Olam International

[specuvestor]

The problem is d.o.g is right: Company and shareholders are different. Their interests are different. It is not hard to find stocks where the major shareholders benefit from other means at the expense of the company.

And majority and minority shareholders are also different. The former wants control of the company and its cashflow while the latter wants primarily income and dividends. If a stock does a right issue and all the shareholders subscribe, does it mean it benefits all? The company gets the cash and the major shareholder CONTROLS the cash. They could easily buy a plot of land in China with the major shareholder owning the construction company, for eg.

Hence dilution itself is not that easily defined, though easily defined by textbooks. The best safeguard for minorities is still having a dilution that is at or higher than the stock's intrinsic value.