the real purpose is to disappear years of capital raising that has  destroyed shareholder value.As SP has pointed out it makes the company look good for the next bunch of wood ducks who can be attracted to a dump and pump. 

It is also important to realise that it is far easier to pump a company with 100m shares on issue rather than 1 billion or 5 billion. In my view the big value in many smaller shares is the opportunity to  create temporary creative markets and benefit from the short term share swings.


----------



## TiminOz

sptrawler said:


> Also for the casual observer, the consolidation doesn't show up, so wow last time I looked they were only x now they are triple that. lol




Wow that really IS dodgy...

Hence the necessity of looking up the history of documents I guess...


----------



## basilio

TiminOz said:


> Wow that really IS dodgy...
> 
> Hence the necessity of looking up the history of documents I guess...




Yeah... Good luck with that.

Tim one of the realities of the stock market is that at the smaller end there is a constant shuffling of companies coming in and out of existence. They will be mining exploration, or IT or, graphite or whatever is the latest craze. 
The intention is to capture public interest and make money on whatever is the buzz word. These forays last between 1 and 3 years before they destroy their share base and have sucked out as much as possible through extra capital raising. When the orange is squeezed dry the directors move onto the next scam.

*But it is  difficult to follow the history of these companies. They disappear. The websites go*. The stories go. In fact one of the better sources is on ASF where you might find the old discussions of these creative scams.


----------



## divs4ever

Ann said:


> 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.




 now to be fair TWO shares  i have held ( one since sold ) that have been consolidated  went on to bigger and better things ( QZL and BSL ) but both with a lot of drama  , before relearning how to fly .

 but on the average  ten 'money-pits' to one eagle  , Ann  has it just about perfect for my experiences in consolidations 

 more interesting is the case of share splits ( turning one share into  say 5 or 10 news  shares ) the longer term trends seems ( in the shares i have held doing this ) that the new share price  climbs toward  the OLD share price .. so a $10 APE share was split into  5 shares  with now trade at around $15 each ( but NOT without some dramas  in between  .. they hit $2.65 in March 2020 )


----------



## divs4ever

TiminOz said:


> Wow that really IS dodgy...
> 
> Hence the necessity of looking up the history of documents I guess...




 yes a classic trap from those glancing at charts  , and i bet PLENTY have been caught under-researched


----------



## divs4ever

basilio said:


> Yeah... Good luck with that.
> 
> Tim one of the realities of the stock market is that at the smaller end there is a constant shuffling of companies coming in and out of existence. They will be mining exploration, or IT or, graphite or whatever is the latest craze.
> The intention is to capture public interest and make money on whatever is the buzz word. These forays last between 1 and 3 years before they destroy their share base and have sucked out as much as possible through extra capital raising. When the orange is squeezed dry the directors move onto the next scam.
> 
> *But it is  difficult to follow the history of these companies. They disappear. The websites go*. The stories go. In fact one of the better sources is on ASF where you might find the old discussions of these creative scams.



 a cynic might suggest THAT is exactly why it happens .. a double  whammy USUALLY ( but not always ) is a name change AND share consolidation  , that really makes it hard for the novice .


----------



## basilio

divs4ever said:


> a cynic might suggest THAT is exactly why it happens .. a double  whammy USUALLY ( but not always ) is a name change AND share consolidation  , that really makes it hard for the novice .



The* point* of being a novice is that you are easier to fleece 
Honestly ,  well I don't think that is an appropriate word for many stock market practices.
Think of it as wild west where the winner is the one who can make the most money and how that is done is pretty well immaterial.

Anyway welcome to ASF.  Fair to say that there is some excellent talent in this forum who are willing and capable of offering insights into investment opportunities as well as trying to make a buck out of trading.  

Cheers.


----------



## divs4ever

since the Commsec Community is closing down at the end of the week , MAYBE there will be more  , new members 

 am not very talented at trading , but i know that already and NORMALLY stick to longer term holds 
 i initially plan to hold a stock forever BUT can change my mind when new information arrives , and it is just sensible to take some profit ( the original investment cash )

 so i would term myself an investor .. who takes passing opportunities 

 my prime focus  is to create an income source for the rest of my life ( via div. income )

 and boy last year did that get put to the test


----------



## basilio

divs4ever said:


> am not very talented at trading , but i know that already and NORMALLY stick to longer term holds
> i initially plan to hold a stock forever BUT can change my mind when new information arrives , and it is just sensible to take some profit ( the original investment cash )
> 
> so i would term myself an investor .. who takes passing opportunities
> 
> my prime focus  is to create an income source for the rest of my life ( via div. income )



 Good luck to you then Div.

With that philosophy you might be interested in checking out the FMG thread and VC's  historical analysis of the stock.   But as usual DYOR


----------



## divs4ever

i missed my target price on FMG several years back and had a second disappointment when management  offered the interest-bearing equities to the internationals  , i would have loved 8% return on FMG bonds/notes  and Twiggy would have had the debt in $A ( not $US )

 further more  a crafty management might have offered to convert them into shares  after a while  , i think some local investors would been actracted by that 

i would rather be holding FMG debt than ( big 4 ) bank  debt currently 
 but for the record , currently ,  i have very little exposure to that sort of investment ( between 2011 and 2016 i was having a ball in that area )

 with FMG now  , i wonder  how to factor in political risk  , after all the goodwill FMG has created in the past ( not management's fault they are in the middle of a soft trade war )

 but thanks  will check that ( and elsewhere later ( i haven't been lurking outside  before i joined  so i have a LOT to explore )


----------



## Joe Blow

divs4ever said:


> since the Commsec Community is closing down at the end of the week , MAYBE there will be more  , new members




Please feel free to point them in this direction. We are always happy to welcome new members, expecially in circumstances where an existing platform is shutting down and there will be people searching for a new home to continue discussing ASX-listed companies and financial markets.


----------



## divs4ever

i can only hope they come , some are class acts , and have plenty of experience  behind them 

 cheers


----------



## Value Collector

sptrawler said:


> They consolidate to lift the share price, it makes the company look like it is doing better and also some larger investment companies only buy into shares above a minimum entry price.
> Also for the casual observer, the consolidation doesn't show up, so wow last time I looked they were only x now they are triple that. l





Ann said:


> 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.



Share consolidations do not affect the value of a company at all.

If you “Lost money” in a share consolidation it would be because the company was already on the way down any way.

If you owned 1% of the company before the share consolidation you will own 1% after it, Yes you own less shares, but so does everyone else, the company is the same company and you still own the same size piece.


----------



## Value Collector

sptrawler said:


> They consolidate to lift the share price, it makes the company look like it is doing better and also some larger investment companies only buy into shares above a minimum entry price.
> Also for the casual observer, the consolidation doesn't show up, so wow last time I looked they were only x now they are triple that. lol



Just like a share split, the charts and all the historical information is adjusted to reflect the change.

eg, after a consolidation you don’t see the price rise in the chart, the charts are adjusted.


----------



## divs4ever

invitation extended  , let's see who comes 

 cheers


----------



## divs4ever

Value Collector said:


> Just like a share split, the charts and all the historical information is adjusted to reflect the change.
> 
> eg, after a consolidation you don’t see the price rise in the chart, the charts are adjusted.



NOT always  , some places are rather lazy  , i have been saved one or twice by tracking the shares on issue ( if they don't change their name as well )

 the extra bit of caition can save a few tears later

 i noticed a member linking Delisted.com  , that site has saved me from grief a few times as well  .. well worthy of a bookmark ( imo )


----------



## divs4ever

TiminOz said:


> *USEFUL EXPLANATION about STOCK CONSOLIDATION for NEWBIES (I hope),
> BUT ALSO A QUESTION*
> 
> Hey guys,
> 
> (For the purposes of educating my newbie self,)
> 
> I've now had a really good read about
> *SHARE CONSOLIDATIONS / REVERSE SCRIPS / REVERSE SPLITS (all the same thing).*
> 
> My understanding is:
> *1) Technically, there is no drop in the value of your holdings
> 2) However is it potentially a warning of problems which MAY reduce the value of your holdings (even soon)*
> 
> Expanding on 1):
> If they turn your five $1 shares into 1 share, that 1 share is priced at $5.
> So the value is exactly the same.
> 
> [SIDEBAR: Old mate mentioned in the SMH seems to have misunderstood what was going on: not reaslising that each (consolidated) share was also WORTH proportionally more...So he thought he'd immediately lost money, I think....The expert replying to him seems to have noticed this and advised him to consider consulting a knowledgable broker from now on!
> 
> But of course, the reverse-scrip did not auger well and he later lost money because of the problems with the company.
> 
> [SIDEBAR WITHIN SIDEBAR: regardless of any nefarious conduct, it's also clear that - at least for a while - people thought net advertising would kill TV advertising...I myself always doubted this. I've clicked on two ads in 20 years! TV ads are far, far more noticable!]
> ]
> 
> *The reason they do it is mainly to increase the headline price of the shares,
> especially to:*
> - make them seem more attractive, which is yes, pure marketing
> - to prevent delisting on a certain exchange (because the price is too low)
> - to prevent falling off the list of potential buys of certain players (ditto)
> - because they are making some kind of new offer (eg a subsidiary???), which they (genuinely?) believe is worth more and so they don't want the poor current price of their stock to (unfairly?) influence that?
> - and perhaps other reasons I can't remember lol !
> 
> (A few articles about all this on Investopedia)
> 
> *Please feel free to correct me if any of this is wrong,*
> ...and question below!



TECHNICALLY , you are correct  , but investors are human  and many have an opinion  that say , stock 32z is a dud  , not matter what the stock price is , impatient sellers want to leave at any price they can get , but few want to buy ( at all )  .. so , since 0.1c is the official lowest share-price an ASX listed  share price can go to  , that is the trend ( MOST ) share consolidation  stocks take  ... remember the share was drifting lower BEFORE the consolidation because it wasn't exciting buying interest  , unless management improves that disinterest will continue but the share price has more room to slide .

 in my experience less than one in ten  resist that trend 

 one exception was BSL  a few years back 

 from June 2011 to  June 2012  i was buying BSL from  $1.19 down to 27c  and the share become 'a trader's toy ' ( still had huge assets and market cap , so instos could lend the shares out , and @ 30( ish) cents a share even retail traders can have fun and profit 

 so BSL management decided to do a consolidation to reduce the attractiveness to short-term  traders  a six into one  consolidation and about the same time did a capital raising  , this tactic worked for BSL ( probably because is still had assets and a growth path ) but often fails elsewhere .

 ANOTHER reason some ( internationally ) listed  companies choose to consolidate is because of requirements to stay listed on that stock exchange  , from memory some US exchanges demand the share price stay above $US 10   so the Aussie version of that share ( if dual listed ) is ten ASX listed shares to one US share


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## MovingAverage

Interesting thread and good read.

I'm a system trader so generally don't dig too deep into this stuff. However this thread has peaked my interest in two of my current holdings that have recently gone through a consolidation. Those holding are AVG and COG. Overall this consolidation hasn't really impacted me significantly, I still hold marketable parcels and my open profit as a percentage still remains pretty much in line with the pre-consolidation open % profit. AVG consolidation even had a small little benefit of returning some capital.

So I'm curious, from those in the know and those that closely followed the AVG and COG consolidations--where these companies trying to fix up any sins of the past?

Stay classy ASF


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## divs4ever

i DON'T follow either of those two closely  ( but maybe should pay more attention  to AVG in the future  , cheers for that i need a replacement for CCL , maybe this will do  )

 from my limited knowledge on AVG  'sins' might be a bit harsh  , with a rival like fund manager darling TWE , it was always in the shadows  the good reactions ( in the wine trade ) went to TWE  first  the others sometime later  , and the bad news hit the small players first ,

 other members will give a better opinion   but i would call AVG  'a second hand Rose' where prestige is everything ( the wine industry )

 cheers

i could be wrong but COG seems to have changed it's business model since i last looked  so can't help there


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## Value Collector

divs4ever said:


> NOT always  , some places are rather lazy  , i have been saved one or twice by tracking the shares on issue ( if they don't change their name as well )
> 
> the extra bit of caition can save a few tears later
> 
> i noticed a member linking Delisted.com  , that site has saved me from grief a few times as well  .. well worthy of a bookmark ( imo )



If a share is say 10 cents on the 1st of March, and the do a 1 for 10 consolidation on the 2nd of March, none of the credible data providers, stock broking sites or the ASX will show charts that make it look like the stock suddenly went from 10 cents to $1.

The charts and data tables will all be updated, and it will now show the share as being worth $1 on the ist of March.

if you are talking about delisted stocks etc I don’t know about that, but more original point is still true, you don’t own less of the company, just the number of pieces changes.


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## Value Collector

MovingAverage said:


> Interesting thread and good read.
> 
> I'm a system trader so generally don't dig too deep into this stuff. However this thread has peaked my interest in two of my current holdings that have recently gone through a consolidation. Those holding are AVG and COG. Overall this consolidation hasn't really impacted me significantly, I still hold marketable parcels and my open profit as a percentage still remains pretty much in line with the pre-consolidation open % profit. AVG consolidation even had a small little benefit of returning some capital.
> 
> So I'm curious, from those in the know and those that closely followed the AVG and COG consolidations--where these companies trying to fix up any sins of the past?
> 
> Stay classy ASF



The main reason for consolidations is for cosmetic reasons, Some funds actually have rules against their managers buying into shares less than $1.

So to make their shares more appealing, and avoid looking like a penny dreadful, they can consolidate their shares into a more valuable unit over $1.

In general though, if a share price has drop so low that management are considering a consolidation then things must have been going wrong for a while.

of course having your share price rise so high that management need to do a share split is better than having the share price drop to where it needs to be consolidated.


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## divs4ever

Value Collector said:


> The main reason for consolidations is for cosmetic reasons, Some funds actually have rules against their managers buying into shares less than $1.
> 
> So to make their shares more appealing, and avoid looking like a penny dreadful, they can consolidate their shares into a more valuable unit over $1.
> 
> In general though, if a share price has drop so low that management are considering a consolidation then things must have been going wrong for a while.
> 
> of course having your share price rise so high that management need to do a share split is better than having the share price drop to where it needs to be consolidated.



 i have bought several shares that traded under $1 at the time ( PME , NST , EVN , AX1  was  RCG back then ) and all went on to bigger and better things without the need of a consolidation  , if your company is well run  somebody similar to me will find it and put a few $$$ into it  when the price is tempting  ( by the way all of them were paying divs while under $1   when i bought them )

 that might be a handy screen for those starting out 

 share price under $1 and pays divs. ( more than one previously ) and THEN start researching  from there  , your $500 buys a useful number of shares ( surely you are not going to put big $$$ omn a micro cap as a beginner )

 now some funds once they buy in get rather pushy ( even want to impose directors and ) are those the funds you want interested , now SOL  is a well known example of that  but MOST times it all ends well  , some others end badly for the smaller investor 

 i would suggest  that the comsmetics style consolidation should have you looking ( examing ) the company very closely  , it may be desperation or just some mew ambitious director  but remember one thing  SHARE CONSOLIDATIONS COST MONEY AND TAKE TIME  ... ALWAYS  are those resources being wisely used  , now a less common  consolidation theme  is to consolidate a company making tiny profits but can pay dividends  once the consolidation is all settled in  , once a company can pay regular divs , the momentum MIGHT start .

 regarding share splits .. they are very rare in Australia and SOMETIMES investors ( imexperienced ones ) are confused  so the share price DROPS for a short while  giving you a better entry .. i was hoping for that when MLT split but i missed my target  , meanwhile BKL so far has steadfastly  refused to do a share split  .

 and yes normally the share price is in the doldrums for a fair while before a share consolidation is organized  ( except those US shares i was talking about earlier where the company NEEDS to stay listed on the exchange so must stay above a certain price )


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## divs4ever

Value Collector said:


> If a share is say 10 cents on the 1st of March, and the do a 1 for 10 consolidation on the 2nd of March, none of the credible data providers, stock broking sites or the ASX will show charts that make it look like the stock suddenly went from 10 cents to $1.
> 
> The charts and data tables will all be updated, and it will now show the share as being worth $1 on the ist of March.
> 
> if you are talking about delisted stocks etc I don’t know about that, but more original point is still true, you don’t own less of the company, just the number of pieces changes.



 but SOME of those data feeds are not credible  , slightly off topic , but one platform i trade with  uses the Dow Jones Newswires  and the messup with ticker codes on the news feeds has been going on for at least 3 years  , normally it will prefer a NZ ticker code over an ASX one , but the confusion can get worse than that  .. sometimes you have highly traded shares confused with a share that may not trade twice a year  ( and it snags the occassional pro-trader as well ) 

so Dow Jones Newires can make repeated errors for 3 years ( plus ) despite various forum member 'comments ' ( some might say sarcasm )

 how many others make such slip ups  say once a year  easy enough to miss  a release during reporting season 

 now the experienced folks  would glance at a stock and see 32X   at $1.50  and go WHAT THE  ??? he would know it hasn't made a profit in 4 years  and has never been on his radar before  , but the novices especially when the market is roiling  , maybe not they MIGHT mistake for a rocket 

 delisted stocks ALSO gives you a brief history  of shares that change their names , go in and out of administration , change from on stock exchance to another  , worth the effort of bookmarking the site  , and when you are digging  around for new penny stocks on the weekend  , worth double checking that new gem ( to make sure it isn't a mutt with a new collar )


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## aus_trader

Share consolidations can be a way to bring a stock back from the grave sometimes. Not talking some theory, this happens in real life on rare occasions.

Recent example is Ookami Ltd (OOK) which went into a trading halt for 2 years and did a massive consolidation to reduce the issued shares and relisted. I think the stock was likely to be de-listed but bought back to the exchange with the massive haircut.

I guess better to get 10c on the dollar and re-list on the exchange than being totally wiped when a company bankrupts itself (technical term is voluntary administration) and de-lists.


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## frugal.rock

What I have noticed with consolidations is, the consolidated shares trade under a deferred settlement (Def set) ticker for a week or so under a slightly different ticker code, usually 2 letters added onto normal ticker.

When this ticker starts, obviously there's no preexisting orders in the market and the last traded price isn't shown. Brokers show last traded price as $0.00

I believe this is where some stocks come undone due to unscrupulous types entering buy orders around the preconsolidated price, that is, the last traded price.
Seemingly, there's some dumb sellers that go in for the same price! (and scammers...)

When I witnessed this activity, I placed a buy order at what should be the new consolidated price, based off consolidation ratio and last price traded.
I also added a sell well  above the last traded X consolidated price.

This alerts others to the shenanigans of dog tactics, hopefully.

The whole potential scam thing could be avoided if the ASX and ASIC agree to use the last traded price multiplied by the consolidation ratio to provide an adjusted last traded starting price.

It seems such a simple thing to do to stop unscrupulous activity around consolidations.

Maybe we should start a petition?


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## Dona Ferentes

frugal.rock said:


> What I have noticed with consolidations is, the consolidated shares trade under a deferred settlement (Def set) ticker for a week or so under a slightly different ticker code, usually 2 letters added onto normal ticker.
> 
> When this ticker starts, obviously there's no preexisting orders in the market and the last traded price isn't shown. Brokers show last traded price as $0.00



Maybe when T+2 goes the way of the dinosaur, there will be no need. Should all happen 'in a flash'.



frugal.rock said:


> I believe this is where some stocks come undone due to unscrupulous types entering buy orders around the preconsolidated price, that is, the last traded price. Seemingly, there's some dumb sellers that go in for the same price! (and scammers...)
> 
> When I witnessed this activity, I placed a buy order at what should be the new consolidated price, based off consolidation ratio and last price traded.
> I also added a sell well  above the last traded X consolidated price.



I have noticed the same price action around shares going _ex-dividend_, on occasion. Doesn't seem to last more than a few trades (minutes/ hours).


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## noirua

Norseman Gold PLC now Tulla Resources PLC ASX: TUL had a consolidation of one share for every 600 shares.  In this case like some others, shares were issued to the loan companies to such an extent the eventual share price would have started on the ASX, on its return after many years, at 0.15c a share with a spread of 0.1c - 0.2c - the lowest allowed - so the share would only rarely trade at all.  Not that the ASX would have accepted that anyway.

Tulla Resources PLC for some reason retains its London registration. Even though the company's investments are all Australian and its directors - there is no London quotation. Nearly all its shareholders are UK based with very small holdings under $500.  So the oddship Tulla sales on.


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