This question is a continuation of these two earlier questions:
- Does the concept of non-outstanding shares exist?
- Do share buybacks leave a company vulnerable to predatory shareholders?
I read in the opening statement of this page here:
That a public company is one that has sold all or a portion of itself to the public. Let's consider the scenario where company ZZZ Inc. has only sold 20% of itself to the public in the form of 100M outstanding shares. My questions are:
- If I bought all 100M outstanding shares, do I still own all of ZZZ Inc.? (This is related to my Question 2. above)
- Let's say ZZZ Inc.'s share price is trading $1 per share, giving a market capitalization of $100M. Let's say ZZZ Inc.'s assets minus it's liabilities is $100M. Does that mean ZZZ Inc.'s Price to Book ratio is 1 (=$100M/$100M) ? The fact that only 20% of ZZZ Inc. is publicly traded does not affect the P/B ratio?
I read somewhere that whenever you see a P/B ratio of less than one, then the market believes that a company is worth less than the book value of the company. And you can buy the company for less than it's book value. All my questions are try to validate this point, and see if there are situations when it is false.