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Problem with IOC is that the available short is not 48 million shares. It is about 20-30% of that. I think a split may help, but ultimately a deal will subscribe inherent non-speculative value and create a floor to the pps.
Then comes supply and demand. There will be new demand created by that value and there will be a new demand created by other firms covering IOC and "selling" it to their retail clients.
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With 40+ prospects and leads, at least 10 of which have possible reefs, with large amounts of development work in infrastructure and plant and multiple wells per field costing at least $25M per well, how can they ever have enough cash?
Which is one reason why I liked the EWC modular plan so much, most of that would have been paid out of future cash flow. The Exxon deal is somewhat similar although I don't think will be as profitable.
Still, IOC has so many business uses for cash that I think large dividends or buybacks are wasteful.
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The problem with IOC is the float, the percentage of total shares that are available for trading. A stock split won't change that.
The small float makes it possible for manipulation of pps.....that along with a cooperative mm.
IOC needs a deal that monetizes the assets and the major stockholders need to stop lending their shares for a few bucks.
That will create any short squeeze that may be available.
I am not convinced that the shorts are all that vulnerable to a squeeze. With both long and short accounts together with options positions, a short squeeze may not be in the cards. Just sayin.....
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In my opinion from numerous chats with management that IOC wants a stock split after the deals announced. They would like the stock to trade in $20's. Maybe a 5 for 1 split to start. That puts 5 times more shares in the float than today. The money required to control the stock would have to got up as the stock price will have risen post deal. Sam did an extensive analysis which he sent to IOC mgt as regards a a stock buyback and this CFA proved with his excel model the worth of a share buyback. Today we have a new CEO and things can change. It was the IOC IBers that were advising IOC to split the stock based of years of doing these type deals and knowing how the markets work. Notice the stock split happens after they announce the deals(plural).
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Everything splits. Heres an example. One owns Jan 2014 $80 strike options quantity say 10 contracts. Post split one owns 20 contacts with a Jan 2014 expiration with a $40 strike.
