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  • A-Power and AgFeed: The Importance of a Strong Balance Sheet [View article]
    First off, to address your point. This is Econ 101: if you borrow money, current investors get the benefit of the increased earnings. If you issue more shares, the now diluted base gets a reduced EPS benefit.

    Borrowed money is riskier, but more beneficial if you're successful.

    The true issue here is that FEED is in a commodity business and they are going to suffer typical commodity volatility in their margins. They are finding out the hard way that they need more equity to survive the current downturn. There is no way they grow earnings 100% next year unless business conditions turn. Don't be surprised if they need to issue more shares again. And, ask yourself this...if they grow earnings 50% but need to issue 100% more shares, how are you looking?

    I can't predict when the cycle turns or what FEED will earn, but I can say that APWR doesn't need to dilute anyone to stay strong for the next cycle. They are better positioned due to their balance sheet.

    On Jan 01 03:45 PM always wrote:

    > issuing shares is like printing money. way better than borrowing
    > to expand for the upcoming hong kong sales.
    > if you dilute shares by 30% and increase profit by 100% how did you
    > hurt the original shares holders.
    > if you sell 5 mil in shares and put it in the bank, how did you reduce
    > the value of the entity?
    > On Dec 31 07:58 PM ChinaStockGuru wrote:
    Jan 2, 2009. 11:44 AM | Likes Like |Link to Comment
  • A-Power and AgFeed: The Importance of a Strong Balance Sheet [View article]
    FEED must feel their balance sheet is weak, or they wouldn't be issuing shares. I'm just pointing out what the company is telling us. And, no, I'm not short. My positions are in the disclaimer.

    On Dec 31 12:37 PM PNG wrote:

    > Where does China Guru get a weak balance sheet from FEED, or is he
    > in the business of "shorting stock" whether it deserves it or not.
    Dec 31, 2008. 07:58 PM | Likes Like |Link to Comment