Ohio Art (OART) sent out a notice regarding a 1:2,300 reverse split (squeese out) that will cash out smaller shareholders at $10.05. The announcement says that controlling shareholders (the Killgallon family) control enough stock to push it through.
The announcement does not have 2020 financial statements, and OART reports only annually. Given the lack of disclosure and the price where the stock was trading prior to the announcement, we consider this split potentially abusive.
One investor reaction on Twitter:
I can't say it enough. Don't invest in micro-caps run by crooks. The Ohio Art Company $OART (the inventor of the Etch A Sketch) is cashing out holders of fewer than 2,300 shares at $10.05 per share.
— Dave Waters (@alluvialcapital) February 23, 2021
The last trade was $15.25.
Ohio Art Reverse Split Notice of Meeting by Nate Tobik on Scribd
Yea, tough call on this one, defiantly abusive but unless one has a better handle on this one's finances, if you hold under 2300 shares and even if you can buy up enough to get one to this threshold (which since meeting was today is past tense) probably should have sold and just taken the lump. Owning a couple of post split shares with only under a thousand outstanding? Fools bet unless you know something...this is going to have 5-10K bid ask spread post split..good luck if you onw this. I looked at this 20 years ago but can cross this one off the list
ReplyDeleteI owned one like this - a railroad in upstate New York. I was able to survive the first reverse split by buying enough share to survive. Several months later they did another reverse split - I couldn't afford that one and sold my share to a friend so he could survive that reverse split. Finally a year or so later they did yet another reverse split that got ride of him and everyone else except 20 or so insiders. If you are up against a company that is aggressive in getting rid of you, lick you wounds and get out sooner rather than later - the losses will only get bigger for you.
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