# Share Consolidation.... Good or Bad?



## amohonour (2 November 2005)

Are consolidations usually a good thing or not?


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## happytrader (2 November 2005)

*Re: consolidation.........Good or Bad*

Hi Amohonour

Personally I think consolidation is dodgy if you are sitting in it because you can never be sure which direction it is going to take when it finally breaks out.  Generally the longer the period of consolidation the stronger the breakout will be.  If you are an optiontrader you would do well to get out after 3 days of consolidation to avoid risk and loss of time. After all you can always jump back in when the direction is clear.

These are my only thoughts and are not to be taken as financial advice or recommendation. 

Cheers 
Happytrader


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## Kauri (2 November 2005)

*Re: Consolidation.... Good or Bad?*



			
				amohonour said:
			
		

> are consolidations usually a good thing or not





  I guess if it breaks the way you are trading it then it is good.       what kind of consolidations are you referring to,  rectangular, flag, triangle, saucers .....?


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## amohonour (2 November 2005)

*Re: Consolidation.... Good or Bad?*

sorry meant consolidation of shares 10 for 1


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## Kauri (2 November 2005)

*Re: Consolidation.... Good or Bad?*

I never see it as a good sign...usually done with low priced stocks that have masses of scrip due to a history of raisings and issues.. artificial way of raising the sp and also enabling them to embark on more raisings. (MUL, if it survives, will probably be going down this path)


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## amohonour (2 November 2005)

*Re: Consolidation.... Good or Bad?*

thanks kauri


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## bvbfan (2 November 2005)

I don't like consolidations as the share prices of the stocks I've followed generally drop after the consolidation.
ERG is probably the stand out, was consolidated and now shares have dropped to where they were prior to the last consolidation.

Some companies need a consolidation, BDG did it and have sort of recovered quite well.
I wouldn't mind seeing OXR do one


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## Fleeta (2 November 2005)

If you want an example, look no further than CBD...

Was always around 1c share. So they went 50-1 and share price became 50c. Soon afterwards, it was 6c. 'Nuff said.


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## krisbarry (2 November 2005)

MXA turned into LVL and then consolidated too.  It went downhill rapidly, mind you the legal problems/challenges that LVL faced didn't help either.

Although on the positive side the shares on issue reduces too, so a much greater chance of some real movement taking place.  Patience is required while stocks go into deffered settlement etc.


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## amohonour (3 November 2005)

i hear what your saying and seem to think that it will have that very problem with one im in oh well will ride it out and see bit concerned atm


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## bvbfan (3 November 2005)

Consolidations also are a way of improving the fundamentals like EPS and other ratios.
Same profit over less shares will increase EPS


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## amohonour (3 November 2005)

can someone tell me how long it usually is before your portfolio gets rectified when this occurs thanx


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## krisbarry (3 November 2005)

Give it a couple of months.


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## bvbfan (3 November 2005)

Give your broker a call, had to do it once with Westpac after a consolidation with one company.
Took a little while to get it fixed in the portfolio.
Share registry should send new holding statements at the end of the calendar month


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