Transfer Agents and why is share structure is important

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Welcome to Chedsblog!   
Helping new traders avoid my old mistakes-
OTCBB Pennystock trading article topics include:

Reading financials and filings
Market makers 
L2 and chart analysis
Understanding the competition
Using social media to trade
Price and volume study
Bankroll management
Game theory
Sub .01 low float setups
Interviews with influence makers

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    What do people mean when they say “share structure”. Why is that important?

    Share structure refers to in a nutshell how many shares are out there of a given stock, which gives you an idea of the relative value of one share of the stuck versus the market capitalization of the “company”.

    Here is a snapshot of share structure from a company on OTCmarkets.com

    Market Value1 $18,800,435 a/o Nov 11, 2015
    Authorized Shares 4,800,000,000 a/o Jun 30, 2015
    Outstanding Shares 4,177,874,418 a/o Jun 30, 2015

    Always pay attention to the date at the right. often this is not the most current info. You need to look at their filings, the most recentl 10Q or 10K, or go to state website and check there. A very large percentage of these tickers are from Florida and Nevada.

    Check for info here:
    http://www.sunbiz.org/                       Florida
    http://nvsos.gov/sosentitysearch/        Nevada

    Always search by company name.

    Authorized Shares:
    http://www.investopedia.com/terms/a/authorizedstock.asp

    DEFINITION of ‘Authorized Stock’

    The maximum number of shares that a corporation is legally permitted to issue, as specified in its articles of incorporation. Authorized stock, also known as “authorized shares” or “authorized capital stock,” is also usually listed in the capital accounts section of the balance sheet. Authorized shares should not be confused with outstanding shares, which are the number of shares the corporation has actually issued that are held by the public.


    BREAKING DOWN ‘Authorized Stock’

    The number of authorized shares is typically higher than those actually issued, which allows the company to sell more shares if it needs to raise additional funds. For example, if a company had 1 million authorized shares, it might only sell 500,000 of the shares during its IPO. That would leave 500,000 shares unissued. The company might distribute some as stock options to attract and retain employees. It might sell others in a secondary offering to raise more money in the future. Another reason a company might not want to issue all of its authorized shares is to maintain a controlling interest in the company and prevent the possibility of a hostile takeover.
    Amazon’s corporate charter, for example, states the company’s total authorized stock shall include 5 billion shares of common stock and 500 million shares of preferred stock. The charter permits Amazon to increase its authorized stock if there isn’t enough unissued common stock to allow the conversion of preferred stock. Corporate charters often require shareholder approval to increase the number of shares of authorized stock.
    One reason an investor might want to know how many authorized shares a company has is to analyze the potential for stock dilution. Dilution reduces a stockholder’s share of ownership and voting power in a company and reduces a stock’s earnings per share when new stock is issued. The larger the difference between the number of authorized shares and the number of outstanding shares, the greater the potential for dilution.


    Cheds Breakdown:

    The limit for how many shares can be printed. The maximum amount of water you can pour into a cup before its full.


    Outstanding shares:
    http://www.investopedia.com/terms/o/outstandingshares.asp

    DEFINITION of ‘Outstanding Shares’

    Outstanding shares refer to a company’s stock currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders. Outstanding shares are shown on a company’s balance sheet under the heading “Capital Stock.” The number of outstanding shares is used in calculating key metrics such as a company’s market capitalization, as well as its earnings per share (EPS) and cash flow per share (CFPS).
    A company’s number of outstanding shares is not static, but may fluctuate widely over time. Also known as “shares outstanding.”


    BREAKING DOWN ‘Outstanding Shares’

    Any authorized shares that are held by or sold to a corporation’s shareholders, exclusive of treasury stock which is held by the company itself, are known as the outstanding shares. In other words, the number of shares outstanding represents the amount of stock on the open market, including shares held by institutional investors and restricted shares held by insiders and company officers.
    A company’s outstanding shares can fluctuate for a number of reasons. The number will increase if the company issues additional shares. Companies typically issue shares when they raise capital through an equity financing, or upon exercising employee stock options or other financial instruments. Outstanding shares will decrease if the company buys back its shares under a share repurchase program.

    How to Locate the Number of Outstanding Shares

    In addition to listing outstanding shares, or capital stock, on the company’s balance sheet, publicly traded companies are obligated to report the number of issued and outstanding shares, and generally package this information within the investor relations sections of their websites, or on local stock exchange websites. In the United States, outstanding shares numbers are accessible from the Securities and Exchange Commission (SEC) quarterly filings.


    Cheds Breakdown:

    Number of printed shares so far, and the key component in figuring out market capital so.

    1million oustanding shares times a price of .01 is a 1 million $ market cap



    Float
    http://www.investopedia.com/terms/f/floating-stock.asp

    DEFINITION of ‘Floating Stock’

    The number of shares available for trading of a particular stock. Floating stock is calculated by subtracting closely-held shares and restricted stock from a firm’s total outstanding shares. Closely-held shares are those owned by insiders, major shareholders and employees, while restricted stock refers to insider shares that cannot be traded because of a temporary restriction such as the lock-up period after an initial public offering. A stock with a small float will generally be more volatile than a stock with a large float, apart from having limited liquidity and wider bid-ask spread. Because of these issues, institutional investors seldom invest in low-float stocks. Also known as share float or simply “float”.

    BREAKING DOWN ‘Floating Stock’

    A company may have a large number of shares outstanding, but a fairly limited float. For example, let’s say ABC Co. has 50 million shares outstanding, with major stakeholders as follows – Institutions 25 million, XYZ Company 10 million, Management and Insiders 5 million, Employee Stock Ownership Plan (ESOP) 2 million. Floating stock is therefore only 8 million shares (i.e. 50 million – 42 million), or 16% of outstanding shares.
    Low float is typically an impediment to active trading. This lack of trading activity makes it difficult to exit long positions in stocks that have limited float.
    The amount of a company’s floating stock will typically go up over time. This occurs because companies may sell shares in a secondary offering to expand the business or make an acquisition, or periodically when employees exercise their stock options.
    Other corporate actions can also have a significant impact on floating shares. A share buyback, for example, decreases the number of outstanding shares, so floating shares as a percentage of outstanding stock will go down. Similarly, while a share split will increase floating shares, which may provide a temporary boost to the stock, a reverse split decreases float and makes it harder to borrow, which is a deterrent to short-sellers.

    Cheds Breakdown:
    Basically, float is how many shares are actually tradable from the OS. So if the OS is 1 million shares and the CEO owns 800k, the float is 200k shares which can be bought and sold by retail.





    Transfer agent. What is a transfer agent and what does it mean when they are gagged?

    http://www.investopedia.com/terms/t/transferagent.asp

    https://www.sec.gov/divisions/marketreg/mrtransfer.shtml

    DEFINITION of ‘Transfer Agent’

    trust company, bank or similar financial institution assigned by a corporation to maintain records of investors and account balances and transactions, to cancel and issue certificates, to process investor mailings and to deal with any associated problems (i.e. lost or stolen certificates).


    BREAKING DOWN ‘Transfer Agent’

    Because publicly-traded companies, mutual funds and similar entities often have many investors who own a small portion of the organization, require accurate records and have rights regarding information provision, the role of the transfer agent is an important one. Some corporations choose to act as their own transfer agents, but most choose a third-party financial institution to fill the role.


    Cheds Breakdown:

    So, these are the guys who handle all the shares for the company.  The transfer agent knows how many shares in outstanding, how many are authorized, how big the float is etc. You can also think of them as a lawyer for the company. If you want to know how big the OS is, you cant ask company directly you have to ask the transfer agent.

    How do find out transfer agent? Go to OTCmarkets.com. Type in the company symbol, and at the left click on “company profile”

    The transfer agent will be listed, usually with a phone number and or an email address.

    here is an example:
    For LATX, look at the right where it says “security details”. You see:

    Transfer Agent(s)
    Signature Stock Transfer, Inc.



    If you click on the link, you will get this information
    Transfer Agent 2632 Coachlight Court
    Plano, TX 75075
    972-612-4120
    signaturestocktransfer@msn.com

    You can call or email the transfer agent. Say you are a share holder and would like the most up to date share structure. What is the AS, what is the OS and what is the float?
    If they are ‘gagged’, they will tell you to contact the CEO for that information. The TA’s which are not ‘gagged’ will give you the information, and having this up to date information can be very helpful.
    Welcome to Chedsblog!   
    Helping new traders avoid my old mistakes-
    OTCBB Pennystock trading article topics include:
    Reading financials and filings
    Market makers 
    L2 and chart analysis
    Understanding the competition
    Using social media to trade
    Price and volume study
    Bankroll management
    Game theory
    Sub .01 low float setups
    Interviews with influence makers
      OTCBB Penny Stocks Trading Market Makers L2 Charts Technical Analysis Financials Learning Discipline Networking Planning Bankroll Management Taking Profit Paper Trading Options Nasdaq NYSE Small Cap Stock Picks Alerts Bashers Growth Pennystock Sub Penny List Stop Loss Top Hot




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