Thursday, April 19, 2012

GOOGLE - Founder's scheme to ......."Take the money"

Google has proposed a stock split 2 for 1 - doubling everyone's shares and reducing the price accordingly. There is one stipulation, however, after your split... 1/2 of your shares will have their original voting rights - the other 1/2 will have no voting rights.

Sergey Brin and his partner Larry Page, started and developed the Google empire and are the controlling shareholders (directly and indirectly.)

This proposed stock split will allow them to dispose up to all of the "new split shares" without giving up control of the company. (actually a good personal wealth planning device - to diversify their assets into other holdings.)

At this date Google is selling at $600+ per share. Their availability to dispose up to 1/2 their holdings in Google without giving up control could have a damaging effect on the stock price

So let's say the stock splits to a value of $300 per share (doubling ever shareholder's quantity of shares) If the plan is that Sergey and Larry start disposing the non-voting half of their holdings - it is my opinion that the value of the stock would be $250 - with their sales as some damage to the value and an increase in purchase by others because lower value might create an increase in purchases. Will there be "two values?" Class A and Class B Stock? Traded at different Values? Class B traded at a discount to Class A?

Good, Bad or Evil - What you say?

Sergey has taken the role of the "Bad Guy" at Google. Larry has taken the role as "Good Guy" - these roles are perception of others and actions by the leading characters.

The future of the stock price will be a leading consideration by people who deal in (derivatives) Stock Options with Spreads and long dates.

You might ask, How did I determine the discount from $300 to $250 - My answer is very simple - it is not logarithmic, Scientific, or Algebraic - it is from my own gut - which has kept me alive for 70 years.

(below is a digital image of my gut's process)

(Eculid, 300BC - Greek Mathematician - The Father of Geometry - although "algorithm" is a 21st century overused term - specific current algorithms are patentable - now you know why there are so many court cases on patents - do you think judges really understand this stuff? )

Full disclosure: Sergey and I share the same birthday August 21st - possibly we think the same on some levels - we also share a similar heritage
What does that mean.... I'll ask Susan, my Astrologer and Sofia, my shrink - and get back to you.

Born Sergey Mikhaylovich Brin
Russian: Серге́й Миха́йлович Брин
August 21, 1973 (age 38)
Moscow, RSFSR, Soviet Union
Residence Los Altos, California, U.S.
Nationality American
Ethnicity Russian
Alma mater University of Maryland (B.S. 1993)
Stanford University (M.S. 1995)
Occupation Computer scientist, Internet entrepreneur
Known for Co-founder of Google
Salary $1[1]
Net worth US$ 18.7 billion (2012)[1]
Religion Jewish
Spouse Anne Wojcicki[2]
Children 2

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